Accounting System Of Local NGO

NON-GOVERNMENTAL ORGANIZATIONS: DEFINITION & NATURE

Private, non-profit organizations, generally known as NGOs have become important agents of social and economic development in Bangladesh. Because they focus their actions on the underprivileged and target problems related to education, primary healthcare, rural credit, income generation, and environment, their contribution is unique and essential. Unfortunately, concerns about the quality of the NGOs' work are often raised. Most NGOs are small, geographically concentrated, and face some serious internal problems: funding uncertainties, staffing, leadership, and poor management expertise. As financial support from donors to NGOs has steadily increased over the last 10 years, it has become critical that adequate support in the form of training and management systems be provided to them.

CONSTITUTION OF NGOThere is a great variety of ways in which NGOs are structured. The classic model is of a membership organization, co-ordinate in a geographically-defined hierarchy. Individual people work in local groups, which co-ordinate in provinces and then have a headquarters in the capital city for the country as a whole. Such country-wide organizations are called national NGOs. Frequently, the national NGOs combine in an international NGO, or INGO, which may consist of regional groups of countries and be capped by a global body. Not all the levels of the hierarchy need exist. Many countries are too small to have provincial structures. Smaller specialist NGOs may simply enroll individual members at the national level, without having any local branches. Occasionally, individuals are enrolled at the international level. On the other hand, in large organizations, the international level often seems relatively remote and attracts little attention, even among the NGO's own members. The group running a local family planning clinic does not necessarily know about the work of the International Planned Parenthood Federation (IPPF) at the UN World Conference on Women in Beijing. Nevertheless, such global organizations with their membership measured in millions do maintain a democratic policy-making process. While some may hold direct elections for key posts at the national level, the responsibility to the membership at the global level is always indirect, via some international council or assembly of national representatives.

It should be noted that one of the ambiguities about the term, NGO, is whether it is referring to a local, provincial, national, regional or global body. Until the early 1990s, the matter was generally straightforward in academic, news media or political discussions. The overwhelming majority of local and provincial NGOs never engaged in transnational activities. Thus NGO, by itself, usually meant a national NGO and regional or global bodies were called international NGOs. National NGOs did engage in transnational development and humanitarian activities, but, with very few exceptions, they were not, in their own right, participants in international diplomacy. When they wanted to exercise political influence at the global level, they did so through the appropriate INGO. In the 1990s, there was a great upsurge in local organizations becoming active at the global level, particularly on environmental issues, because of the Rio Earth Summit in June 1992, and on social issues, because of the Copenhagen Social Summit in March 1995. Since then, the term INGO has not been used so much and NGO, by itself, has come to cover both national and international NGOs. As an expression of the new politics, various terms then were popularized to refer to local NGOs. Grass-roots organizations, community based organizations (CBOs), and civil society organizations (CSOs), all came into currency. There is still an ambiguity whether these newer terms cover organizations that only operate at the local level or also include local branches of national organizations. Grass-roots and community organizations clearly refer solely to the local level, but civil society has connotations of any level within a single country. Indeed, it has become quite common to refer to global civil society.

Linguistic usage in the legal atmosphere at the UN used to be somewhat different. When the UN was formed, any involvement of private individuals or groups in its work constituted deviation from the norm of diplomacy

being the exclusive preserve of "states". Thus, a national organization, as mentioned in Article 71 of the UN Charter, was any NGO based in a single country. No distinction was made between an organization that covered a large constituency, over the whole country, and an organization based solely in a local community or a small section of the population. The lack of any distinction did not matter, as participation by either country-wide or more limited national NGOs was so rare in the permanent UN organs. Participation began on a small scale in the 1970s at UN conferences, on an ad hoc basis. When the ECOSOC rules were changed in 1996, to admit "national NGOs" to consultative status as a matter of routine, the presumption became that a national organization was a country-wide membership organization or a federation of local groups or an umbrella group, which is a coalition of NGOs operating in different fields. As is common at the UN, practice has not been consistent: a few local NGOs have been admitted as "national NGOs" to consultative status. The Rio conference also produced a term that has only been used in environmental politics at the UN. "Major Groups" refers to a system of categorizing NGOs from all levels, for the purposes of participating in UN policy-making processes.

Hereafter, use of NGO alone will imply that any or all levels are included, while local, national or global will be used when the meaning must be restricted to that level. Terms such as CBOs and Major Groups will also be used in the appropriate political context.

EVOLUTION OF NGO:The term, "non-governmental organization" or NGO, came into currency in 1945 because of the need for the UN to differentiate in its Charter between participation rights for intergovernmental specialized agencies and those for international private organizations. At the UN, virtually all types of private bodies can be recognized as NGOs. They only have to be independent from government control, not seeking to challenge governments either as a political party or by a narrow focus on human rights, non-profit-making and non-criminal.

The structures of NGOs vary considerably. They can be global hierarchies, with either a relatively strong central authority or a more loose federal arrangement. Alternatively, they may be based in a single country and operate trans-nationally. With the improvement in communications, more locally-based groups, referred to as grass-roots organizations or community based organizations, have become active at the national or even the global level. Increasingly this occurs through the formation of coalitions. There are international umbrellas NGOs, providing an institutional structure for different NGOs that do not share a common identity. There are also looser issue-based networks and ad hoc caucuses, lobbying at UN conferences. In environmental politics, this occurs in the unique form of the nine "Major Groups", listed in Agenda 21.

At times NGOs are contrasted with social movements. Much as proponents of social movements may wish to see movements as being more progressive and more dynamic than NGOs, this is a false dichotomy. NGOs are components of social movements. Similarly, civil society is the broader concept to cover all social activity by individuals, groups and movements. It remains a matter of contention whether civil society also covers all economic activity. Usually, society is seen as being composed of three sectors: government, the private sector and civil society, excluding businesses.

NGOs are so diverse and so controversial that it is not possible to support, or be opposed to, all NGOs. They may claim to be the voice of the people and to have greater legitimacy than governments, but this can only be a plausible claim under authoritarian governments. However, their role as participants in democratic debate does not depend upon any claim to representative legitimacy.

MISSION STATEMENT

BRAC works with people whose lives are dominated by extreme poverty, illiteracy, disease and other handicaps. With multifaceted development interventions, BRAC strives to bring about positive change in the quality of life of the poor people of Bangladesh.

BRAC firmly believes and is actively involved in promoting human rights, dignity and gender equity through poor people’s social, economic, political and human capacity building. Although the emphasis of BRAC’s work is at the individual level, sustaining the work of the organization depends on an environment that permits the poor to break out of the cycle of poverty and hopelessness. To this end, BRAC endeavors to bring about change at the level of national and global policy on poverty reduction and social progress. BRAC is committed to making its programs socially, financially and environmentally sustainable, using new methods and improved technologies. As a part of its support to the program participants and its financial sustainability, BRAC is also involved in various income generating enterprises. Poverty reduction programs undertaken so far have bypassed many of the poorest. In this context one of BRAC’s main focuses is the ultra poor. Given that development is a complex process requiring a strong dedication to learning, sharing of knowledge and being responsive to the needs of the poor, BRAC places a strong emphasis on their organizational development, simultaneously engaging itself in the process of capacity building on a national scale to accelerate societal emancipation. The fulfillment of BRAC’s mission requires the contribution of competent professionals committed to the goals and values of BRAC. BRAC, therefore, fosters the development of the human potential of the members of the organization and those they serve.

In order to achieve its goal, wherever necessary, BRAC welcomes partnerships with the community, like-minded organizations, governmental institutions, and the private sector and development partners both at home and abroad.

BRAC TIMELINE: MAJOR EVENTS9BRAC, a national private development organization, set up in 1972 by Mr. Fazle Hasan Abed, began as a relief oriented organization focused on resettling the refugees returning from India after the War of Independence in 1971. This task over, BRAC turned its focus on the issue of poverty alleviation and empowerment of the poor, especially women, in Bangladesh’s rural areas. BRAC, the acronym for Bangladesh Rural Advancement Committee has become its identity and it stands for working for the poor and the marginalized. From its modest birth in 1972, it is now the world’s largest national NGO, diverse in its operations with over 27,000 regular staff and 34,000 part time teachers, working in 61,924 villages in all the 64 districts of Bangladesh. BRAC has progressed with learning from experience and through a responsive and inductive process. Adjusting its strategy to prevailing circumstances, it does not pursue any rigid development model.

ECONOMIC DEVELOPMENT

Institution Building through Village Organization (VO)

BRAC believes that a common platform that is created and owned by the poor is a prerequisite through which the poor can make themselves count in the development process. B R A C’s approach to social and economic development of the poor, especially women, involves four inter-related strategies: institution building, service delivery, social mobilization and public sector mobilization. BRAC’s core approach and competency is the delivery of health, education, microfinance, and micro enterprise services on a large scale to the rural poor, primarily women. BRAC decided to train local women to help deliver these services and organize local groups. As a result, BRAC’s service delivery contributes to building local leadership and local organizations.

Social Mobilization

BRAC believes that women must be aware of their legal rights to protect themselves from being discriminated and exploited, and that the sociopolitical relationships and power structures within village communities need to be changed. BRAC feels that it can assist poor women obtain access to these services,

either through legal aid clinics or by helping women report cases at the local police station or when seeking medical care like the case of acid victims.

Microfinance Program

The microfinance program of BRAC is a tool for poverty alleviation and empowering the poor. Lack of access to the formal banking system deprives them of the facilities to borrow, save and invest in productive activities, and this is a major reason why poor people remain poor. The formal banking sector also requires collateral. Making credit available to the rural poor enables them to become involved in different income generating activities, which, in turn, allows them to become economically self-reliant. Through this process, BRAC’s micro-finance program works to create a self-sustaining and reliable financial service program for the poor.

i) Credit Credit is provided to its VO members to initiate different income generating activities. While loans for individual and joint activities do not require collateral, members must have some savings with BRAC before they are eligible for loans. Credit operations are carried out through a Revolving Loan Fund (RLF). This RLF consists of donors’ fund, members’ savings, Polli Karmo Shohayok Foundation (PKSF) loan and other loans. Loans realized from VO members are credited to and form part of the RLF for extending further credit. A 2% loan loss reserve is kept to cover the risk of bad debts and death. Regular borrowing and payments allow the borrower to take larger loans.

ii) Savings Savings is an important component of microfinance services. Experiences show that there is a positive correlation between savings and sustainable credit operation. From the member’s point of view, savings represent an opportunity to save in small amounts to form a lump sum that earns interest. This is an opportunity that the formal market or regular financial institutions do not provide.

iii) Death Benefit A death benefit policy has been introduced for its VO members since June 1990. The key features of BRAC’s death benefit are:

• All VO members irrespective of borrowers are entitled to this benefit.• Death benefit service provides US$ 86 (Tk 5,000) to the dependants of the

deceased member.• No premium is charged to the members. The cash benefits are paid out of the

service charge earned through BRAC credit program.• Outstanding loans of the deceased are written off.

Vegetable Export Program

BRAC started this program in 1997-98 with particular focus on vegetables that have high demand in the European markets and could be grown in Bangladesh. In the first year, 27 tons of beans were exported successfully to England, France, Belgium and Holland and in 1999; 26 tons of fresh potatoes were exported to Singapore. BRAC has exported 621 tons of fresh vegetables and 350 tons of potatoes in 2002 to the wholesalers and supermarkets in England, France, Germany, the Netherlands, Belgium and Italy in Europe, and the UAE, Bahrain, Singapore, Malaysia and Hong Kong in Asia. In addition to French beans, Broccoli and

Green chili demand oriented new items have been selected with the total export target of 800 tons of fresh vegetables and 1000 tons of potatoes for the year 2003.

Rural Enterprise Project (REP)

As the scope of employment and income earning sectors are limited, new livelihood opportunities are essential for reducing rural poverty. Moreover, many traditional livelihoods are becoming marginal and new opportunities are opening up with growing urbanization and globalization. However, the poor may not be able to gain from these opportunities without support. This realization led BRAC to initiate the Rural Enterprise Project (REP), to encourage employment and income generation through entrepreneurship. The project is involved in innovating non-traditional activities and introducing them to the program participants. 19

Income Generation for Vulnerable Group Development (IGVGD)

The Income Generation for Vulnerable Group Development (IGVGD) program covers the poorest women who own no land, have little or no income, are widowed or divorced and with no able bodied male member in the family. The objective of the IGVGD program is to alleviate poverty of the hard core poor by providing long-term sustainable income and employment opportunities through food assistance, training and access to credit facilities. The Vulnerable Group Development Program (VGD) cardholders receive a monthly ration of 30 kg of wheat for 24 months. BRAC provides various skill training to these women in different income generating activities, mainly in poultry, goat and cattle rearing and vegetable cultivation.

BRAC’s Urban Program

Urban poverty and slums are closely linked. Considering the needs of slum dwellers, BRAC conducted a survey of urban slums in 1991 and found that a substantial number of slum children had no access to education. In 1992, BRAC opened urban schools and at the beginning of 1997 started the urban credit program. BRAC plans to construct a hostel for garment workers. It has also started absorbing a number of retrenched garment workers into microfinance program with an average loan size of US$ 86 (Tk. 5,000). The goal of the program is to support the war-affected Afghan people. The components of this program are:

* Education Program* Health Program* Livelihood Program* Small Enterprise Program

BRAC-Afghanistan: At a Glance(December 2002)

HEALTH

Essential Health Care (EHC)

The essential health care (EHC) package is delivered primarily through the Shastho Shebika (SS), a female community health volunteer. Shebikas are health cadre in the community and the frontline workforce in BRAC’s health program. Each BRAC area office covers 12,000 households with a population of approximately 60,000. They also organize one issue based meeting each month to discuss topics related to health, nutrition and family planning in the community. Components of EHC include water and sanitation, family planning, immunization, pregnancy related care, basic curative care, and TB.

• Water and Sanitation

Safe water supply and household sanitation program emphasizes on development of awareness and capacity building at different levels. There is a close co-ordination with the government and other supporting agencies to ensure effective implementation of this program.

Family Planning

During household visit, the Shastho Shebika motivates women to use modern methods of contraception. She provides pills and condoms to the clients through doorstep service. For other temporary and permanent methods, she refers the clients to the government union and upazila health facilities. She also counsels and refers for side-effects, if necessary. A total of 395,055 couples received contraceptives in program areas in 2002.

• Pregnancy Related Care

BRAC has been providing the community based pregnancy related care to rural women. This is done by BRAC's present health program has evolved from a series of lessons learned over the years in providing basic health care services at grass root level.

• Basic Curative Services

Illness is a major factor for ‘income erosion’ among the rural poor. About 60-70% of the common diseases could be treated at community level through basic curative services. The Shebika is responsible for diagnosis and treatment of ten common diseases diarrhea, dysentery, common cold, halmenthiasis, anaemia, ringworm, scabies, hyperacidity, angular stomatitis and preventive service for goiter.

• Nutrition In issue-based meetings, Shebika discuss nutrition topics such as natural source of vitamin A, appropriate nutrition during pregnancy and lactation. They also motivate the community to cultivate vegetables and fruits in their homesteads. Each Shebika distributes 50 packets of different types of vegetable seeds twice a year. Every pregnant woman receives iron and folic acid during antenatal care services. A total of 312,382 pregnant women received iron and folic acid in 2002.

• Tuberculosis Control

During her household visit, the Shebika identifies suspected persons with cough for more than 3 weeks and refers them for sputum examination. Shebika gives identified patients Directly Observed Treatment Short courses (DOTS). Patients come to the Sebeka’s home every day for taking drugs during the intensive phase of the treatment. Afterwards patients receive drug from Shebika once a week. Patients are requested to deposit Tk.200 and sign a bond as a guarantee of treatment completion. Upon completion Tk.125 is given to the Shebika and Tk.75 is refunded to the patient.

EDUCATIONNon Formal Primary Education (NFPE):

BRAC’s NFPE program was initially designed for children aged 8-10 years (70% of whom are girls) and to progress them through Grades I–III over a three year period. Recently, the program has extended to provide education of a five year curriculum in four years. The teachers are mostly locally recruited married females, 72% of whom have passed Secondary School Examination and above. The percentage of graduating students who have completed Grade V and progressed to secondary schools has gradually increased from 90.1% in 1999 to 94.3% in 2002.

Basic Education for Older Children (BEOC)

BEOC or Kishor Kishori (KK) schools were established in 1987 to cater for the children aged 11-14 years who previously had no access to education. The ratio of girls to boys was 70:30. The BEOC school design is similar to the NFPE but it differs in that it offers 3 years of basic education. There are 8,940 BEOC schools in operation. BEP, however, has decided to change the KK curriculum from 3-year basic education to primary education–covering grades I-V over the period of four years from 2004-2009.

Educational Support Program (ESP)

The ESP started in 1991 to expand NFPE coverage through partnership with small NGOs. Through this program BRAC provides technical and financial support to a number of small NGOs who, in turn, replicate the NFPE model in remote areas of the country where BRAC is less represented. ESP schools follow the BRAC approach including material and textbooks and offer 3 years of primary curriculum to the poorest children of the rural community.

Rural Library (Gonokendro Pathagar)

In 2002, there were 700 Rural Libraries which provided access to reading materials and a venue for socio-cultural activities. These were mostly set up in secondary school premises or at the centre of a Union near other important rural institutions and run by local communities with active support from BRAC. Each library has a children’s corner to focus on increasing the number of child readers. Under the program, a student is eligible to borrow a set of books for an academic year. The libraries also act as centers for socio-cultural activities, sports, and training on computer and other skills.

Training of the Secondary School Teachers

BRAC observed that even many teachers of secondary schools find it difficult to understand some of the topics of the new curriculum. To identify the problem areas an intensive need assessment exercise was done by BRAC. Under the assessment, BRAC organized several focus group discussions with subject (mathematics and English) teachers in almost all the 22 schools and organized workshops with the Head Teachers, Asst. Head teachers, and members of the School Management Committee (SMC).

SUPPORT PROGRAMS

BRAC Training Division

Training has been considered an integral part of BRAC programs since its inception. The BRAC Training Division (BTD) is responsible for capacity building and professional development of BRAC staff and the program participants through a wide range of training and exposure initiatives. It has established 12 residential Training and Resource Centers (TARC) and two BRAC Centre for Development Management (BCDM). NFPE schools teachers’ capacity building, capacity building of the Adolescent Development Program staff, communication skills development, promotion of sales skills, etc. were arranged for the staff. In addition, this division organized and facilitated a number of external training courses and exposure visits to develop the capacity of the staff members of the Government of Bangladesh and other development organizations. The BTD has also been instrumental in creating a work force that believes in the vision and values of BRAC.

Global Partnership The Global Partnership (GP) for NGO Studies, Education and Training is a consortium of three educational centers: BRAC in Bangladesh, Organization of Rural Associations for Progress (ORAP) in Zimbabwe, and School for International Training (SIT) in the United States. The GP offers the comprehensive

diploma and masters degree program especially designed to respond to the realities faced by the NGO leaders from grassroots to the global levels. Under the partnership, BRAC offers the postgraduate diploma in NGO Leadership and Management leading to Master's degree. ORAP Zenzele College is the venue for the Diploma in Grassroots Development and NGO Management lead to Bachelor’s Degree. SIT in Vermont, the USA is the venue for Bachelor and Master's degrees offered by the GP. Since 1997, the inception of the postgraduate diploma in NGO Leadership and Management at BRAC, 126 graduates from 24 countries have completed their postgraduate diploma at BRAC, and 42 of them have completed their Masters program from SIT. In 2002, a total of 21 students, including 6 female attended the diploma course.

Research and Evaluation Division (RED)

RED conducts multidisciplinary studies on a wide range of issues and subjects. These include poverty alleviation, socio-economic development, agriculture, nutrition and health, population, education, environment, gender and related fields. Although RED concentrates its activities on BRAC programs, it also maintains strong linkages with the government organizations and a number of academic institutions at home and abroad. In the year 2002, RED undertook 23 collaborative projects with organizations like National Institutes of Health (USA), International Rice Research Institute (Philippines), Aberdeen University (UK), Cornell University (USA), Umeå University (Sweden), Micronutrient Initiative (Canada), UNICEF Bangladesh, Campaign for Popular Education, Bangladesh, International Centre for Diarrhoeal Disease Research, Bangladesh (ICDDR,B), Population Council (USA), Karolinska Institute (Sweden), Imperial College (UK), and the government of Bangladesh. RED’s major work on Economic Development Program concentrated on targeting the Ultra Poor to bring them into mainstream development program. RED has been all along involved in the nationwide Education Watch since 1998 to examine the state of 40

Special ProjectsVocational Training

BRAC vocational training program, introduced in 2001, has brought 1,439 retrenched female garment workers under its pilot “Skills Training for Employment of Retrenched Garment Workers” project. This project was undertaken to help reemployment of female garment workers who suffered retrenchment due to closure of large number of garment factories caused by global economic recession and unfavorable trade policies internationally. Through the project the retrenched workers were provided skill training on candle making, bag making, small enterprise development, embroidery and stitching along with facilities of micro credit. Majority of the reskilled workers have been able to get employed.

Road Safety

Bangladesh has one of the highest fatality rates in road accidents. More than 73 deaths per 10,000 registered motor vehicles occur every year. BRAC workers, who travel a lot by motor cycle and bicycle and its program participants who travel mainly on foot fall victims of road accidents. Road accident being such a major national and organizational issue, BRAC prompted to develope a “Community Road Safety Project”. Certain activities of the project like road safety training for staff, forging a network of NGOs committed to road safety, road use awareness through popular theatre and developing road safety lessons in Non Formal Primary Education are being implemented. A research study has been conducted on Community Traffic Policing in partnership with Transport Research Laboratory of the UK with a view to conceptualizing the idea, improving the institutional framework and to identifying pilot program.

Human Rights and Advocacy Unit

The Human Rights and Advocacy unit was set up to support the needs of the ultra poor in particular and cover BRAC’s initiatives in promoting socioeconomic equity at the local, national and international level. In the last eight months some major activities as per plan were: two workshops to develop strategy and identify core advocacy issues, and three district level and four upazila level workshops. The unit conducted other social mobilization activities with partners and allies while developed communication materials.

Commercial Ventures

In the past few years BRAC has been involved in socially useful commercial ventures. As a major shareholder in the Delta BRAC Housing Corporation Limited, a public limited company and a non-banking financial institution approved by the Government, BRAC is promoting affordable home ownership by financing and contributing to the growth of the housing sector. Realizing the need for keeping up with technological innovations, BRAC has involved itself in the field of information technology. BDMail Network Limited is an internet service provider company of BRAC. BRAC Information Technology Institute (BITI), was set up in 1999 to provide training and education to develop professionals in IT, is now a part of BRAC University.

Aarong

Aarong, meaning a village fair, was established in 1978 with objective to bring support services and marketing facilities within the reach of rural artisans, expand domestic markets and promote the export of traditional and non-traditional crafts. BRAC’s job creation projects for rural women in Manikganj, Jamalpur, Sherpur, Jessore and Kushtia areas are based on traditional and non-traditional craftskills. Nearly 30,000 artisans, mostly women, are involved in these groups. Many other independent cooperative groups or traditional family based artisans like potters, brass workers, jewellers, jute workers, basket weavers, handloom weavers, silk weavers and different artisans from all over the country come to Aarong for marketing and support services. Over the years, Aarong has earned a name of itself as one of the finest rural crafts producers and market inBangladesh. Experiences encourage BRAC to look forward to a continued partnership in development with the rural artisans of Bangladesh.

BRAC Bank

BRAC realized that there is a vast group of small and medium entrepreneurs in the country, who have no access to institutional credit. BRAC Bank, inaugurated on July 4, 2001, functions as a full-fledged commercial bank with a special focus on providing financial services to those Small and Medium Enterprises (SME). Till December 2002, BRAC Bank disbursed US$ 5.73 million (Tk. 33.25 crore) through seven branches in Dhaka, Chittagong and Sylhet, and 79 Unit Offices all over Bangladesh.

BRAC University

BRAC University (BU) is another addition (April 2001) to the family of BRAC initiatives. Its mission is not only to impart knowledge but also to act as a centre of excellence in knowledge creation through research that connects with practice. This, BRAC believes, is fundamental to creating professionals with the vision and ethics needed to foster national development that is inclusive, pro-poor and just. The goal of BU is to provide high quality broad-based education for students to equip them with the skill and knowledge necessary for taking on the challenges of development, both in Bangladesh and beyond. At present more than 1,000 students are studying in BU in Bachelor of Business Administration (BBA), Bachelor of Science (BS) in Computer Science, Bachelor of Social Science (BSS) in Economics, Bachelor of Arts (BA) in English and Bachelor of Architecture (B.Arch). Under the Postgraduate Programs BU is offering three courses: Master of Business Administration (MBA), Master of Development Studies (MDS) and Diploma in Computer Science. C E

BRAC ACCOUNTING SYSTEM

Part 1

Voucher: A voucher is a form ,prepared and used within the business, on which a transaction is:

Summarized and supported Approved Analyzed for recording And, approved for payment

Types of Voucher: Generally four types of voucher is used:

1. Debit voucher- For cash/Bank payment.2. Credit voucher- For receiving of cash/bank.3. Journal Voucher- For non-cash transaction.

4. Transfer voucher- For the amount deposited to and withdrawn from bank.

Supportings of voucher:

Debit Voucher: The following information should be disclosed in preparing a debit voucher:

The nature, standard, brand, price, quantity of the goods should be disclosed in the debit voucher. If the wages is paid in daily basis, to whom at what rate and for how many days the wages is paid should

be disclosed in the bill. The signature of the recipient and the signature of the person who entry into the stock

be in the bill. In case of the budget of expenditure, verify the actual expenditure is above than the budgeted

expenditure. The full name and signature of the bill receiver should be in the bill. The salaries, bonus gratuity of the employees should be ensured by conformation letter. The supporting of voucher should be included with the voucher with accordance.

Credit voucher: the following supporting should be included with the credit voucher: In case of cash receipt, cash memo should be used. The quantity, rate Nature and price of the selling goods should be disclosed in the cash memo. The signature of cash recipient must be in the cash memo.

Journal voucher: The following things should be included with the journal voucher:

In case of provision, the amount of provision along with the list working papers .Ex: The schedule of interest on savings.

The copy of the adjusted documents .Ex: challan, Debit note. In case of rectification, in which sources rectification is occurred, the copy of those

documents. Ex: Audit report, Workings of Vouching. Transfer voucher: generally in case of transfer voucher, no extra supporting is needed. The pass book, Bank

statement, Deposit slip is treated as the supporting .the above documents should be preserved carefully in the office.

BRACProject RCP location pabna code 816 vouchar no. 165

-------------------- Debit voucher date 28.05.97

explanation Amount(dr.) Cash/bank (cr.)title number Taka

Being the amount paid to Utilities 1503208 50Mr. Md. Ashraful Alam (O.A) Stationary and supplies 1503209 210Against utilities, office stationery Maintenance 1503210 250Etc. as per bill attached General expanse 1503211 265

Totaltaka seven hundred and seventy five only

------------- ------------ ----------------- ---------------Payment received originator checker please pay

Signature ------------------------ ------------- ---------------------------Name in full----------------------- cashier authorized signatureBRACProject RCP location paba code 816 vouchar no. 165------------------- journal voucher date 28.05.97

Financial year ending on 31st December 1997

Heads of account Account no. Debit credit source Particularstaka Taka

Progamme assistant salary 0404205 2200 RCP cash Being the amountProgamme assistant salary 0409205 2200 Book Transferred fromTo H.O. account 0425125 4400 RCP against

programAssistants salary

Total: taka four thousand four hundred only 4400 4400

Prepared by checked by approved by

BRAC

Project RCP location pabna code 816 vouchar no. 55-------------------- credit voucher date 28.05.9

Heads of account Account no. Amount Number ParticularsTaka

Loan realised 1509553 50000 Amount receivedOwn contribution 1512127 10000 Against collectionPass books and others 1510032 25 Of loan, savings

& sale of pass book as per daily collection register

Total: taka four thousand four hundred only 60025 Five only

Payment received

Signature......................

NAME IN FULL..................... Accountant Authorized Signature

Verification of Voucher:Debit voucher:

Emphasis should be given to the following subject, as the above information related to debit voucher is maintained accurately:1. Does all the vouchers decorated according to the serial number?2. Does the amount prescribed in the voucher is accurate?3. Does the disclose expenditure is similar with personnel procedure, circular , minutes, budget and other

rules and regulation of the institution?4. Is it applicable with the payment of various purchases approval , Budget ,work order,Quation?5. Does the stamp is fitted with the supporting perfectly?6. Revenue expenditure should not be recorded as capital expenditure and capital expenditure also should

not be recorded as revenue expenditure.7. Does the expenditure recorded accurately?8. The total amount of voucher will be written in words and with figure.9. If any differences are seems to be occurred, necessary document will be checked.10. In case of salary payment and receiving goods, it should be find out that entry is recorded in the registrar

book.11. When payment is made through cheque, the cheque no., date should be described.12. Does the different cell of voucher is filled up, should be identified and signature also be made.

Credit voucher: 1. Does the credit vouchers are arranged sequentially according to serial number?2. Does the prescribed amount of money in voucher is similar with supporting and the daily receive

registrar?3. Sufficient cash receipt memo should be verified.4. Does the receipt amount is record accurately?5. Does the total sum of money o voucher is equal to the supporting sum of money and the sum of money

is written in words?Journal voucher:

After checking whether the pre-mentioned subject matters regarding the journal voucher are properly maintained, the following matters should be given importance:

1. If the vouchers have been arranged according to their serial no.2. If there is necessary supporting in case of adjustment, rectification, transfer, provision etc.3. If adjustment, rectification, transfers, provisions etc are properly done.4. If the amount of money of the adjustment, transfer, rectification, provision etc.5. If it is properly signed and endorsed.

Transfer VoucherIn case of Transfer Voucher, it may be ensured whether the date and amount of money in the Passbook,

Bank Statement, Deposit Slip and Cheque are properly recorded as they were recorded in the Cashbook.

Cashbook Writing:The transaction should be recorded into the cashbook according to different accounts with voucher number. If the transaction is in cash, it will be in the cash column or if the transaction done by bank, it is recorded in the bank column. Narration of every account will describe shortly if it is needed. If a clear-cut idea is known from an account, no narration is needed.

Ledger:The statement, prepared by arranging briefly all the transactions in the name of any person, enterprise, income-expenses, assets separately, is called an account. An enterprise has to keep so many accounts in a separate book. The book in which all the transactions are written permanently in brief in the different heads of account from the primary book of records is called a ledger.

Similarity of cashbook with ledger:

The cashbook has done the function of ledger as well as the journal. The accounting philosopher recognizes the cashbook as ledger as cashbook is the cash account of ledger. On the other hand cashbook is also known as journal as it s the primary book.

Rules of posting to general ledger and subsidiary ledger: According to BRAC traditional system, posting is done from cashbook and journal to ledger.

a. Cash book: Cash book is a journalized ledger i.e. it is separated as different books for benefit of the working

process, so when any transaction is recorded in the cash book, according to double entry system where one entry is recorded as in cash and bank account, other in this case only one more posting is needed for completing the double entry process.

When posting as made from the Cashbook to the Ledger, the particular entry that is posting from ledger the recorded date of the transaction of cashbook will be maintained. In the ‘Folio’ cash book to general ledger, if it is in the debit side of cash book, then it will be shown as credit (taka.) in the particulars column as By Cash and vice-versa. In the Date column of the general column voucher number will be written according to the cash book. Then the actual amount of money is posted in actual account will be insured by checking with Debit, Credit and Transfer voucher. In this case, it should be remembered that no posting is necessary for the Contra Entry.

b. Journal Voucher: When posting is made to the ledger account from the journal voucher in which account the posting is

done, if it is recorded in the debit side of the journal voucher, it also should be recorded in the debit side of the general ledger. The name of account will be written in the particulars column after writing ‘To’ and the vice-versa also for the credit side. The date and no. of general voucher should be written in the Date and Folio column of the ledger.

Balancing:

a. Cash Book: Prior the balancing of the Cash book, it has to be checked that whether all the necessary credit vouchers from the cash receipts and the debit vouchers from the cash payment and the transfer vouchers from the bank transactions have been prepared and the prepared vouchers are properly debited and credited respectively in the cash book. If all the debit, credit and transfer vouchers are properly recorded in the cash book, then the amounts

of cash and bank column of the cash and bank column of the payment side are to be sum-up. Then all the amounts of cash and bank column of the receipt side are to be sum-up a little below the payment side’s sum-up result. Then the sum-up result of the receipt side should also be written in the payment side below the sum-up results o the cash and bank column. Now the balances of the two sum-up results in the middle of these two results and in the particulars column ‘closing balance’ is to be recorded and finally cash and bank deposits should be compared with the closing balance.

b. Ledger Accounts: At the end of the month, prior the balancing of the ledger accounts, it is to be checked that the recorded vouchers in the cash book in different dates are properly posted in the related ledger accounts according top their transactions. Besides this, if the journal vouchers of that month posted duly are to be checked. After all the transactions are duly posted to the related ledger accounts, if there are amounts in both the debit and credit column, then the amounts are to be added and the sum-up results are to be written using pencil. Then the differences of the results are to be added and subtracted with the previous month’s balance in the Balance column. At the end of the month, closing debit balance is to be written in the ‘Dr. or Cr.’ Column as debit and the Closing Credit balance is to be written as credit. After preparing the ‘Receipts and Expenditures Statement’, all the pencil writings are to be written by pen.

Preparation of Monthly Receipts and Expenditures Statement:At the end of the month, the related balances of the general ledgers are to be written in the ‘Cumulative’

column in the ‘Receipts and Expenditures Statement’ against the related accounts and codes. Then at the last date of the month, the closing balances of the cash and bank column of the cash book are to be written in the ‘Cumulative’ column of the Cash Receipts and Expenditures Statement’ against the cash and bank balances and Net debit and credit balances of current month of every accounts are to be recorded in ‘For the Month’ column. It is mentionable that if the sum-up result of the debit column of any ledger accounts more, then the deducted result of the debit and credit sum-up result is to be written in ‘For the Month’ column against the related accounts and codes as the debit balance of that. Similarly, if the sum-up result of credit column of any ledger account is more, then the deducted result of the credit and debit sum-up results is to be written in ‘For the Month’ column against the related accounts and codes as the credit balance of that month.

Any credit balance is closed with a first bracket like “(----------)”. After writing the sum-up results according to the paragraph in the Receipts and Expenditures Statement it is filled in the Gross Total column. When the sum-up results of both the Receipts and Expenditures sides are the same, then it is assumed that ‘Receipts and Expenditures Statement’ is perfectly prepared.

Others:a. For the clear understanding about who get money from the BRAC Fund, necessary no. of vouchers

are to be prepared for all the transactions instead of a single voucher.b. for the non-cash transactions, a debit and credit voucher should not be prepared at all. In this case,

Journal voucher should be prepared. As for example, adjustment of loan’s due through the savings.c. To understand the credit voucher easily, necessary no. of vouchers, should be prepared according to

the chronology of the transactions and their nature.

PART-2

INTEREST ON LOAN: In BRAC’S Accounting system, interest on loan provision is kept every month. The

journal entries corollary with provision is given below-1. 15% interest provision on monthly total disbursed loan ;

Interest realization A\C Dr. Interest income in advance A/C Cr.

2. Due to Interest provision of previous month , the following journal has to record by taking the sum of “This month interest” column of Branch Summary of MLR( Monthly Loan Realization) Record relating to the current year .

Interest receivable A\C Dr. Interest income A\C Cr.

3. The Interest which is collected in the previous month have to separate from the loan collected & entry should be made in the Interest realized account. Total monthly collected Interest is recorded in the Interest realization column separately in the computer sheet . By taking the total of that column the following entry is passed:

Loan realized A\C Dr. Interest realized A\C Cr.

4. The amount of interest which is shown in the “Interest receivable A\C” in the previous month has to reduce by the amount of interest collected (Interest Receivable) in that month. The journal entry should be given for that amount for which the journal entry (2) has given| Interest income in advance A/C Dr. Interest receivable A\C Cr.

For example:In May 1997 distributed loan was 20100000 taka in Darshana. According to the Monthly Loan Realization record installment collected was amount to Tk. 19,52,444. In April 1997 the Receipt &Expenditure statement has shown the following balances: REVOLVING LOAN FUND Tk. loan disbursed (1509551) 82273953 Interest receivable (1509552) 12417507 loan realized (1509553) (71465187) Interest realized (1509554) (10244165) loan outstanding ***** 12982106 Interest receivable (1509557) 1692638

loan outstanding ***** 14674744

in April 1997 the Branch summary of MLR Records was as follows:

Date: 26-05-97 branch summary of MLR RecordsArea: Darshana (402) LIST FOR THE MONTH of April 1997

VO. CODE

Interest outstanding OPENING

THIS MONTH INTEREST

PRINCIPLEoutstanding OPENING

OPENING OVERDUE

PRINCIPLE REALISATION

1 2 3 4 5 6AREA TOTAL

214294 256044 14423359 1796642 1367545

Interest Realisation

Excess Realisation

Total Realisation

Interest outstanding closing

Principal outstanding closing

Overdue closing

7 8 9 10 11 12254685 4 1622234 215616 13085230 1792270

The journal entry relating to the interest provision is following1. for collected interest of total disbursed loan amounting to 2010000 in May 1997 Interest Realisation A\C Dr. 301500 Interest income in advance A\C Cr. 301500

2. for recording the amount of provision receivable interest of April 1997as income in May 1997 Interest receivable A\C Dr 256044 Interest income A\C Cr 256044

3. for separating the interest from the loan installment of April 1997as income in May 1997

Loan realized a/c Dr 254685 Interest realized a/c Cr 254685

4. for adjusting the debited amount in Interest receivable A\C at April 1997 by the collected interest Amount for that month

Interest income in advance a/c dr. 256044 Interest realization A\C cr. 256044

INTEREST ON SAVINGS

Provisions upon savings is kept 4 times in a year on a quarterly basis. Interest Provision is kept in march upon balances of savings at Decembers, June upon march, September upon June & Decembers upon June month also.

Procedure for calculating interest on savings:

March quarter = SAVING balances of December of previous year * 6/100*3/12June quarter = SAVING balances of March * 6/100 * 3/12September quarter = SAVING balances June * 6/100 * 3/12December quarter = SAVING balances June * 6/100 * 3/12

Journalization of provisionalised interest upon savings:The journal entry for recording interest savings is Interest on savings a\c Dr Outstanding liabilities a\c CrNote: For R.D.P/ IGVGOP region the interest on deposit a\c is debited instead of interest on savings a\c.For example :

For R. C. P. Chandina region , the different monthly savings balances are – December1996 saving balances = 35250 tk. March 1997 saving balances = 37100 June 1997 saving balances = 39600 September 1997 SAVING balances = 40500

The interest provisions on savings for yr 1997 are given below in charName of month Calculation of interest journalMarch’97 35250*6/100*3/12=529 Interest on savings a/c dr. 557

Outstanding liabilities a/c cr. 557June ,97 37100*6/100*3/12=557 Interest on savings a/c dr. 529

Outstanding liabilities a/c cr. 529Sep’97 (39600*6/100*9/12)-

(529+557)=696

Interest on savings a/c dr. 696Outstanding liabilities a/c cr. 696

Dec’97 39600*6/100*3/12=594 Interest on savings a/c dr. 594Outstanding liabilities a/c cr. 594

INTEREST ON H.O. FUND:

In every month interest provisions is kept upon the H.O. fund. In order to calculate the amount of fund approved from the H.O., the amount of due loan & fixed assets has to sum up from which the amount of group savings & groups trust fund (if any) has to deduct. The net amount of fund is calculated in a way upon which interest is charged @ 9%. In order to determine the amount of fund the beginning balance has to calculated of the concerned month.

Head office fund|: calculation of monthly interestFORMULA: net receipt fund * 9/100*/12

The journal for recording of interest H.O.fund Interest on H.O. fund a\c dr. H.O. current a\c cr.

In order to calculate net receipt fund the following system has to follow:

Disbursed loan ****- collected loan **** ****

Total fixed asset * *** ****

(G.T/F. personal savings + compulsory savings) **** NET FUND ****9% Interest is charged on that net fund in order to calculate the monthly interest amount.EXAMPLESSAY R.C.P. CHANDINA : The statement of monthly balance for April 1997 are FOR THE MONTH CUMULATIVEDisbursed loan 2010000 84283953

Interest receivable 256044 12673551 Loan realized (1697759) (73162948) Interest realized) (254685) (10498850) Loan outstanding 313600 13295706 CAPITAL INVESTMENT(branch office)Land 325063Building 988574Furniture & fixture 165011Motor cycle (101500) 309500Bi-cycle 3000Equipment 2680 52040Total (Fixed Assets) (98820) 1843188Accumulated Depreciation (5370) (400888)Total of 6

104190 1442300OTHER LIABILITESGroup Trust Fund a/cCurrent Account with Group 1610 (63499)Project Account with Group (152897) (314571)Own Contribution (165523) (7097453)Compulsory savings (99700) (5349169)Savings withdrawal 35421 5334769

Now from the above account statement the interest on H.O. fund has to calculated & recorded system of calculating interest: Total loan disbursed 84283953 Total loan realized (73162948) ______________Total PRINCIPLE outstanding 11121005Total fixed asset 1843188 _____________ 12964193LESS: Group trust fund - Own contribution 7097453 Compulsory saving 5349169 Saving withdrawal (5334769) 7111853NET FUND RECEIVED 5852340

Interest on H.O. fund= 5852340 * 9/100 *1/12System of recording interest:In order to recording the interest on H.O. fund the following journal has to pass Interest on H.O. fund Dr

H.O. current account Cr

LOAN LOSS

Loan loss provisions is kept in the following way:

1. After every 3 months loan loss provisions is kept @ 2% upon the total distributed loan.. Loan loss provision Dr Loan loss reserve Cr2. If loan loss provisions is excess or below than the requirement then the following entries should be passed

for below loan loss provisions than the requirement Loan loss provision Dr Loan loss reserve Cr

For excess loan loss reserve, the following entries should be reverse.

GRATUITY:

From the 1st January 1997 after every 3 months i.e. 4 times a year - march, June, September, December, for all regular Project & service holder ,gratuity provision should be kept.

Quality provision should be kept.

Rule for calculating gratuity provision:

FORMULA = basic salary * 2 * 3 12 Rule for recording gratuity provision The account on which salary is included should be debited by the gratuity provision amountFor each employee & H.O. current account should be credited. In addition, after that journal voucher have to be prepared.

For example: Salary &benefit of PA Dr 825H.O. Current account Cr 825(being the gatuity provision made quarterly of PA[credit] for the period from April’97 to June’97)

BONUS:

In every month, bonus provision is kept for each employee of the regional office.In every year each employee get 2 bonus & each bonus is equal to the basic salary of respective employee.

Formula for calculating bonus provision:Bonus amount = monthly basic salary *2 12For recording bonus provision:Debit the account on which salary is included & credit the H.O. current account.For example:For recording bonus provision1. Salary & benefit a/c dr. H.O. current account Cr. 2. Programme assistant salary account dr. H.O. current account cr.

For recording payment of bonus3. H.O. current account Dr Cash a\c Cr

Insurance premium:

The formula for calculating insurance premium is as followsFormula= basic salary * 1/100 *3The amount of insurance premium is submitted on quarterly basis through “Statement of Gratuity and Redundancy Group Insurance premium” issued from the H.O. Insurance premium has to recorded from the time when the employee has been appointed.

DepreciationIn every month depreciation is charged on the depreciated value of fixed asset and after every 6 month (June & December) they are accumulated & submitted to the H.O. through “Schedule of fixed asset and depreciation(Annexure-A)For recording depreciation:

1. For charging depreciation Depreciation a\c Dr Accumulated depreciation a\c Cr2. For transferring Fixed asset to another office; H.O. Current Account dr Related Fixed Asset Accounts cr3.for transferring the accumulated depreciation of that transferred asset; Accumulated depreciation Account dr H.O. Current Account cr4.For receipt of fixed asset from regional office or H.O.; Fixed Asset Accounts dr H.O. Current Account cr5. For Recording the accumulated depreciation of received fixed asset; H.O. Current Account dr Accumulated depreciation Account crFor Sell Of Fixed Asset:

6. For the accumulated depreciation of sold asset Accumulated depreciation Account dr Fixed Asset Accounts cr7. For selling the fixed asset at written down value; cash a/c dr Fixed Asset Accounts crI.e. For that, a debit voucher has to be prepared.8. for selling of asset at a profit - for cash receipt

cash a/c dr (for sale price) H.O. Current Account dr( for profit on sale) Fixed Asset Accounts cr( for written down value)i.e. credit voucher has to be prepared9. . For selling of asset at a loss - for cash receipt

cash a/c dr Fixed Asset Accounts cr

i.e. credit voucher has to be prepared -for loss

H.O. Current Account dr Fixed Asset Accounts cr i.e. Journal voucher has to be prepared

The outstanding liabilities The rule for recording and adjusting outstanding liabilities provisions are ;

1. For provision of June to December Related a\c Dr Outstanding liabilities a\c Cr2. Payment of such expenditure in the next year

Outstanding liabilities a\c Dr Cash a\c Cr i.e. debit voucher has to be prepared

3. If Provision is in excess then for the excess amount

Outstanding liabilities a\c Dr. Related a\c Cr

4. If provision is less then for the deficit amount Related a\c Dr

Cash a\c Cr i.e. debit voucher has to be prepared

BRACSchedule of Outstanding LiabilitiesAs on 31st December 1996Project: RCP Area: Trishal

Sl. No. Payable to Purpose Amount (Tk.) Remarks1. Mr. Abul KAlam Azad (cr) Salary December, 96 40502. Anada Kumar Sarker, R.S.S. Motor Cycle Bill 10003. Power Development Board, Trishal Electric Bill 15004. T & T Board Telephone Bill 5505. Janata Store Office Stationery 250

Total: Taka Seven Thousand Three Hundred and fifty only 7350

----------------------- --------- ----------------P.O. (Accounts) Area Manager

PROVIDEND FUND:In every regional office the rules relating to the PROVIDEND FUND has to be followed:

1. Every member of PROVIDEND FUND has to contribute 105 of his basic salary to PROVIDEND FUND.

2. Double amount is recorded in the name of the respective member in the PROVIDEND FUND. The extra amount is contributed by BRAC.

3. Every member HAS a PROVIDEND FUND number.4. Care must be taken so that same amount doesn’t be fee or twice in the account of the employee.5. Total amount which is cut off from the basic salary of the member should be mentioned in the provident

fund statement and lent to the H.O.For example:

Mr. Rafiq obtain basic salary 3250 tk per month .So the amount cut of for PROVIDEND FUND from this basic salary are MR Rafiq = 3250*10%

=325 amount recorded = (325*2)=650 tk

INSTALLMENT OF THE MOTOR CYCLE LOAN:The employee who has taken MOTOR CYCLE LOAN has to contribute to the BRAC an installment equal to the 1.2* no. of km he has run by the motor-cycle.Recording:To collect installment of MOTOR CYCLE LOAN from the salary the following journal must be passed.Salary & benefit a\c DrH.O. current a\c CrFor giving any MOTOR CYCLE allowance the following journal must be passed.Transportation a\c Dr Cash a\c Cr

PERSONAL USE OF ELECTRICITY:If any employee lives in the BRAC office & use ELECTRIC things for his own purpose t following cut off rate should be applied

Usable goods cut off rate1. Refrigerator 40 tk 2. Fan 40t k 3. Iron 35 tk4. Cassette recorded 10 tk

5. Radio none6. TV 30

7. VCR 40The journal entry for the cut-off amount is:

Salary & benefit a\c Dr Utilities a\c Cr.

ADVANCES:Advances are recorded in three accounts, such as

1. Advances to staff against salary.2. Advances to staff against expenses.3. Advances to third parties.

1. Advances to staff against salary.

This loan is given against salary in advanced. These loans are of three types, such as

a. Loan permitted by advanced committee:1) The journal entry for payment of each loan:

Advance to staff against salary dr.Cash account cr.

i.e. one debit voucher has to be prepared

2) For interest amount:

Advance to staff against salary dr.H.O. current account cr.

i.e. one journal voucher has to be prepared.

3) For collection of installment of advances paid from the salary:

Salary and benefits dr.Advance to staff against salary cr.

b. Special loan: journal entries relating to this are 1) For payment of advances

Advance to staff against salary dr.Cash account cr.

2) When the installment is collected for advanced paid for the salary of the employee

Salary and benefits dr.Advance to staff against salary cr.

3) at last the credit balance of the “advanced to staff against salary” account should be recorded by the following journal entry

Advance to staff against salary dr.H.O. current account cr.

C. Advance from Provident Fund:Journal entries relating to these are:

1. When the advance is paid H.O. current account Dr.

Cash/ Bank a/c Cr.i.e. one debit voucher has to be prepared:

2. For collection of installment of advance paid:Cash a/c Dr.

H.O. current account Cr.3. If installment is cut out from the salary rather than cash collection then;

Salary and benefit a/c Dr.H.O. current account Cr.

2. Advance to Staff against Expenses:The advances paid against the firm’s expenses are recorded in this a/c. Journal entries are:

1. For payment of advance against expenses:Advance to staff against expenses Dr.

Cash a/c Cr.i.e. Through debit voucher this transaction are recorded in the cash book:

2. When the expenses for which advance is paid is incurred:Related a/c Dr.

Advance to staff against expenses Cr.

3. If the actual expense is less than the advance paid, for returning the extra amount:Cash a/c Dr.

Advance to staff against expenses Cr.

4. For adjustment of advance:Related a/c Dr.

Advance to staff against expenses Cr.

5. If advances are less than the actual expense:Advance to staff against expenses Dr.

Cash a/c Cr.i.e. one debit voucher is to be prepared.

Related a/c Dr.Advance to staff against expenses Cr.

3) Advance to third party:journal entries for giving any person other then BRAC`s employee are following:

a) For payment of advancesAdvance to third party dr.

Cash/ Bank a/c cr.

i.e. one debit voucher has to be prepared.b) For adjusting the advance paid

Related a/c dr. Advance to third party cr.

Prepaid expanse:The treatment of prepaid expanse is as like expenses paid in advance. In every year, the balance of

prepaid expanse of June and December is sent to the H.O. through a statement.Accounting process for an NGO:

Management of accounts and the accounting process in an NGO requires following successive steps:

1) All the receipts and expanses should be entered in the cash book and the bank book on day to day basis.

2) For each of the employees in the cash book and the bank book, double entry is completed by posting this into a ledger. In the ledger, separate accounts are opened for each type of expense. An account is also open for grant received. The ledger may also have accounts for fixed assets.

3) At the end of each month or year, accountants prepared a trail balance. The trial balance gives a clear idea about the correctness of the accounts of the concern.

4) The final accounts (balance sheet, income and expenditure account) are prepared from this. 5) NGOs also prepare statement called receipt and payment accounts. This gives a summary of all cash

and bank transactions during the year.

Important Dates to be complied by NGO’s for accounting purposes: Following are the last dates for NGOs to meet their standard accounting obligations and requirements in a financial year.

March 31: End of financial year and closing books of accounts.April 30: Issue TDS certificates an form no. 16 to employees from whose salaries, tax is deducted

at source.May 31: Last Date for filing annual return in form no. 24 for TDS from salaries.

June 30: Last Date for filing annual return for TDS from contractors, and sub-contractors, rent and professional fees under Income Tax Act.

July 31: Last Date for filing return in FC-3 to Home Ministry under FC(R)A.Sept 30: Last Date of filing Income Tax return for smaller NGOsOct 31: Last Date of filing Income Tax return for organizations whose income exceeds taka

50,000 and which are filing their returns in form 10B.PART-3

PREPARETION AND ISSUE OF CHALLAN:Challan is used for selling or transferring goods\commodities in any local office. Every challan has four copies:

1st copy: is given to the local office where the commodities are sold/ transferred.2nd copy: is attached to the debit note given against the challan.3rd copy: Given to the persons who transfers the goods.4th copy: It is remained in the books of challan.

System of preparing challan:

Date: the date at which the commodities are sold \ transferred must be mentioned here.

To: the name of the local area where the commodities are sold \transferred and the type of its activities is mentioned here.Ex. RDP - Brahmanbaria.RDP – Jamalpur

From: the name of the local office from which the commodities are sold \ transferred is mentioned here.

Sl. No: The serial numbers of commodities sold / transferred in the challan are mentioned here.

Name of articles: the name and type of commodities sold \ transferred is recorded here. Ex. Corn seed, family corn, chick mash etc.

Quality: the quality of each commodity according to its units/numbers is recorded here.Unit Price: the unit price of each commodity is mentioned here.Total Price: Unit price* quantityRemarks: here the receiver of the commodity puts his remarks.Grand total: here total amount of taka is written in words.Taka: total amount of taka is written in figure

Receiving Officer: The receiver of the commodity puts his signature here.Name: Full name of receiving officer is recorded here.

Designation: The designation of the receiving officer must be mentioned here.

Date: The date of receiving the commodities is mentioned here.Issuing Officer: The issuing officer must sign here.

Name: Full name of issuing officer is mentioned here.

Designation: The designation of issuing officer is mentioned here.

Issue of Debit Note: Debit/Credit note is issued for various reason in case of recording non-cash transactions. Generally Debit/Credit note are issued when one local officer expense/income and liabilities/ asset are borne by another local office.

The procedure of issuing debit note:

1) Debit/Credit note must be issued immediately when a transaction takes place.2) No. of challan, data and G.V.N.o and date must be mentioned in the respective debit note.3) Description of service or commodity, quantity and price per unit must be mentioned in the debit note and the date and No of challan against which the credit note is issued must be recorded.4) Debit/Credit note must be in accordance with the respective challan.5) If there is any difference between the price mentioned in the debit/credit note and respective challan, the reason there of must be mentioned.

The procedure of preparing debit/credit:Notes: The No of each debit/ credit note is mentioned here. New no. is assigned in first January each year and continues till December that year.Date: The date here debit/credit note is issued is mentioned here.To: the name of the project of the local office where the note is send, the name of the branch is mentioned here.From: the name of the project, branch and code No of the local office which sends the note is recorded here.Description: The name and date of respective challan, quantity, price per unit and a brief description of the commodity sent is mentioned.Taka: The total amount of taka of each challan must be recorded against the respective challan and then must be totaled.Total taka: The total amount mentioned in taka column is recorded here.Signature of accountant: It must include the signature of the accountant of the local office which issues the debit note.Signature of the manager: This must include the signature of the in charge/manager of the local office that issued the debit/credit note.At the time of issuing debit note the words debit or debited must be ticked from the column debit/credit Note No and debit/ credited; or the words credit and credited must be crossed. The reverse procedure is applied in case of issuing credit note.

H.O. current account breach up:Transactions between H.O. local office or transactions between one local office and another local office and performed through current account. On the other hand H.O. records the transactions of each local office by keeping separate current accounts for each local office. For this reason the balance of “H.O. current Account” kept in each local office must consider with the balance of current Account” kept in the H.O. on any specific date. But this is not so for various reasons. To find out the reason of difference between these two balances, a detailed description is taken from each local office whose transactions are recorded in the “H.O. current account”.The appropriate and proper recording of “H.O. current Account Break up” is very important. If the break up is not recorded/filled up properly it becomes tremendously hard to reconcile “Current A/C” and “H.O Current A/C”

The procedures for preparing “H.O Current A/C break up” are as follows:1) The date/month of the break-up must be mentioned.2) The name of the project, location and Account code must be recorded accurately for the break-up of respective local office.

3) At the time of filling the particulars column of the break-up the following things must be covered:

- Type of expenditure.-The name, No and model of the commodity.-Name of the local office and its activity.-The designation of the respective officer/employee.

4) Debit/Credit Note No must be accurately recorded5) The amount of taka must be recorded in the debit/credit note Column.6) The closing balance of respective account must consider with the balance of break-up.

H.O. current account reconciliation statement:

Several transactions takes place between vat office and local \ branch offices. These transactions are performed by local offices through H.O. current account. Again the transactions that takes place between one office and another local office are also perform through current account. That is every cash or non-cash transactions taking place between one local office and another local office or H.O. is recorded in the “H.O. current account” while each local office debit of credit the “H.O. current account”. The H.O. also debits or credit the “current account” kept for each local office. When any local; office transfers cash or commodity to another local office then the issuing local office debits “H.O. current account” the receiving local office credits “H.O. current account” and the H.O. accounting department credits the “current account” of issuing local office and debits the “current account” of receiving branch local office. So the debit and credit balance of current account kept in H.O. accounting department must be equal with the credit and debit balance of “H.O. current account” of the branch offices respectively.

Ex. R.D.P. Sirajganj sends furniture taka 10000 and fridge taka 25000 to R.D.P – Bogra branch office.The above transaction is recorded in the H.O. and branch office as follows:Branch office:Journal entry:

a) R.D.P. Shirajgonj:H.O. current account dr. 35000

Furniture and fixture cr. 10000Equipment cr. 25000

b) R.D.P. Bogra:Furniture and fixture dr. 10000Equipment dr. 25000H.O. current account cr. cr. 35000

Head Office:Current account (Bogra) dr. 35000

Current account (Sirajganj) cr. 35000

So the debit balance of H.O. current account of RDP Sirajganj is equal to credit balance of current account kept in the H.O. Again the credit balance of RDP Bogra “H.O. account” is equal to the debit of current account kept in H.O. However, for various reason “the H.O. current a/c” and the “Current a/c” of respective local offices does not equal

The reasons of differences between this two a/c:

Debit/credit note is not issued at appropriate date Debit/credit note is not recorded Challan is recorded in the journal voucher with issuing debit/credit note

Debit/credit note of the challan is received at a later date by the respective branch office Sometimes there is a differences between the amount of debit/credit note and the challan Wrong amount of taka is recorded in debit/credit note Debit/credit note of one office is send to another office

The above differences are equated through a statement called “H.O. current a/c reconciliation statements”. The different aspects of these reconciliation statement is described below-

1) balance as per H.O. book:it is the balance of current account kept with the H.O.. It is generally debit balance.

2) amount debited by H.O.:Total amount of all the expanses that are recorded under this heading is subtracted from that debit balance. These expanses are recorded by H.O. So the difference arises if the H.O. doesn’t get information regarding these expenses or for any other reasons it fails to record the respective entry. So such transactions must be ascertained by using supporting documents and must be recorded in the respective branch office to which the transaction relates.

Journal entries:Related account Dr.

H.O. current account Cr.

If the expanses are not related to the respective branch office, it must make necessary modification by collecting information from H.O.

3) Amount debited by branch:These expenses are recorded by the regional office as “head-office current A/C” . But the H.O. declares why the account is not recorded. If the account is recorded then it is rectified, unless the H.O. settles the matter.

4) Amount credited by branch :These transactions are recorded by branch office in “H.O. current account”. So if these expenses are once recorded in the reconciliation statement, there is no need to record these again. After checking and examining various papers of local branch office and gathering information from the H.O., necessary modification must be made to these amounts. These expenses are added with balance of number 1.

5) Amount credited by H.O. :These transactions are added with (1) balance obtain in the incomes that are shown under these heading are recorded by the following journal-

H.O. current account dr.Related account cr.

Writing of money receipt:Money receipt is given against the cash amount. In the collection of any goods, fees service charge, our organization will give cash money receipt. But in many cases, this rule is not properly maintained.The particulars of fulfillment of cash receipt are given below:

1) the name of the branch office from which money is receipt2) the name of the respective members and association3) the serial number and date of money receipt4) the date of receiving service charges5) the type, amount and price of commodities sold

6) name, signature and designation of the person receiving cash7) name, signature and designation of giving cash8) total amount of money in words and in figure9) 1st copy of money receipt – is given to the person giving cash

2nd copy of money receipt – attached to the credit voucher3rd copy of money receipt – should be attached with.

PART - 4Responsibility of Accountants:The matters that the accountant of each branch office should consider in keeping accounts are as follows:

1. To prepare the daily ledger by completing the previous day’s cash book.2. Verify the daily ledger with the cash in hand.3. Compare his daily voucher with duplicate bill and cash receipt register.4. Examining whether all receipt has entered in the register.5. Examining whether applicable procedures have been followed in case of receiving and reconciling

cash through token register, token receipt, cash receipt and paralegal course fees and prepare the voucher of respective day.

6. Compar5e the cash ledger’s bank account with bank Pass book and cash book.7. Verifying transfer vouchers of bank deposit and withdraws with deposit slip and cheque book balance

and also verify whether deposit slip and check balance are maintained properly or not. 8. Making correct entries in cash journal according to the voucher.9. Making correct posting from cash journal to ledger daily.10. Make sure that the ledger balances are appropriate at the end of the month.11. Compare the monthly cash deposit with general ledger.12. Compare the other report related to deposit with respective register and ledger.13. To examine whether there is any debit or credit note attached with the journal as a supporting

document.14. To see whether there is necessary notes regarding the non-cash transactions relating to deduction

from salary.15. While preparing journal voucher, the accurate amount of taka in debit or credit note should be

booked in the respective code.16. To make appropriate explanation while making journal entries from “H.O. Account Reconciliation

Statement.17. To make proper entries regarding the cash receipt from sell of commodities daily. 18. To record correct figure in the stock register regarding the purchase and sell of commodities.19. Payments of deductions from salary properly and have the signature of the employees on the revenue

stamp.20. To consider leave allowances in case of payment of salary and examine the supporting documents in

this case.21. To preserve the signature of the actual receiver in case of allotment of loans or other disbursement of

cash.22. To make sure that the activities operated through the revolving fund are carried out properly by

examining the supporting documents.23. To examine the subsidiary ledger or registers in case of some accounts in general ledger

. Example: Savings, current a/c, deposit refundable, advance from third party, outstanding liabilities, loan outstanding etc.

24. Monitoring that the expenses approved by appropriate authority are made properly and examine whether there is any unauthorized expense.

25. Monitor that the recurring expenses are covered the budget and the excess expenses are approved by the appropriate authority.

26. Ensuring the proper recording of funds from H. O. to branch offices.

27. Maintain and monitor necessary registers and ledgers.28. Maintain proper account regarding acquiring and transfer of assets.29. Examining whether the funds received by branches from the H. O. was actually necessary.30. To examine whether any expense not covered by budget is approved by the appropriate authority.31. To make appropriate entries regarding provision for bad debts.32. To monitor whether interest on H. O. fond and H.O. logistics are charged accurately.33. To compare with the records kept for the depreciation of fixed assets with the actual fixed assets.

Books of Accounts and Register: The books of accounts and registers in R.D.P. areas are as follows:

1. Cash Book:Cash book is maintained for recording everyday transactions of the branch offices. Separate cash book is

maintained for every project. For example, each project like RCP, RDP, IGBAGD, SLOP, MELA etc has separate cash books. The format of cash book is given below:

NAME OF THE MONTHCASH BOOK OF Receipt/Dr.

FOR THE MONTH OF Expenses/Cr.

Month & Date

Vr. No

Particulars

Folio

Amount Tk.

Total Tk.

Month & Date

Vr.No

Particular

Folio

Amount Tk.

Total Tk.

2. General Ledger:It is mentioned to get the balance in each account kept within a month or year. The format of

general ledger is as follows:General ledger

ACCOUNT LEDGERACCOUNT OF Date Particulars Folio Debit Tk. Credit Tk. Dr. or Cr. Balance Tk.

3. Subsidiary Ledger:If there are involved several persons or institutions in account maintained in the general ledger, then

subsidiary ledger is kept to know the balance of each individual or institution a/c and relieve the general ledger from recording huge amount of such transactions.For example: To know the amount of savings from the village organizations that are recorded in the ‘Own Contribution’ or ‘Compulsory Savings’, subsidiary ledger of savings according to the village organizations.

Generally the following subsidiary ledgers are maintained in the branch offices:-a. V.O. Loan subsidiary ledgerb. V.O. Savings subsidiary ledger c. Current Account subsidiary ledgerd. Project Account subsidiary ledgere. Advance subsidiary ledger

4. Daily Collection Ledger:The funds obtained daily from various sources are recorded in the daily collection ledger. So the total of

daily collection register and the debit of cash book will be the same. The format of Daily collection ledger is as follows:

DAILY COLLECTION REGISTER

Sl.No

Particulars

Code No.

CollectionsService Charge

Other

Total Receipt

Collector Signature

Time of Rece-ipt

Savings

Instal

Fee

Sales of ProductNo

Rate

Taka

5. Loan Disbursement Register:The amount of loan disbursed daily is entered into the loan disbursement register. The amount of

compulsory savings deducted from the loan is also recorded in the loan disbursement register. The format of this register is as follows:

LOAN DISBURSEMENT REGISTERDate Name of Village

OrganizationCode No

No of Payee

Loan Amount

Saving Deduction

Others

6. Salary Register:The monthly salary to the employees is paid through the salary register. The signature of the employees

must be kept in the salary register. The format of salary register is as follows:

SALARY REGISTERName of Month

Working Day

Basic Salary

House Rent

Conveyance Allow.

Medical Allow.

Other Earnings

Total Earnings

Provident Fund

Car Expenses

Employee Loan

Other Deductions

Total Deductions

Net Payable Amount (TK)

Employee’s Signature

7. Fixed Assets Register:Fixed assets register is maintained for the proper record keeping of fixed assets. The format of fixed

assets register is as follows:

BRACFIXED ASSTES REGISTERDescription:Date of Transactions

Voucher No.

LocationCost

Description Tk.

Assets Identification Number

Written Down Value

Quantity Rate (Tk)

Total (Tk)

8. IOU Register:IOU register is maintained for recording IOU of various business dealings. The format of IOU register

as is as follows:

IOU REGISTERDate Name of

ReceiverDesignation Name of

ProjectAmount (Tk) Purpose

9. Financial Statement & Others:The statement kept monthly, quarterly and yearly in the branch register is shown in the following

register:

Sl. No.

Name of Financial Statements PreparedMonthly Quarterly Half-

YearlyAnnually

1. Receipt & Expenditure Statement √ √ √ √2. Income and Expenditure Statement - - √ √3. Balance Sheet - - √ √4. H.O. Current A/c Break Up √ √ √ √5. Provident Fund Statement √ √ √ √6. Income Tax Statement ( If any) √ √ √ √7. Monthly Schedule of motor Cycle Loan √ √ √ √8. Cash Certificate √ √ √ √9. Statement of Daily Cash and Bank Position √ √ √ √10. Bank Reconciliation Statement (If any) √ √ √ √11. Schedule of Advance to Third Party - - √ √12. Schedule of Fixed Assets and Depreciation (Con.) - - √ √13. Statement of Motor Cycle - - √ √14. Schedule of Outstanding Liabilities - - √ √15. Schedule of Prepaid Expenses - - √ √16. Schedule of Advance Against Salary - - √ √17. Schedule of Advance Against Expenses &

Purchases- - √ √

18. Schedule of outstanding Receivables - - √ √19. Schedule of Security Deposit - - √ √20. Schedule of Stock of Transferable Goods - - √ √21. Schedule of Savings Account - - √ √22. Schedule of Project Account - - √ √23. Schedule of Current Account - - √ √24. Statement of Gratuity & Redundancy and Group - - √ √

Insurance

Accounts Related Files: To preserve different files properly, an order related files is issued named as Pa/163/96 on the 15 th

February, 1996. All the files of an area are to be preserved under this order. The name and number of different account related files are mentioned below:LIST OF ACCOUNT RELATED FILESSl. No.

Name of the File Contents File no.

1. Accounts Statement File -Monthly Receipts and Expenditure Statement A3/1-Income and Expenditure Statement-Balance Sheet

2. Accounts Circular File -All type of circular relating to Accounts and Budget A3/23. Budget File -Approved budget and other documents relating to

budget.A3/3

4. Cash and Bank Statement File

-Cash Register, Cash Certificate, Daily Cash and Bank position & Bank Statement

A3/4

5. H.O. Break-up File -H.O. break-up various projects. A3/56. H.O. Reconciliation File -H.O. reconciliation of various projects A3/67. Debit/credit Note File -Debit/Credit note for all expenses, income &

materialsA3/7

8. IOU File -IOU taken by staff A3/89. Audit Related File -Internal and external audit report, reply, review,

meeting minutes, quarterly report etcA4/1

10. Procurement & Logistics File

-Tender, advertisement, quotations, work order etc i.e. procurement and logistics related documents

P1/1

11. Challan File -All Challan related to material purchase & receipt from another branch

P1/2