FINANCE MANUAL DRAFTOPEN SOCIETY INITIATIVE FOR EASTERN AFRICA (OSIEA)

Table of ConTenTs

ACRONYMS ................................................................................................. 4

FOREWORD ................................................................................................. 5

Chapter One ............................................................................................... 6The Functions of the OSIEA Finance and Administration Department .....................6

The Department .................................................................................................. 6The Finance and Administration Team ............................................................. 6

Chapter Two ................................................................................................ 7Accounting principles and policies .............................................................................7

Guiding Principles .............................................................................................. 7Policies and procedures .................................................................................... 8

Chapter Three .......................................................................................... 10Understanding and Tracking OSIEA Budget Process .............................................10

Budget Approval ................................................................................................10Budget Categories ............................................................................................10Budget Coding ...................................................................................................12Budget Tracking ................................................................................................15Budget versus Actual analysis (BvA) ...............................................................15Generating BvA report from GMS ...................................................................15Budget Tracker ..................................................................................................17End of Budget Cycle .........................................................................................17

Chapter 4 .................................................................................................. 18Cash management ...................................................................................................18

Cash in hand (petty cash) .................................................................................18Travel and workshop advances ........................................................................19Cash at Bank ..................................................................................................... 20Reimbursements for expenses ........................................................................24Mobile phone transfers/banking .....................................................................24

Chapter 5 .................................................................................................. 26Credit Card Procedures .......................................................................................... 26

Using the OSIEA credit card ........................................................................... 26Reporting credit card expenses ..................................................................... 27Monthly accounting for your credit card ....................................................... 29

Chapter 6 ..................................................................................................30

Assets Management ................................................................................30Checks and balances ....................................................................................... 30

Chapter 8 ..................................................................................................33

Financial Reporting .................................................................................33Annual External Audit ...................................................................................... 33Internal Audit .................................................................................................... 34

GLOSSARY OF TERMS .............................................................................35

Mobile phone transfers/banking .................................................................... 36

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aCRonYMsALL – Authorization Levels List

ASF – Areas of Specific Focus

CBA – Commercial Bank of Africa

FAAP - Financial and Administrative Procedures

GMS – Grant Management System

OSI – Open Society Institute

OSIEA - Open Society Initiative for Eastern Africa

OSF – Open Society Foundations

OSI-NY - Open Society Institute - New York

NF - National Foundation

NP – Network Program

FRP – Financial Reporting Package

IFRS – International Financial Report Standard

PR – Payment Request

ETR – Electronic Transfer Register

ESD – Electronic Signature Device

LPO – Local Purchase Order

NAD – Network Audit Department

ISA – International Standards of Auditing

POB – Payment on Behalf Off

BvA- Budgets verses Actual

USD – United States Dollar

KES – Kenya Shillings

UGX – Uganda Shillings

TZS – Tanzania Shillings

SSP – South Sudan Pound

SP – Sudan Pound

VAT – Value added Tax

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foReWoRD

OSIEA works to build vibrant and tolerant democracies whose governments are accountable to their citizens. In keeping with our organization value of integrity, it is critical that all OSIEA staff maintain high ethical and professional standards in all interactions.

OSIEA treats everyone with respect and as equal partners. We communicate effectively with our colleagues and vendors. Our work is always undertaken in a manner that ensures efficiency, accuracy and accessibility. We do not countenance delays or require unnecessary bureaucracy.

The Finance Manual sets out clear and consistent operating instructions for best practices in financial management. This is critical given that OSIEA financial structures are somewhat complicated with work being undertaken in two separate financial database systems, in multiple countries, and with a number of OSF thematic network programs.

Feedback from staff members on this manual and finance policies is welcomed and should be shared with the finance and administration department to continually improve operations. This manual was drafted as a collective effort by finance, administration and program staff at OSIEA. The manual will be reviewed periodically to incorporate feedback.

Binaifer NowrojeeExecutive Director

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ChapTeR oneThe Functions of the OSIEA Finance and Administration Department

1. The DepartmentThe Open Society of East Africa (OSIEA) head office is based in Nairobi, Kenya. OSIEA operates and manages offices in Uganda, Tanzania and South Sudan. The finance and administration department comprise of finance and administration director (FAD), finance officers (FOs), administrative support staff, and the grants coordinator.

In Uganda, Tanzania and South Sudan, the finance and administration departments comprise of appointed fiscal agents, with the support of the Kenya based administration manager, and grants coordinator.

The OSIEA finance and administration department has three main functions: financial management, administration management, and grants coordination.

2. The Finance and Administration TeamThe OSIEA Finance Department is headed by the Finance and Administration Director (FAD) who works with a team of professionals in the following functional roles:

�� Finance and Administration DirectorThe FAD provides strategic overall leadership of the organization and heads the financial and administrative team.

�� Finance officers The FOs are responsible for financial reports, payments, advance and floats.

�� Fiscal agents Located in Tanzania, Uganda and South Sudan and are contracted to do payments on behalf of OSIEA except where it is stated otherwise (refer chapter 4: Cash Management). Fiscal agents may also be contracted to manage grants as needed.

�� Grants coordinatorThe Grants Coordinator is responsible for all aspects of grant processing, issuing and management of consultant contracts, maintains and manages database of budget modifications.

�� Administration ManagerThe AM manages all aspects of administration which includes but not limited to; day to day running of all OSIEA offices and logistics. The administration manager is assisted by the office managers/program assistants in UG, TZ, and SS to carry out these functions in their respective offices.

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ChapTeR TWo

AccountinG principles AnD policies

In line with OSIEA values, the accounting principles ensure that staff make consistent and appropriate decisions in the best interest of the organization. This ensures OSIEA uses its resources efficiently and effectively to meet its objectives thus building the confidence of other stakeholders.

3. Guiding principlesThe following principles are good financial management norms that OSIEA abides by; -

1. Accountability: staff at OSIEA are accountable to OSIEA management who then have the obligation to provide information to OSF management on how resources have or are being used to ensure learning, evaluation and achievement are on-going.

2. Adherence to Accounting standards: OSIEA adheres to the established set of rules known as the Generally Acceptable Accounting Principles (GAAP) & International Financial Reporting Standards (IFRS), which form basis for the preparation of financial statements and ensure that proper books of accounts are maintained in order to reflect a true and fair position of its performance. In case of conflict between various policies and local statutory or OSF requirements, the IFRS will prevail. The OSF FAAP also guides OSIEA.

3. compliance: All OSIEA offices must be in compliance with local legal and statutory obligations for example registration, taxation laws, employment laws etc.

4. consistency: OSIEA will endeavor to have consistency in the application of financial management practices as set out in this manual. This manual assumes that the same accounting treatment will be applied to like items within each fiscal year/accounting period and from one accounting period to the next in order to have consistent statements. In cases where the situation has drastically changed or the policy needs to be updated the policy should be recommended to the Finance and Administrative Director to be approved by the Director’s office and also reported to the external auditors.

5. stewardship: This is a guiding principle that ensures - OSIEA - develops and optimizes the resources that are entrusted to it to meet its strategic goals. To achieve this, the management has in place a strategic plan with appropriate checks and balances.

6. sustainability: is the ability of OSIEA to operate as a going concern (i.e. a lifespan beyond the financial year). This means that all expenditure incurred by the organization must be matched with incoming funds to ensure continuity and viability. The board of directors, the executive director and his/her management team have in place a resource management strategy that ensures OSIEA meets its financial obligations within the available resources.

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4. policies and proceduresThese are broad accounting and financial operating policies and procedures that guide and direct day-to-day financial management of OSIEA’s resources.

1. Accounting conventions: The OSIEA financial statements are prepared under historical cost convention and in accordance with IFRS and United States GAAP. Any departure where necessary will be disclosed in the audit reports.

2. income recognition: income comprises of contribution from open society Foundations (osF) and any other third party funding. The income is recorded on an accrual basis, when osieA becomes eligible to earning revenue under the terms of the annual donation letter. income in kind is recognized upon receipt of goods. The osF core budget is provided as a conditional support that osieA incurs expenditures or legally binding commitments chargeable during the specified periods. The same applies to funding allocated to osieA by network programs.

3. translation of Foreign currency: osieA presents its financial statements in united states Dollars (usD). The translation of the financial statements from the functional currency, Kenya shillings (Kes), to usD is made by translating assets and liabilities at closing rates of the statement of assets, liabilities and funds while revenues and expenditures are translated at the average rate of the period.

4. All regional currencies such as tanzania shillings (tZs), uganda shillings (uGX) and south sudan pounds (ssp) are translated into Kes using the transactional rate (the rate prevailing at the transaction date). This leads to foreign exchange differences which are recognized as a separate component of the fund balance: exchange transaction differences arising from the translation of the statement of assets, liabilities and fund balance and statement of revenues, expenses and change in fund balance from the functional currency into usD.

5. Fixed Assets and Depreciation: Any single asset acquired at a cost of USD500 (or equivalent) or more is capitalized as a fixed asset and recorded in the fixed asset register. Depreciation will be charged over its useful life at:

Computers ................................................................................ 3 yearsEquipment ............................................................................... 3 yearsRenovations (office partitions) ................................................... 8 yearsFurniture and fittings ................................................................ 8 years

6. taxation: OSIEA is registered in Kenya as a limited company with branch offices in eastern Africa. It relies on donations and as a non-profit making company submits nil (no) returns.

7. retirement benefits: OSIEA and its employees are obliged by law to contribute to the respective national social security fund. The company’s contributions to the scheme are charged to the income statement in the year to which they relate.

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In addition, OSIEA operates a staff retirement scheme for its employees. An insurance company administers the defined contributory scheme. The organization’s contribution to the scheme is charged to the profit and loss account in the year in which they relate.

8. recognition of expenses: OSIEA recognizes expenses when they are incurred, i.e. when goods or services are received. Consultants’ expenses are recognized depending on the terms of the contract. Tax expenses are recognized in the year when the associated transaction occurs. For recognition of the grant expenses, please refer to the grants manual.

The program admin budget is allocated for staff costs, such as air and ground travel, hotel, telephone usage, OSIEA sponsored meetings, etc. The program admin budgets vary somewhat based on country costs, program size, anticipated network program funding additions, and projected travel costs.

Operational costs are any non-grant program activities. These funds are provided to facilitate meetings and conferences, research, consultants, etc. Such costs include hotel, air tickets, ground transport and conference facilities for non-staff partners.

Grants constitute the bulk of OSIEA’s overall budget in line with OSIEA’s commitment to directly support affected communities. These funds are disbursed to organizations and/or individuals (grantees) in US dollars on a rolling basis throughout the year.

OSIEA BUDGET

GENERAL ADMINPROGRAM

PROGRAMACTIVITIES

PROGRAMADMIN

GRANTS

OPERATIONAL

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ChapTeR ThReeunderstanding and tracking osieA Budget process

5. Budget Approval Each year, the budget process starts with respective programs presenting their proposed strategy and budget to the OSIEA Regional Board before submission to OSI New York (NY) for final approval.

The director’s office compiles the overall OSIEA budget, which is then submitted in Kenya Shillings [(Kes.) (as required by OSI NY)] and converted to US Dollars (USS) at an exchange rate determined by OSI NY. Following the approval, at the start of a calendar year, OSIEA receives a donation letter in US$ for the approved annual budget.

In January, each program is informed of its budget for the year by the Director’s Office in a table illustrated below:

2012 osIea programme funds Grants/operational Kes program admin Kes ToTal Us$

Kenya 1,500,000 98,800 1,598,800

Uganda 1,500,000 92,700 1,592,700

Tanzania 1,500,000 80,000 1,580,000

sudan and south sudan 3,000,000 177,900 3,177,900

health 1,300,000 99,250 1,399,250

Regional programme 200,000 82,500 282,500

Director’s Grant fund 500,000 50,000 550,000

Communications 0 194,600 194,600

learning, evaluation and achievement programme (leap) 0 162,000 162,000

ToTal 9,500,000 1,037,750 10,537,750

6. Budget categoriesThe OSIEA’s budget is broadly divided into two sections, namely: general administrative costs (Gen Admin) and program costs.

�� Gen AdminThis covers all overhead and administrative costs for the organization as well as staff salaries for senior management and the finance and administration team.

�� program costsThe program costs are further split into two categories, namely: program activities (i.e. grants, consultancy contracts, large meetings, publications, etc.) and program administration (program admin).

�� Budget Breakdown (Note to designer – insert colour diagram)

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7. Budget codingIn January, the finance office inputs the allocated budgets in the local finance database known as Grants Management System (GMS) allowing respective programs to spend. The budget is broken down into various codes to track spending.

For tracking purposes, there are two levels of budget coding:

�� osF account codesOSF has designated codes for various spending categories. These are selected by relevant staff upon spending. The chart below shows the codes:

Account codes & Description61010: salaries and wages

61020: part-time and interns

61025: Othersalariesandbenefits

61080: staff training / development

62010: airfare

62015: Ground transportation

62030: other travel expenses

62032: Travel meals & entertainment

62035: hotel (room & taxes)

62070: Conference and meetings

63020: audit fees

63030: other professional fees

64050: Officesupplies

64562: Otherofficeservices

65010: Telephone / fax / postage

66020: brochures

67025: Rent

69010: bank charges

69085: Miscellaneous

66080: Miscellaneous publications

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�� Budget Analysis codesBudget analysis codes are broad categories for purposes of monitoring spending trends. These analysis codes distinguish from which OSF entity the funds are originating and to which thematic or geographic area in the Eastern African region they will be used. They are used, as applicable, primarily by the finance office and are not visible to program staff.

EAKF, EAEF,EAUF, EATF,EASF, EANF

Indicatesthird partyfunding

Shows howOSIEA does itswork

EAFR, BZUG,N001 (OSI Budapest codes)

EAFR, BZUG,N001 (OSI Budapest codes)

B74** (Grantsoriginating fromOSI Budapest)

T3 (Country

of bene�t)

T10(Project)

T1(Program)

T4 (Budget

Type)

T2(Fund)

T5 (Function)

�� network program Funding (Bud Mod)Funds can be transferred between any OSF entities but is largely done by network programs to foundations. OSIEA works collaboratively with various OSF network programs that work on thematic issues. The projects can be operational, grant making or engage in advocacy usually in collaboration with foundations. Network program spending in Eastern Africa significantly augments OSIEA’s staffing and activities in the region. Based on their strategy, each OSIEA program negotiates with different network programs engaging in a range of projects. This has financial implications because network program funding is coded and accounted for differently.

A written form from a network program to OSIEA is required in order to charge expenses against the network program budget code and vice versa. This form is known as a budget modification (bud mod). Bud mods should be issued prior to expenses being incurred. For the bud mod to be valid, all relevant parties must countersign it. It is the responsibility of OSIEA staff to utilize the funds as agreed and account back.

The countersigned bud mod is shared with the relevant network and OSIEA program staff, and copied to relevant staff in the OSIEA finance team and the OSI NY budget office. The OSIEA finance staff will then create the

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corresponding network program code in OSIEA’s budget in GMS. All expenses must be coded to the relevant network program code. If this is not done correctly expenses are incurred by OSIEA despite the bud mod.

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Below is a sample of countersigned budget allocation letter.

8. Budget trackingMonitoring your budget is an important collective responsibility to ensure that funds are billed to the right codes and within the specified budget lines. Each program in two ways monitors budgets: By generating and reviewing a Budget verses Actual (BvA) report from GMS on a monthly basis; and by maintaining an OSIEA Budget Tracker form on a weekly basis.

9. Budget versus Actual analysis (BvA)The BvA is a spread sheet that is automatically generated from GMS. It compares the allocated budget to the amount spent to date against each budget line. It is the responsibility of the programme manager to regularly review actual spending compared to budget. Finance and program staff for accuracy should review the BvA quarterly.

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It is important to note that the BvA in GMS does not capture grant spending, which is uploaded into a different data base system.

10. Generating BvA report from GMs

Log into GMS and click on “Reports” on the top menu bar

To generate a report, select the BvA FAST CHECK option

Select the period and ensure the budget year the one that you are interested in

Click on the icon Docs at the top of the screen (illustrated below).This icon emerges after some time, meaning that the report is ready. The document opens as an excel file that can be saved, printed, and generated as often as needed.

11. Budget trackerBudget Tracker is an internal Excel spread sheet that is manually updated by each program on a regular basis. It is used because OSIEA processes its grants through OSI NY, which does not work in GMS. Accordingly the GMS-generated BvA’s do not include grant spending. The Budget Tracker is a comprehensive sheet that captures:

�� Grant spending �� Operational spending�� Program administrative spending�� Active grants�� Grant declines�� Any other relevant program tracking

It is sent quarterly to the director’s office for review. The Budget Tracker is the only document that comprehensively captures program spending in a single location and therefore is a critical budget-tracking tool at OSIEA. Program assistants are responsible for ensuring that the document is up-to-date. The form is sent to each program in January by the director’s office with the allocated budget filled in.

Sample of a program Budget Tracker cover sheet

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Activity ExpType NY Account# Budget US$

Network Prog Co-Funding

Expenditures to date

Budget remaining to date

88000 Grants GOVERNANCE 1,000,000 781,400 218,600 HUMAN RIGHTS 250,000 16,600 233,400 FREEDOM OF EXPRESSION 100,000 - 100,000 OPERATIONAL 150,000 153,716 (3,716)

sub-total 1,500,000 798,000 552,000 Prog Admin

62010 AIRFARE 23,500 3,651 19,849 62015 GROUND TRANSPORTATION 8,000 1,083 6,918 62030 OTHER TRAVEL-EXPENSES 1,000 1,000 62032 TRAVEL MEALS 5,800 5,800 62035 HOTEL (ROOM & TAXES) 12,600 1,058 11,543 62070 CONFERENCES & MEETINGS 15,000 6,437 8,563

65010 TELEPHONE/FAX 6,000 6,000 61080 STAFF TRAINING/DEVELOPMENT 4,000 5,500 (1,500) 69085 MISCELLANEOUS 2,000 2,000

77,900 17,728 60,172.00 Program Budget 1,577,900

[Add annex with full Budget Tracker]

12. end of Budget cycle

At the end of the financial year, all unused monies are returned to OSI NY. Programs are encouraged to ensure that respective budgets are fully utilized.

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ChapTeR 4cash management

A system of checks and balances is required for safeguarding OSIEA’s cash assets as well as maintaining a proper book of accounts. In general, the cash assets include, but are not limited to:

I. Cash in hand (petty cash)II. Travel and workshop advances

III. Cash in bank (bank balances)IV. ReimbursementsV. Fiscal Agents

VI. Mobile phone transfer/banking

13. cash in hand (petty cash) Each of the OSIEA offices maintains petty cash which helps to meet small daily cash transactions. The petty cash float for the offices is as follows:

1. local currency and usD petty cash floats

Kenya Uganda Tanzania S. Sudan

LIMITS Kes. USD Ugx USD Tshs USD SP USD

Petty cash floats 100,000 5,000 1,200,000 500 800,000 500 4,000 200

Maximum Advances/Reimbursements from office float - No PR required

10,000 200 280,000 100 180,000 100 2,000 100

There are different limits for different countries on petty cash floats.

NB: The above limits are subject to be reviewed from time to time without reviewing the whole manual.

points to note:�� For reimbursements staff will exchange the related receipt for cash and

sign the petty cash voucher�� For petty cash advances staff will be required to fill a petty cash request

form�� Petty cash payment requests should be lodged daily to the finance office

in Nairobi and to Program Assistants for Tanzania, South Sudan and Uganda, between 2.00pm and 5.00pm.

�� There is a limit to the amount of cash that may be received from the petty cash float.

The following general rules apply for petty cash transactions: a) The petty cash custodian should maintain an updated petty cash

excel summary sheet (refer to the annexure X) of the expenses paid out of petty cash on daily basis and the account codes being charged for each expense.

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b) Once the expenditure is at 60 percent as per the petty cash excel summary sheet, the custodian makes a request for the replenishment of petty cash. The custodian must submit the reconciled petty cash excel summary sheet and the petty cash vouchers for the amount expended to the finance office. The supervisors to the petty cash custodian, will need to review and approve all petty cash related expenditures after reconciliation. The replenishment will go through the normal cheque or wire transfer procedure.

c) Cash count must be done by the custodian’s supervisor on regular basis or by a fiscal agent. She/he should ensure that the total receipts plus the cash in hand equals the float amount for the period. This will be recorded in the petty cash tally form.

d) Spot checks will be carried out by the Director’s Office or Finance Director.

e) No refunds from workshop and travel advances should be mixed with petty cash.

14. travel and workshop advances Staff should use the company credit card for work related travel expenses. However, when travelling to areas where the credit cards are not used, one should request for a travel advance.

1. procedures for travel AdvancesA request for travel advance is submitted through a GMS Advance PR. Staff must request approval in writing (e-mail or signed PR) from their supervisor outlining the purpose of the travel, a breakdown of the proposed budget, the budget code and any other information required. The Finance Department will cross check the codes and whether the staff member has unaccounted travel advances. Please note that no travel advance will be processed with outstanding travel advances, without approval by the Director’s office.

All travel advance requests must be submitted to the Finance Department at least 5 working days in advance (subject to the payment cycle in para XX below), to ensure ample time for processing the requests.

Travel advance will be deposited into the staff member’s personal bank account. Staff members should be aware of how many days its takes for their banks to clear transfers.

In exceptional circumstances travel and workshop advances may be paid in cash to a limit of $1,000, with the prior approval from the supervisor.points to note:

�� A Payment Request is required to process any travel and workshop advances

�� Ensure that the request is lodged with the Finance Department at the soonest possible time, but at least 5 working days in advance subject to the

�� For payment through mobile money transfer to participants of a meeting (where applicable), the requestor should provide their names, identity card numbers and telephone numbers.

�� Costs of the transactions should be charge to the respective program budget.

2. procedures for Accounting for travel and workshop Advances

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This is done through GMS with an advance report. The following are the steps in GMS to reach the report;

Go to Financials à Advance PR à select and click on the number à Linked AR à Edit project being charged à charge to expense account codes à submit for approval and print AR and attach the receipts then submit to finance office for review and further processing.

The travel and workshop expense report should be submitted within 2 weeks upon return from travel and must provide clear details of the expenses being accounted for. All expenses must be supported with valid receipts. The advances can only be used for work related expenses as stipulated in the travel and expenses guidelines. Personal expenses are not allowable.

3. Approval of expense claimsThe travel and workshop expense report must first be submitted to the supervisor who is responsible for checking and approving the report to ensure the expenses are reasonable and in accordance with OSIEA policy. Where this is not the case, the claim should be returned to the staff member for correction and resubmission. An explanation should be given as to why it has been rejected. Staff cannot approve their own expenses.

If staff use their own resources they should notify their supervisor as soon as possible and submit reimbursement claims. The approval process for such reimbursement is the same as the payment process indicated in para XX below.

4. Missing receiptsThe claimant, together with an explanation, should highlight any missing receipts on the travel and workshop expenses report. The Finance and Admin Director should consider whether the explanation is reasonable given the local environment and context (e.g. difficulty in obtaining receipts and value of claim) before approving the reimbursement.

15. cash at Bank OSIEA maintains a Kenya Shilling (Kes) and US Dollar (USD) bank account at Commercial Bank of Africa (CBA) in Kenya. In other countries OSIEA operates through fiscal agents. OSIEA may open other bank accounts in other currencies and countries as and when required.

1. opening / closing bank account / changing signatories

To open new bank accounts, change signatories and to close any existing bank accounts, a resolution of the OSIEA board of directors is required. The board minutes have to be confirmed by the company secretary and the company seal affixed.

2. Authorised signatories

To ensure checks and balances, there are two signatories for each payment. To approve payments (cheques or transfers) through the system, one signature from each panel is required. For payroll payments, approval has to be done by the Director’s Office accompanied by another signatory.

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3. osieA bank agents

The bank agents to OSIEA accounts will be any person designated by OSIEA in writing by the bank signatories. Bank agents are responsible for delivering and collecting all correspondences or documents to and from the bank. They are also mandated to cash cheques.

4. Bank reconciliations

As a check and balance, bank reconciliations must be performed by the finance office by the 10th of every month and reviewed by the finance director by the 15th.

5. payments for goods and services

OSIEA’s procurement process (refer to the procurement policy) must be followed. It involves the submission and authorisation of a payment requisition form; obtaining quotes where required; identification of suppliers; and any other necessary due diligence, depending on the procurement value.

At the time of payment, finance staff will be presented with the invoice together with all the other relevant documents i.e. signed requisition, evidence of quotes/tender etc., purchase order and goods received note. These should be checked by the Finance Department before payment of the invoice is made.

What is an LPO? How to process an LPO – LPO’s must be approved by the budget holder.

a. Payment processing

A payment request is prepared by the budget holder or the designee as follows:

Go to Financials à new non-grant PR à select the beneficiary à select the beneficiary bank à complete the other sections of the PR by selecting the project to chargeà select expense account codes à submit for approval and print PR and attach the support documents à submit to finance office for review and further processing.

A payment request must be submitted with sufficient supporting documentation, including receipts, invoices, contract letters, ETR receipts and any other relevant documentation, or it will be returned with an explanation for resubmission.

The payment request must be signed by the requester and approved by the supervisor before being authorized by the bank signatories.

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Documents to attach when raising a pr:

Payment pointers Type of Payment What documents to attach?

1 Cheque payments a Payment against an invoice

for goods/items �� Original invoice �� approved local purchase order (LPO)�� signed delivery note

If VAT, attach ETR or ESD

b Payments for a service �� Original invoice�� approved local purchase order (LPO) or a service contract�� signed delivery note

If VAT, attach ETR or ESD.

c Hotel service (conference & meeting)

�� Quotation / proforma invoices�� LPO�� invoices / signed bills�� check in/out sheets

d Consultancy contracts (local & international)

�� Countersigned contract�� Written confirmation of satisfactory completion of

contracted work�� proper deduction of taxes

Taxation* �� Withholding tax for residents; Kenyan – 5%�� Ugandan – 6%; Tanzania – 0%; EAC residents – 15%�� Non-residents; UK - 12.5%, Indian – 17.5; Germany & Canada -

15%; and others 20%�� International consultancies attract reverse VAT @ 16% in addition

to withholding tax. 2 Petty cash payments a Services / goods Approval document, receipt or an invoice

3 Bank transfers a from vendors Same as the relevant documentation indicated above for each category, but

must also include bank details viz: �� Account name�� Bank name�� Account number�� Branch, and �� Swift code for foreign payments.

4 Travel and workshopa travel and workshop

advancePR & approved estimated budget if no outstanding advance

b Reimbursement Expense report, receipts/ invoices and approvalc credit card Itemised receipts/bill / invoice and credit card payment slip. Brief narrative

on the expense on the receipt.

*These figures are subject to legal changes in the region. Please check with the finance office for updates.

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b. Payment cycle

Once a payment request is generated and proper documents attached, they should be submitted to the finance department for scrutiny. The finance department will ensure that the submission conforms to internal policies and statutory requirements, including:

a) Payments are charged to the right expense codeb) Availability of necessary attachments including, but not limited to

ETR receiptsc) Withholding tax is deducted at the applicable rate.d) The availability of funds in the budget line charged.

Payments are to be processed once in a week as follows:

Mondays: Submit PR to

finance dept. by 12pm

Tuedays: PR checked by Finance dept.

for compliance

Friday: Cheques issued and collected

by the beneficiariesWednesday and Thursday:

Cheques/transfer signed by the signatories

Please note that PRs that are submitted after Monday noon will be processed the following week. Emergency or exceptional payments will only be made with the approval of the Finance and Admin Director.

C. Authorization Level List (ALL)

OSIEA has an Authorisation Level List (ALL) that formally indicates which budget holder and designees are authorised to approve expenses from their respective budgets. See Annexure X. ALL will be updated by the finance office as necessary.

16. reimbursements for expenses

1. procedure for requesting reimbursement

A request for reimbursement is done through the submission of a payment request with sufficient supporting documentation, including receipts and any other relevant documentation. Please refer to para XX above on payment processing for further details.

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2. receipts

Receipts may be reimbursed up to 3 months from the date the expense was incurred, within the same financial year. No receipts from a previous financial year will be accepted after 31 January.

Any missing receipts should be highlighted on the PR together with an explanation. The Finance and Admin Director should consider whether the explanation is reasonable given the local environment and context (e.g. difficulty in obtaining receipts and value of claim) before approving the reimbursement.

i. Fiscal Agents (framework with the fiscal agents to be annexed)

For purposes of efficiency and convenience in all its offices, OSIEA relies on external accounting firms known as Fiscal Agents, for certain aspects of its financial transactions. This is done through contractual agreements with the designated accounting firms. They play two roles:

1. Payments and financial reporting for the offices outside Nairobi. Their responsibilities include, but are not limited to the following:

a) Administering approved advances and direct payments b) Opening bank accounts for activities and maintain cashbooks c) Preparing and submitting monthly report by the 5th of the

every month d) Advising on the current legal and statutory requirementse) Managing staff payroll to ensure compliance with domestic

requirements

2. Grants management to support select grantees with their accounting functions. The grant contract is co-signed with the fiscal agent and the funds are received and managed by the fiscal agent on behalf of the grantee. The fiscal agent charges a fixed percentage fee, which is included in the grant amount.

Process of identifying a fiscal agent: The Finance Office identifies a pool of fiscal agents based in the region who are vetted and awarded, with preference given to local firms.

17. Mobile phone transfers/banking Mobile phone banking is a concept of payment through the mobile phones which is a departure from the conventional methods of cash transfer to and from the banks accounts. This mode of payment is becoming very popular in Kenya especially for cash transfers of below KES 200,000. This is not only popular with individuals but also with corporations for official business.

Where appropriate OSIEA will utilize mobile phone banking to make payments. The payment process is the same as other payments with regard to preparation, review and approval. However, in addition to the normal documents, a list of the name, identity number and mobile numbers of beneficiaries should also be attached. It is recommended that the mobile numbers be registered with the service providers since it is cheaper and easy to trace if paid to the wrong number.

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ChapTeR 5

1. credit card procedures

1. using the osieA credit cardWhyOSIEA issues company credit cards to its employees, through the Commercial Bank of Africa (CBA), in order to provide a convenient form of payment for business travel needs.

When The card is to be used solely for OSIEA business expenses, such as accommodation, meals and ground transportation costs as detailed in the OSIEA travel and expenses guidelines. In the event that credit cards are not accepted, staff should apply for a travel advance prior to departure or utilize their own funds and seek reimbursement. OSIEA will reimburse all reasonable business-related costs incurred.

The OSIEA corporate card should not be used to purchase office equipment (including, but not limited to, such items as computer software, computers, notebook computers, printers, personal digital assistants, fax machines or answering machines). This type of purchase is appropriately requested and purchased through the established procurement procedures.

When an employee is no longer with OSIEA, the card will be cancelled. When an employee is not on the OSIEA payroll for a certain period of time, (e.g. a leave of absence without pay) the credit card will be cancelled for the duration of that leave.

HowBefore embarking on travel that will require the use of the OSIEA credit card, staff must notify CBA of their intended travel date(s) and location(s) by email (cardcentre@cba.co.ke) and copy relevant staff. This will ensure that there are sufficient funds and that the bank is aware of the legitimacy of the transactions. In the event of insufficient funds, staff members should contact OSIEA human resources manager or the finance office.

For each expense, staff must ensure that they receive not only the credit card slip but also an itemized receipt showing the details of the cost incurred.

It is the responsibility of the cardholder to ensure safety of the card. Staff should immediately report loss or fraud to the OSIEA human resources department and to CBA.

Abuse of the OSIEA credit card will result in cancellation of this privilege. If a business charge is denied or a personal charge occurs, a detailed explanation, along with a personal check made payable to the organization must be provided to the finance office. This should be attached to the monthly reconciliation of your corporate card statement. If staff is going to be out of town for an extended period of time, one must make arrangements to ensure that the finance office has all the receipts charged to the credit card. Employees are responsible for credit card late charges in the event that they have not filed their expense reports with OSIEA in a timely fashion. If unable to submit the original receipts, scanned copies can be emailed in the interim until the originals are submitted.

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2. reporting credit card expensesAt the end of the month and upon receiving the bank statement from CBA, the cardholder is expected to account in GMS, attach all the original itemized receipts to an advance report (AR) and submit it to the finance office for further processing. If the original receipt is not available, a written explanation of why receipts are missing must be provided. All receipts in a foreign language should be annotated or translated. Staff that regularly travel are expected to make arrangements to ensure that their credit card reporting is submitted in a timely fashion.

To account for credit card expenses in GMS:

Step 1 – to be performed by finance department Credit card expenditure is entered into GMS.

a) To move amount from bank current account (CBA Current Account Kshs.) to VISA card control account (i.e. the total amount as per April Statements Kshs. 1,086,544.35), go to Financials à Accounting à JE pre-set à Transfer between bank and cash account.

Result Journal Entry (JE): Dr. 15199 (Visa control in Kshs.) / Cr. Bank (CBA Kshs. Account)

b) Based on the VISA monthly statements, finance team creates a new non-grant PR for each cardholder with PR type. Go to Financials à Non-grant Payment Request (PR) à Select Beneficiary, complete the PR general details and submit for approval.

Result JE: Dr 17905 by T8 / Cr 15199 (VISA control) + new AR for each cardholder is generated (T8).

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The finance team approves, link the PR to Advance Report (AR). Review for completeness à accept and generate transfer.

Step 2 – To be performed by individual cardholders

Each month, the finance team will provide each cardholder (by email and/or hard copy) with a payment request (PR) number against which expenses will be accounted for in GMS.

The credit card statement supported with attached original receipts must accompany the GMS payment request. Receipts must include the name of the vendor, location, date and amount. Meals and accommodation require further clarification as follows:

�� Meals: The name and affiliations of all participants must be listed.

�� Hotel: The reason for travel should be written on the receipt e.g. International Justice Conference – Dar es Salaam, and must be checked to ensure that no non-reimbursable expenses are included in the hotel bill, e.g. laundry and spa. If meals are included on the hotel bill, the names and affiliations of all participants must be listed.

The finance team will return incorrect or incomplete expense reports with the request for corrective action. Employees may be made to bear the cost of the charge for missing or unauthorized receipts.

3. Monthly accounting for your credit card

Send credit card statement and PR number to credit card holder (via email and/ or hand copy)

finance(26th)

card holder(1st - 5th)

card holder(1st - 5th)

finance/director

(7th - 15th)

Log into GMS to reconcile accounts:Click on the financials’ tab → click paid PRs’ → select the designated PR number → on the left column go to “linked AR” → enter each credit card charge under the relevant project code and accounting category → print out the report as a snapshot → submit PR, credit card statement and attached receipts for approvalto finance team

Attach credit card slips and original itemized receipts to a standard-sized paperin the order that they are listed on the credit card statement

Finance and director’s offices review, approve and expense the itemized costs.Unapproved charges will be reimbursed by card holder

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ChapTeR 6

Assets Management

In this chapter, an asset is any property- tangible (e.g. equipment) or intangible (e.g. debtors)- with monitory value. Tangible assets can be fixed or consumable.

Fixed asset; An item with a working life of over one year and an equivalent value of USD500 and above. For accounting purposes, the value of a fixed asset is spread over its useful life and included in the balance sheet (capitalized).

consumable asset; An item charged to expenditure with a value less than USD500. A consumable asset is written off immediately in the profit and loss account (not capitalized).

4. checks and balancesAppropriate measures should be taken to safeguard all assets in good working condition regardless of how they are categorized. The following section indicates how OSIEA safeguards and accounts for tangible assets. For more details refer to the administration manual.

a) Assets registers

Fixed asset register: A tool for recording all fixed assets owned by OSIEA.

The fixed assets register is regularly updated by the administration department and reconciled to the general ledger on a quarterly basis.

The table below is an illustration of the fixed assets register;

Date of purchase

Description Asset tag no.

Serial number

Location Cost local currency

Cost USD Date of disposal

Sale value local currency

Sale USD

inventory register: Assets with a life span of more than one year and value below USD500 are recorded in inventory register. This register contains minimum information such as type, location and person responsible for the item(s). Below is a sample of an inventory register;

Item Location Responsible person Condition12 chairs board room 1 admin manager Good condition

b) Asset tagging

Each asset in the registers must be indelibly marked by administration with a unique code that also identifies it as OSIEA property.

c) physical VerificationPhysical verification of assets is conducted by the finance office as an internal control procedure annually and reconciled with the assets registers to ensure

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that they are accounted for. In the event of any discrepancy, destruction or loss, appropriate action will be taken in accordance with the administration manual procedures.

2. Accounting

Fixed assets are:�� used over a number of years (referred to as their working life), �� purchased for general programme support rather than for grantees and�� cost USD500 or more

When a fixed item is acquired it is capitalized in the year of purchase. The cost of each asset is then charged annually to expenditure as depreciation (a measure of the wearing out or consumption of the asset) over the estimated working life of the asset. Fully depreciated assets still in use should be retained on the fixed asset register and included in physical verification checks until disposed of.

A fixed asset, together with the estimated working life (depreciation), is coded in GMS as follows:

Asset Asset Code Accumulated Depreciation

Depreciation for the year

Estimated Working life (years)

Remarks

Renovations 19100 19110 68100 8 Major renovations that change the life of the asset

Computers 19200 19210 68200 3 Computers and accessories

furniture 19300 19310 68300 8 Tables,chairs,fillingcabinetsetc

equipment 19400 19410 68400 3 Assetsnotidentifiedinabovecodes

Accounting entries during the year;

Example: ..........................................................................................................Assuming a photocopier is purchased in January of year 1 for USD5000.

The accounting entries will be:

Entry Type Account Account CodeCR bank 15114

DR equipment 19400

DR equipment- Depreciation 68400

CR equipment-accumulated Depreciation 19410

reconciliation with the general ledgerOn a quarterly basis, finance staff should reconcile the fixed asset register to the balances in the general ledger. Any difference should be investigated and corrected immediately.

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Disposal or transferAuthorized asset disposal or transfer takes place in the following ways:

�� Sale�� Donation�� Destruction�� Discard

Authorization is required to write-off fixed assets from the accounting records.

When disposal is made through sales, OSIEA should obtain the best price. Sales to OSIEA staff should be done at the fair market value and the principles of conflict of interest must be observed and avoided. When the asset is for donation to grantees or any other needy organization or persons, consideration must be given to the condition of the asset and the recipient’s ability to use it. The process must be fully documented, including the signing of a certificate of donation by both parties (see appendix). Destruction may be an option where an asset becomes a health hazard or security risk.Staff may recommend the disposal or transfer of an asset to the finance and administration department citing reasons. Following approval from the director’s office, an asset can be disposed of or transferred.

The journal entries after disposal are as follows:

Entry Type Account Account CodeCR asset 19400

DR accumulated depreciation 19410

DR bank 15114

CR Profit/lossondisposal 30000

personal use of assets Assets (e.g. computers) may only be used by staff in accordance with the administration manual.

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ChapTeR 8

Financial Reporting

OSIEA’s financial year parallels the reporting period from January 1st to December 31st.

The months of January to December are considered periods 1-12. In the accounting calendar there are additional periods 13-15. Period 13 caters for unaccounted expenses up to December 31st. Period 14 covers adjustments made during the audit, and period 15 is for post-audit adjustments.

This chapter explains the financial reporting procedures:1. The annual external audit2. Internal audit3. Management reports4. Grantee audits

5. Annual external Audit

OSIEA, as a part of the Open Society Foundations (OSF), is subject to an annual external audit to be carried out in the first quarter of the following financial year, as detailed in the OSF Audit Instructions (“OSF Instructions”, to annex the instructions). Mandatory instructions are issued each year by the OSF Network Audit Department (NAD) in conjunction with the statutory auditors of Foundation Open Society Institute (PWC Zurich). NAD lists the OSF entities required to undertake audit procedures for the given calendar year and sets the specific audit requirements, deliverables, and deadlines.

Key audit deliverables:a) Audit Opinion on the Financial Reporting Package (FRP) based on

International Standards of Auditing (ISA) and on the testing performed after auditing Areas of Specific Focus (ASF) specified by the OSF Instructions. This reporting is not for external circulation outside osF.

b) Highlights Memorandum summarizes the results of the auditor’s testing for ASF.

c) Management Letter addresses the auditor’s observations identified during the audit of the FRP and during the testing of the ASF.

d) Audit Opinion on the Annual Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS) based on ISA. For additional details, please refer to the instructions kit (appendix…)

e) Annual returns based on the external audit reports submitted to Kenya Revenue Authority (KRA) by the auditor before June 30th the following year.

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6. internal Audit OSIEA’s internal audit function is undertaken by the Regional Senior Internal Auditor, OSF-Africa Region who reports to NAD. Within the organisation, OSIEA ensures strong internal controls to;

�� safeguard its assets;�� secure the accuracy and reliability of its financial information;�� promote the economy, efficiency and effectiveness of its operations;�� ensure adherence to the organisation’s values, goals and policies;�� ensure compliance with all relevant legal and administrative

requirements.

1. Management reports

By the 5th day of each month, all cash books should be with the finance office. They are posted in GMS and a consolidated monthly report is generated and sent to the OSF finance office in Budapest by the 10th.

Once the reports are sent, the Budapest office consolidates the report by including payments made by other OSF entities on OSIEA’s behalf (Payment on Behalf - POBs). The consolidated report is sent back to OSIEA within a month for review and confirmation.

2. Grantee monitoringOSIEA may where it deems necessary order an audit of a grantee. It is however, desirable that programme staff undertake regular capacity assessments of grantees to determine institutional needs, in keeping with the thoughtful grant making policy.

Programme staff bears the greatest responsibility for closely monitoring programmatic and financial aspects of the grants in their portfolio in collaboration with the grants coordinator. In the event that there are concerns about a particular grant, the program staff and the grants coordinator may undertake a detailed assessment of the grantee. Where necessary an audit may be commissioned.

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Glossary Of Termsaccrual Expensesincurredinacurrentfinancialyearbutpaidoutinthefollowingfinancialyear

authorization levels list (all)

Indicates which budget holder and designees are authorized to approve expenses from their respectivebudgetsandwillbeupdatedbythefinanceofficerasnecessary.

budget a is a plan expressed in monetary terms that acts as estimate of what the planned activities wouldcost.

budget allocation letter (bud-mod) Seechapter3people(Umar).

budget codes (T0 & T1)

OSFhasafinancialsystemwithcentralbudgetofficesinNewYorkandBudapest.Multiplecoding-referredtoasTcodes-isrequiredforeachfinancialtransaction.SeeAppendixforlistof codes

budget holder Astaffresponsibleandaccountableforaspecificbudgete.g.thedisabilityprogramofficerisresponsible for the budget of the disability rights program, program associate manages the easteastbeyondboundersprogram.

budgets verses actual (bva) Abudgetmonitoringtoolusedtocompareexpensesagainstthebudget.

Director’sOffice Constitutesofexecutivedirectoranddeputydirector.

Country Manager ???

Thematic Manager????

financial and administrative procedures (faap)

AframeworkforOSFprovidingfinancialandadministrativeguidelines.ThepurposeofFAAPistoestablishprudentpoliciesforgoodfinancialmanagement.

Grants Management system (GMs)

AnonlinefinancialmanagementsystemforprocessingOSIEA’son-shoretransactions.ItisalsousedbyotherOSFfoundationsforgrantsprocessing.However,OSIEAdoesnotprocessgrants through GMs

Regional foundation

national foundation (nf) AgrantmakingOSFentitybasedatthenationalorregionallevel.osIea is the osf entity that operates within eastern africa

network programs (np)

entities within the larger osf network that work on thematic issues (largely headquartered inOSINY,BudapestorLondon).Theycanbeoperational,grantmakingorengageinadvocacy,usuallyincollaborationwithnationalandregionalfoundations.OSIEAcollaborateswith a number of network programs through a variety of methods, including co-funding of activities--- see ChapTeR 3

open society foundations (osf)a network of private operating and grant making foundations working in over 70 countries Worldwidethatarelinkedtoeachotherbytheirphilosophy.OSF’sseniormanagementishousedinOSINewYorkandOSF’sfinancialhubisOSIBudapest

payment Request a system generated form used to gain approval for direct or advance payments for certain servicesand/orgoods.

Capitalized Toclassifyacostasalongterminvestmentratherthanchargingittothecurrentfinancialyear.

Depreciation a systematic and rational process of distributing the cost of tangible assets over their useful life.

float Cash set aside for incidental expenses

DefinedContributory pension scheme

It’s a retirement scheme where the employer and employee input predetermined percentages offunds.

local purchase order (lpo) It’s a legally binding document used for procuring goods and services at predetermined price andterms.

fiscal agent AlegalentitymanagingfundsonbehalfofOSIEA.

Mobile phone banking (seechapter4…….)

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Asset….chapter6FixedConsumable

supplies Generable purpose consumable items which commonly have a shorter life span than equipmentandmachinesandwhicharestockedforrecurringusee.g.pens,plates,stationary,flipcharts

Disposed….chap6 SystemthroughwhichOSIEAgetsride-offofunwantedassets.

General ledger ThemainaccountingrecordofOSIEAthatusesdoubleentrybookkeeping.

advance Report a system generated form used to report on the expenses incurred against a travel and workshopadvance.

Generally accepted accounting principles (Gaap)

Isthestandardframeworkofguidelinesforfinancialaccountingandisusedbyaccountantsinthepreparationoffinancialstatements.

Mobile phone transfers/banking Mobile phone banking is a concept of payment through the mobile phones which is a departurefromtheconventionalmethodsofcashtransfertoandfromthebanksaccounts.

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InfoRMaTIon ManaGeMenT anD ReTenTIon

Purpose

It is the OSIEA’s (OSIEA) policy to maintain and manage complete, accurate, and high quality records in accordance with the attached record retention schedule (rrs). The RRS provides a systematic mechanism for classifying and disposing of OSIEA company files in order to: (1) assure legal compliance with state, and local agency requirements; (2) reduce the cost and volume of on- and off-site paper (as well as online) file storage; (3) improve file organization and departmental operating efficiency; and (4) identify and permanently retain records with enduring historical and other research value. rrs in the appendix is only for Finance department. For detailed rrs refer Administration manual.

In finance department, Finance officers in their areas of operation oversees departments (hardcopy and electronic) records complying with the RRS. In general, original records may not be disposed of before the expiration of the given retention period and should not be maintained longer than the disposition term. If, however, a competing operational need (e.g., enduring or historical value) of a record is greater than the minimum required retention, OSIEA warrants its permanent retention.

A record is information created, transmitted, received, and/or main-tained by an organization in the course of doing business and retained as evidence of such activity or function. Information flows through the organization in the form of paper document, photo, audiovisual, and/or electronic records, such as e-mail, word processing documents, spread-sheets, scanned documents, power point presentations, hypertext documents, multimedia documents, graphical images, and digital audio and video recordings.

retention period is the length of time a record must be kept to meet administrative, fiscal, legal, or historical requirements. specifically, the retention period indicates the minimum length of time that the official copy of a record should be retained by OSI before disposal can take place. A retention period is always specified for the official copy and may also be specified in some cases for duplicate copies for records that are widely distributed throughout the organization. Duplicate copies should not be retained longer than the official copy.

Information can be stored on a variety of storage media, such as paper, videotape, optical disk, DVD or CD-ROM. The retention period is not based on the medium of the record, but rather on the content of the record.

While records are still being created in physical formats, it is evident that the vast majority of records today are “born-digital,” and that the majority

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of those are stored, maintained, accessed, and ultimately retained or disposed of as digital information objects. Therefore, OSIEA maintains a hybrid record-keeping system.

in the event that osieA is in litigation, audited, or subpoenaed, the Director’s office may instruct staff to preserve certain records beyond the retention period indicated on the rrs (“legal Hold”).

Electronic records

These are machine-readable, digitally encoded information generated, stored, and/or distributed through the use of software applications, computers, and other electronic information processing devices. Electronic records include:

•� quantitative data of the type contained in databases and spreadsheet files;

•� character-coded text of the type contained in word processing files and e-mail messages;

•� images, such as electronic document images and video images and computer generated graphics;

•� sound, including voice and music recordings.

Electronic records may be stored on a variety of media, such as computer, video and audio recordings on magnetic disks and optical media, such as CD, CD-ROM, DVD, flash (SD) memory cards, and USB flash drives. Staff should use the same record series for electronic records that they would use if, for example, the same content would be circulated in a hard copy form

Databases:

Data generated through and collected into automated information (“database”) systems may also be considered electronic records. A database consists of individual units called “records” that are organized into fields (data elements). Fields include specific pieces of information, a record is a collection of fields, and a database is a collection of records. Data elements contain records that are subject to minimum retention and disposition obligations, as indicated in the RRS.

Web-Based Records:

Information contained on web-based collaborative technologies (e.g., social media such as blogs and wikis), and collaborative applications (e.g., KARL’s Network of Communities) may contain official OSIEA records and may therefore be subject to regulatory requirements. Hence, content created, posted or stored using these technologies must also be managed (and preserved) in accordance with OSIEA’s records management policy and procedures.

E-mail:

E-mail is not a record series, but an electronic communication technol-ogy, a medium of communication, used to transmit information, regard-less of content or purpose. Its retention is based on the content of the

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message rather than on the fact that it is an e-mail message. An e-mail message consists of the following elements:

•� textual message; •� metadata (to, from, subject, time, date, system, etc.); •� and, sometimes, attachments.

As such, each element is part of the record or non-record item, as applicable. In many cases, e-mail messages are the electronic counterparts of paper correspondence, memoranda, or telephone messages. If an e-mail message meets the definition of a record, it must be managed as such, as one would a conventional paper record.

Voicemail:

Voicemails received in an e-mail inbox or phone message system, should be managed in the same manner as any written message.

Disposition of Records

When records reach the end of their useful life cycle and retention period, they should be disposed of. Disposition, for all media formats, should be carried out regularly, at least once a year. Do not defer it until records become an urgent storage problem

Purging Non-Records:

Part of the goal of managing records in the hybrid environment is to separate official records from copies, drafts and other non-records. This distinction is important because non-records are immune from some of the requirements associated with official records (the law generally prefers records in their original format). non-record or transitory documents can generally be disposed of without authorization from the Administration Manager once their immediate usefulness has passed.

Long-Term Retention of Physical Records

In general, bulk materials or files accessed infrequently should be shift-ed to the store to free up space in the offices. Each department may de-termine when to move its files to storage. The Administration Manager is responsible for tracking all items sent to the store and for their final disposition, whether permanent retention or disposal, after all legal and administrative needs have been satisfied. Before preparing material for storage, contact the Administration Manager, who will supply boxes and instruction on packing and inventorying files for storage.

Disposition of Sensitive or Confidential Materials:

Once bulk (and boxed) materials are ready to be disposed of, a storage company takes care of their secure destruction by using powerful shredding technologies as well as a patented process for disposal and destruction of physical (e.g., paper) or machine readable records stored on computers, digital media, and related electronic items.

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recorDs retention scHeDule - FinAnce DepArtMentopen societY institute oF eAstern AFricA

record series - category retention period Vital records

AUDIT (YEAR-END) RECORDS

Audit Records

May include: correspondence, work papers, reports relating to external audit conducted annually on OSIEA; unaudited financial anal yses, interim financial statements, grant accruals.

FY+7 years NO

Fixed Assets

May include: Fixed Assets inventories and reports of Facilities Management (e.g., furniture and fixtures) and Information Systems (e.g., computers, telephone equipments, laptops, and servers).

FY+7 years NO

Tax Records

May include:

Annual Individual Tax Reporting (e.g., 1099, 1042 forms) as filed with IRS;

Tax-related (general) records, including correspondence, working papers, reports.

Staff Identification Number (PIN)

Organization’s Identification Number (PIN

FY+7 years

Permanent

NO

May include annual Nil returns, as filed to KRA by the external auditor

It also includes attached annual audited financial reports.

Permanent NO

Trial Balances and General Ledgers

May include: journal entry; journal import

FY+7 years NO

AUDITED (YEAR-END) FINANCIAL

stAteMents

Audited (Year-End) Financial Statements

May include: Audited financial statements

Permanent NO

Banking Records

Bank statements, cancelled checks and stubs, foreign drafts and wires, reconciliations, wire transfers / confirmations.

FY+7 years NO

BUDGET RECORDS

Annual Budgets and Approved Revisions

Reports and key correspondence related to OSIEA programs and departments as well as other OSI entities.

FY+7 years NO

Management Reports

OSIEA programs’ financial / budget reports including Grantees reports, strategy

Papers and key correspondence produced for senior management.

Permanent YES

DISBURSEMENTS AND RECEIPTS

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May include payment: requests, receipts, other backup material, copies of checks/wire confirmations/bank transaction; report details.

FY+7 years NO

DIRECTIVES

May include Finance’s:

Policies, procedures, and guidelines.

Permanent yes

COMPUTER APPLICATIONS

Computerized Accounting/Budget Systems

GMS, BUDGET TRACKER

Indefinite - As long as the system is in use

YES-BACKED UP BY IT

.