S1 - Preamble
S2 - Partnerships
S3 - Governance
S4 - Organizational Integrity
S5 - Finances
S6 - Fundrainsing & Communications to the Public
S7 - Management Practices & Human Ressources
S8 - Acheiving Compliance
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Summary
Finances
S 5.1
Raison d'être
Indicators of Compliance
Ethical Questions to ask
Examples of good ethical practice
Examples of poor practice
  1. The Organization shall conduct its finances in such a way as to ensure appropriate use of funds and accountability to donors. It shall operate according to a budget approved by its governing body and have sound internal controls and documented financial policies and procedures.

Why
Why

This standard introduces the section on financial responsibilities of the Organization and its governing body. The latter is charged with exercising due diligence while avoiding the temptation to “micro-manage” budget lines.

 

“Appropriate use of funds” means that funds for development objectives are used only for such purposes.

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Indicators of Compliance
Indicators of Compliance
  • Annual budgets are approved by the governing body, which also conducts periodic reviews of the finances and year-end projections.
  • The Organization has written procedures, approved by the governing body, which clearly outline levels of authority for disbursements. 
  • There are adequate internal controls over disbursements and revenues.
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Ethical Questions to ask
Ethical Questions to ask
  • Are there ways to improve our level of due diligence?
  • Is the governing body given sufficient information, time, and opportunities to ask questions in order to truly meet its fiduciary responsibilities?
  • Is the procurement system fair and transparent?
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Examples of good ethical practice
Examples of good ethical practice
  • Establishing clear signing limits and levels of authority for approval of payments and for decisions related to disbursements.
  • Setting up mechanisms to provide a second check on disbursements, e.g. having two authorized signatures or a formal allocations motion to approve disbursements.
  • Prohibiting undocumented transactions or loans to Board members or staff.
  • Having a transparent policy or guidelines to ensure separation of development program funds from funds for other organizational activities.
  • Providing updated financial reports to the governing body at each meeting.
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Examples of poor practice
Examples of poor practice
  • Failing to implement limits on the length of time an advance can remain outstanding.
  • Approving the annual budget after the fiscal year begins.