Financial Policy

The entity of an organization is separate from that of the individuals who authorized to operate finance and accounts. The top management shall be responsible for ensuring that, all the transactions and activities of the organization is carried out within the framework of its aims and objectives as well as based on the decisions and policies taken/adopted by the Executive or General body. The information needs of an NGO is exceptionally large due to the fact of multiple funding, variety nature of projects, different locations and multiple budget heads to meet each of the projects funded by different agencies. The finance and accounting system of any organization should be in such a way, which could integrate both, activities as well as expenditures in order to be able to effectively analyze, understand, comply and present inter-relations between the various activities undertaken and expenditures incurred for the purpose for which it is meant.

Global Educational Research Association (GLOBERA) believes that timely, free-flowing information in accessible language, form and format is essential for ensuring accountability to our stakeholders, learning, trust and good performance.

To this end, we have decided to publicly publish several internal strategies, plans, reports and staff information, among others.

Our decision to do this is guided by our commitment to transparency, and to sharing information with poor and marginalized people and their organizations. We are also directly accountable to our staff, partners, donors and host governments.

Our Financial Policy describes exactly how and what minimum information GLOBERA will share proactively with the general public and informs exactly what information people can demand GLOBERA make public.

GLOBERA identified a series of good practice principles which can be used as a standard in developing proper financial management systems. These principles will guide behaviour and help in the development of policies and procedures. Using these principles as a checklist will help and identify relative strengths and weaknesses in the systems.

GLOBERA would look upon each of these Seven Principles of Financial Management as goals to work towards.

  1. Custodianship: This refers to the stewardship or safekeeping of the organization’s resources. GLOBERA’s custodians hold the assets and funds in trust and must make sure that they are used in accordance with the constitution and any contractual agreements entered.
  2. Accountability: Those who have invested not just money but also time, effort and trust in the organization, are interested to see that the resources of the organization are used effectively and for the purpose for which they were intended. Accountability is the moral or legal duty, placed on an individual, group or organization, to explain how funds, equipment or authority is given by a third party has been used.
  3. Transparency: Systems must be established whereby all financial information is recorded accurately and presented clearly and can be easily disclosed to those who have a right to request it.
  4. Consistency: The financial systems of GLOBERA should be consistent over the years so that comparisons can be made, trends analysed, and transparency facilitated. This does not mean that the systems may not be refined.
  5. Integrity: The integrity – or honesty and reliability – of GLOBERA and the individuals within it, has to be beyond question for proper financial management. To achieve this there must be no doubts about how funds are being utilized, the records must be a true reflection of reality and proper procedures are set up and followed by all staff.
  6. Non-Deficit Financing: GLOBERA should not set out to achieve its objectives until it is confident that it will have sufficient funding to cover all its activities.
  7. Standard Documentation: The system of maintaining financial records and documentation should observe internationally accepted accounting standards and principles. The system of GLOBERA for maintaining financial records in accounting software.

GLOBERA’s financial management: It involves the following four building blocks:

  • Keeping records
  • Internal control
  • Budgeting
  • Financial reporting

Keeping Records

The foundations of all accounting are basic records that describe our earnings and spending. This means the contracts and letters for money we receive and the receipts and the debits for things that we buy.

These basic records prove that each and every transaction has taken place. They are the cornerstones of being accountable. We must make sure that all these records are carefully filed and kept safe.

We must also make sure that the details of each transaction are written in a ‘cashbook’ – which is a list of how much we spent, on what and when.

We are keeping our basic records in good order and writing down the details of each transaction in a cashbook then we cannot go far wrong.

Internal Control

GLOBERA has proper controls in place so that money cannot be misused. However, some controls that are often used include:

  • Keeping cash in a safe place (in a bank account).
  • All expenditure is properly authorised.
  • Following the planned budget.
  • Financial monitoring (how much money has been spent on what every month).
  • Employed qualified finance staff.
  • Ensuring internal audit (quarterly), statutory audit (annually), FC return to Ministry of Internal Affairs, Govt. Of Turkey and income tax return every year.
  • Preparation of ‘bank reconciliation’ statement every month (which means checking that the amount of cash in the bank is the same as the amount that cashbook tells).

This last control is particularly important. It proves that the amounts recorded in the cashbook and the reports based on it are accurate.

Budgeting

For good financial management, GLOBERA prepares accurate budgets, in order to know how much money we will need to carry out our work. A budget is only useful if it is worked out by carefully forecasting how much we expect to spend on our activities.

Financial Reporting

The fourth building block used by GLOBERA is writing and reviewing financial reports. A financial report summarizes our income and expenditure over a certain period of time. Financial reports are created by adding together similar transactions. Financial reports summarize the information held in the cash book. This is normally done using a system of codes/budget heads, to allocate transactions to different categories. These categories might often be defined by donors/project budget heads.

Receiving Funds

GLOBERA always thinks about the relationship with donors from the donors’ point of view.

Donors usually make grants to organizations that they have confidence in. All our dealings with donors should aim to build up their confidence in our organization, for instance by:

  • Describing plans to use funds – through clear plans and budgets.
  • Demonstrating proper controls in place, including good management.
  • Providing honest and accurate reports of our work.

Reporting to donors

Sending reports late is guaranteed to reduce a donor’s confidence in the organization. But GLOBERA always identifies the donors’ reporting requirements and set up a reporting timetable as per the donor’s format and timing of reports.