Financial Management Training

1
County Financial Management
2
Annual Budget

• Preparation and Submission of the County Annual
  Budget
• The County Education Officer (CEO) in
  consultation with chair of the County Board,
  prepares the Annual Budget. The Budget must be in
  line with the countys priorities. The Budget
  must be based on the amount allocated for the
  county for the fiscal period. The Budget along
  with the Annual Work Plan of the county must be
  submitted to the Ministry of Education Central to
  be included in the overall annual budget of the
  Ministry of Education Central.
• Objectives of the County annual budget
• The County annual budget will serve the following
  purposes
• To provide the detailed plan (quantitative and
  financial) of the activities of the County
  relating to the countys priorities
• To provide the basis of determining the fund
  required for each work, goods, operating cost and
  the cost of contracting the services of clerk of
  works to be procured by the County for a given
  year
• To inform the Ministry of Education and
  subsequently the Ministry of Finance and
  Development Planning of the results the County is
  expected to achieve each fiscal year
• To provide the basis for monitoring performance
  during the year.

3
Chart of Account

• Structure of the Government of Liberia Chart of
  Account
• The Government of Liberia uses a chart of account
  for all budgeting and accounting processes. The
  standard Chart of Account contains 39 digits
  divided into 9 segments
• Segment 1 Agency
• This segment identifies a Ministry/Agency/departme
  nt/section that receives funds from the
  Consolidated Fund/other funds. Under this segment
  the first three (3) digits represent a
  Ministry/Agency e.g. Ministry of Education (301)
  the next two (2) digits represent a department
  e.g. the department of Instruction (17) under the
  Ministry of Education. The last two (2) digits
  represent a section(bureau) under a department
  for example Early Childhood Education (01).
• So the Ministry of Education-Department of
  Instruction will be written as 3011701

1. Agency Ministry/Agency 3 XXX-XX-XX
    Department 2 XXX-XX-XX
    Section 2 XXX-XX-XX
    Total of digits 7 XXX-XX-XX
4
Chart of Account

• Structure of the Government of Liberia Chart of
  Account
• Segment 2 Budget Classification
• This segment is used to capture the budget type
  i.e. recurrent, capital (development) or revenue.
• 3011701/1

2. Budget Classification Budget Classification 1 X
Code Description
1 Recurrent
2 Development/Capital
3 Revenue
4 Public Investments (PSIP)
5 Other
5
Chart of Account

• Structure of the Government of Liberia Chart of
  Account
• Segment 3 Fund Type
• This segment is for identifying whether the funds
  are from the Consolidated fund or any other fund.
• 3011701/1/01

3. Fund Type Fund Type 2 XX
Code Description
01 Consolidated Fund
02 Infrastructure Fund
03 Youth Fund
04 Capacity Fund
05 Reconciliation Fund
6
Chart of Account

• Structure of the Government of Liberia Chart of
  Account
• Segment 4 Funding Source
• The funding source segment is used to capture the
  source of funds e.g. Government of Liberia or
  Multi-lateral/bi-lateral sources.
• 3011701/1/01/001

4. Funding Source Funding Source 3 XXX
Code Range Funding Source Categories
000 Unspecified
001 399 Core funding
400 699 Contingent funding
700 999 Borrowing
7
Chart of Account

• Structure of the Government of Liberia Chart of
  Account
• Segment 5 Projects
• This six (6) digit segment is used to identify
  and capture project related transactions. The
  first four (4) digits represent the Project name
  and the last two (2) digits represent a Project
  component (group of related activities).
• 3011701/1/01/001/020000

5. Project Projects Name 4 XXXX-XX
    Project Components 2 XXXX-XX
    Total No of digits 6 XXXX-XX
0000-00 Unspecified
0200-00 Legislative Support to Education
0201-00 Legislative Support to Health

8
Chart of Account

• Structure of the Government of Liberia Chart of
  Account
• Segment 6 MTEF
• This segment is used to capture Sectors and
  Policy Areas for the Medium Term Expenditure
  Framework (MTEF). The first two (2) digits
  represent the Sector, the next two (2) digits
  represent the Policy Area and last two (2) digits
  are spare.
• 3011701/1/01/001/020000/070300

MTEF Sector 2
  Policy Area 2
  Spare 2
  Total No of digits 6
07 Education
07-01 Student counseling, health and hygiene and extra-curricular activities
07-02 Vocational education services
07-03 Secondary education
9
Chart of Account

• Structure of the Government of Liberia Chart of
  Account
• Segment 7 Function Segment
• The function segment is used for coding
  transactions in line with the Classification of
  Functions of Government (COFOG) as per the
  Government Finance Statistics Manual, 2001. It is
  a detailed classification of the functions, or
  socioeconomic objectives, that general government
  units aim to achieve through various kinds of
  outlays. Examples include General Public Services
  (01), Defense (02), Health (07), Education (09)
  etc. The segment consists of four (4) digits. The
  first two (2) digits represent the Division, the
  next one (1) represents Group and the last one
  (1) represents Class.
• 3011701/1/01/001/020000/070300/0922

Function 1st Level/Division 2 XX-X-X
  Group 1 XX-X-X
  Class 1 XX-X-X
  Total No of digits 4 XX-X-X
09 Education
091 Pre-Primary and Primary Education
0911 Pre-Primary and Primary Education (IS)
092 Secondary Education
0921 Lower-secondary education (IS)
0922 Upper-secondary education (IS)
10
Chart of Account

• Structure of the Government of Liberia Chart of
  Account
• Segment 8 Location Segment
• The location segment is used for capturing
  County/district information at the transaction
  level. The first two (2) digits represent a
  County and the last two (2) digits represent a
  district.
• 3011701/1/01/001/020000/070300/0922/0201

02 BONG COUNTY
01 Gbarnga
02 Fuamah
03 Jorquelleh
04 Kokoyah
05 Kpaai
06 Panta
07 Salala
08 Sanoyeah
09 Suakoko
10 Tukpahblee
11 Yeallequelleh
12 Zota
05 GRAND CAPE MOUNT
01 Commonwealth-C
02 Garwula
03 Golakonneh
04 Porkpa
05 Tewor
04 GRAND BASSA
01 Commonwealth-B
02 District No 1
03 District No 2
04 District No 3
05 District No 4
06 Neekreen
07 Owensgrove
08 St. John River City
11
Chart of Account

• Structure of the Government of Liberia Chart of
  Account
• Segment 9 Economic Classification Segment
• This segment identifies the General Ledger
  accounts for revenues (class 1), expenses (class
  2) assets (class 3), liabilities (class 4) and
  reserves (class 5) for the Government of Liberia.
• 3011701/1/01/001/020000/070300/0922/0201/221104
• However, for Budgeting at the County Level, our
  concentration shall be on the location and
  economic classification segments.

   
3011404 Grand Bassa County  
221401 Fuel and Lubricants - Vehicles 13,000.00
221501 Repair and MaintenanceCivil 96,635.00
221502 Repairs and Maintenance - Veh. 7,250.00
221602 Stationery 3,880.00
221901 Educational Materials and Supp 79,550.00
312203 Furniture and Fixtures 25,710.00
3011404 Grand Bassa County Total 226,025.00
Class 2 Expenses
21 COMPENSATION OF EMPLOYEES
 211 Wages and Salaries
2111 Wages and Salaries in Cash
211101 Basic Salary - Civil Service
22 USE OF GOODS AND SERVICES
221 General Expenses
2211 Travel Expenses
221101 Foreign Travel - Means of travel
221104 Domestic Travel - Means of Travel
12
   
3011404 Grand Bassa County  
221401 Fuel and Lubricants - Vehicles 13,000.00
221501 Repair and MaintenanceCivil 96,635.00
221502 Repairs and Maintenance - Veh. 7,250.00
221602 Stationery 3,880.00
221901 Educational Materials and Supp 79,550.00
312203 Furniture and Fixtures 25,710.00
3011404 Grand Bassa County Total 226,025.00
13
Bank and Cash Management

• Opening County bank accounts and the disbursement
  of fund into the account
• All county accounts shall be resided at the
  Central Bank of Liberia.
• The Ministry of Education works closely with
  Ministry of Finance and Development Planning
  (MFDP) to create a separate bank account for each
  county. Government of Liberia funds will only be
  disbursed to county accounts, not individual
  account.
• Procedures for bank related transactions
• Bank transaction documentation
• A cash book or ledger - to record all
  transactions relating to receipts and payments at
  the bank.
• All bank documentation such as examples of
  signatory cards, bank statements, etc. shall be
  kept in a secure location.
• Collection of money and documents from the bank
  must be restricted to delegated finance personnel
  only.

14
Bank and Cash Management

• Checks and Electronic Funds Transfer (EFT)
• At least two signatories are required at all
  times to sign checks from the countys bank
  account
• Signatory A - the County Board Chair and the
  Financial Comptroller of the Ministry of
  Education
• Signatory B - the County Education Officer and
  the County Finance Officer (FO) For the bank to
  accept and process a check from a County s bank
  account, the check must be signed by the School
  Board Chair (Signatory A) and have a second
  signature from the County Education (signatory
  B). In the absence of School Board Chair
  (signatory A), the Financial Comptroller, MoE
  (signatory A) can sign. In the absence of the
  CEO, the County Finance Person can sign in
  Category B.
• Blank checks should never be pre-signed under any
  circumstances.
• Check books are to be kept secure by a specified
  responsible person with restricted access
  exclusively.
• Cancelled checks are to be retained, crossed or
  marked cancelled and stored securely.
• All checks received on behalf of the County
  should be deposited in the County s bank account
  promptly and not more than 3 working days after
  receipt.

15
Bank and Cash Management

• Bank reconciliation.
• There shall be a monthly reconciliation of County
  accounts undertaken not later than 7 working days
  after the end of the month. The monthly
  reconciliation should be prepared by the County
  Finance Person in consultation with the CEO.
• Procedures for Receipt of Cash/Checks
• Issue receipt for all cash/checks received by the
  County.
• Deposit all cash/checks received in the County s
  account/petty cash vault promptly and within at
  most 3 working days.
• Record the cash/checks received in the cash
  book/ledger.

16
Bank and Cash Management

• Check payment process.
• When all of the documentations have been
  completed from the procurement stages, the next
  action is making the payment. Check payments
  should be used wherever possible when making
  payments from the County s bank account. The
  following steps must be followed when preparing a
  check payment
• Registrar/Cashier completes a payment request
  form
• Payment request form is reviewed by the Board
  Chair or Resident DEO (in the absence of the
  Board Chair) and then approved by the CEO
• A payment voucher is prepared in the name of the
  Payee/Vendor by the Finance Person. The payment
  voucher should include
• the purpose of the payment
• the check number (after the approval of the
  voucher)
• the amount in words figures

17
Bank and Cash Management

• Check payment process.
• The following documentation should be attached to
  the payment voucher
• Copy of the approved payment request (which
  authorized the Works or services to be procure)
• Copies of three quotations from reputable vendors
• Vendor selection evaluation report (to show how
  vendor was selected)
• Copy of Approved Purchase Order (PO) to the
  vendor
• Delivery Note/ Interim payment certificate/Complet
  ion Certificate and Invoice from the vendor for
  Works completed
• The payment voucher should be reviewed and signed
  by the internal auditor to ensure all information
  and supporting documentation is complete and
  appropriate.
• The reviewed payment voucher is taken to the CEO
  for approval.
• When the payment voucher is approved, a check is
  prepared by the Finance Person in the
  payee/vendors business name. No check should be
  prepared until the payment request is approved.
• The prepared check is taken to the Board Chair
  and CEO for signature and/or taken to the
  Comptroller, MoE for signature and approval. When
  the check is signed by the CEO and Board Chair or
  Comptroller, it is issued to the payee/vendor.
• The vendor must issue an official receipt and
  sign for the check before the check is released.
  The check number and the date it was received
  should be written on the receipt and signed by
  the vendor.
• The transaction should be recorded in the cash
  book/ledger immediately after the check is
  released.

18
Bank and Cash Management

• Filing of the documents.
• When the payment process has been completed, the
  Finance Officer must file the documents.
• The payment vouchers with all of the supporting
  documents attached should be stamped PAID and
  filed.
• Transactions should be filed per month for ease
  of reference.
• Petty cash management
• The Finance Officer to the County may maintain a
  Petty Cash account at the County to facilitate
  the payments for minor activities. The Petty Cash
  must be managed according to the guidelines
  below.
• The petty cash ceiling at the County shall be Two
  Hundred Fifty United States Dollar (USD250.00) in
  any one calendar month.
• The Finance Officer shall be responsible for the
  security, balancing and replenishment of this
  Petty Cash.
• The petty cash may be replenished to the ceiling
  amount when the cash balance falls to 25 of this
  ceiling level.
• Wherever possible payments from the County s
  bank account should be made by check. The County
  should minimize funds kept as petty cash to
  reduce risk.

19
Bank and Cash Management

• Procedures for payments from the petty cash
  ceiling
• Petty cash requests per transaction shall not
  exceed USD25.00.
• Payments exceeding this amount shall be done
  through checks following the procedures outlined
  in paragraphs above for check payments.
• All purchases via the petty cash system must be
  eligible under the categories of items that can
  be purchased within Government of Liberia
  financial guidelines.
• Purchases via the petty cash system which are not
  acceptable expenditure under the GoL Financial
  Guidelines and which are not included in the
  County s Annual Work Plan will be charged back
  to the CEO who approved the expenditure.
• The Finance Officer must ensure that the petty
  cash is kept in a secure locked place and must
  validate and reconcile the petty cash amount
  weekly.
• A written report detailing any discrepancies in
  the petty cash must be sent to the CEO within 24
  hours of knowledge of the discrepancy.

20
Bank and Cash Management

• Procedures for payments from the petty cash
  ceiling
• The CEO must investigate the discrepancy and
  forward a written report to the responsible
  officer at the County within 24 hours.
• The report must outline the amount of the
  shortage and the steps being taken to discover
  the reason for the shortage. Petty cash shortages
  will be borne by the Finance Officer by way of
  immediate cash payment.
• The petty cash will be subject to regular and
  surprise independent checks by the Board Chair
  and a reconciliation of the petty cash ceiling
  shall include all monies on hand at the time.
• All attached supporting documents must be stamped
  paid or cancelled, and must be signed and
  dated by the cashier after the transaction has
  been completed.
• Official receipts collected from third parties in
  respect of payment should be attached to the
  payment voucher.

21
Bank and Cash Management

• Replenishment of petty cash.
• Replenishment of petty cash will be done by
  preparing a summary report which gives details of
  petty cash spent (requests, vouchers, receipts
  plus payments) and the amount of petty cash on
  hand.
• When cash on hand has been reduced below 25 of
  the petty cash ceiling level for the County, the
  FO must commence the process to obtain cash from
  the bank.
• The FO shall keep a total of all petty cash
  vouchers included in the reimbursement.
• Procedure for disbursing Petty Cash
• The procedures that must be followed for
  requesting and disbursing petty cash are
• The requesting individual should complete a Petty
  Cash Request form detailing the items required to
  be purchased using petty cash.

22
Bank and Cash Management

• Procedure for disbursing Petty Cash (Contd)
• Each Petty Cash Request should be reviewed by the
  Board Chair, who will sign the request if it is
  reasonable and an eligible use.
• Thereafter the request should be sent to the CEO
  for approval.
• On approval of the Petty Cash Request, the FO
  must prepare a Petty Cash Payment Voucher
• This voucher must be reviewed and signed by the
  Residence DEO, and then approved and signed by
  the CEO before the petty cash is disbursed.
• The petty cash vouchers should be filed serially
  on a monthly basis.
• A receipt must be signed by the person requesting
  the petty cash on receipt of the amount
  requested, and the signed receipt must be kept
  with the petty cash voucher.

23
Fixed Assets Register (FAR)

• Fixed assets are tangible assets that have been
  procured and held for use by the county over a
  period exceeding one accounting year. Such assets
  will include furniture, for example, and any
  materials that were acquired in the previous
  year.
• Maintenance of Fixed Asset Register
• A FAR shall be maintained for recording all fixed
  assets procured for each county.
• The register shall contain detailed information
  concerning each asset
• The assets shall be code-numbered for proper
  identification as to categories and location.
• The FAR shall be designed to accommodate
  additions and disposals of assets.
• A summary of fixed assets shall be extracted from
  the FAR and form part of the countys Financial
  Reports.
• A Fixed Assets Verification exercise shall be
  conducted each year to ascertain the existence,
  custody, location, ownership and conditions of
  the countys fixed assets.

24
Reporting

• Financial reports are tools used to assist in
  managing and monitoring county financial
  activities. The following financial reporting
  procedures shall be followed by the County
• All counties shall submit to the Division of
  Finance, MoE at the end of each quarter Financial
  Reports not later than 7 days after the end of
  each quarter.
• Financial Reports shall include, but not be
  limited to the following
• Cash Book
• Payment Requests
• Payment Vouchers
• Petty Cash Requests
• Petty Cash Payment Vouchers
• Bank Reconciliation Statements
• Fixed Asset Register

25
Internal Financial Control

• An internal financial control process shall be
  implemented by all counties to provide assurance
  of
• Effectiveness and efficiency of operation
• Reliability and integrity of financial and
  operational reporting
• Compliance with applicable laws and guidelines
  and
• Transparency of operations to stakeholders and
  beneficiaries.
• The internal financial controls structure of
  counties will consider the following elements
• Control procedures
• Risk management
• Information and communication
• Monitoring
• The control environment

26
Control Procedures

• Control procedures include application controls
  including
• proper authorization,
• appropriate documentation and independent checks,
  
• segregation of duties,
• physical controls and
• performance reviews.
• Authorization procedures shall ensure that all
  transactions are authorized by people acting
  within their authority as set out by guidelines.
• Documents and records shall have reference to the
  source documents which provide
• evidence of transactions
• the applicable price
• description and terms and conditions of the
  transaction.

27
Control Procedures

• Documents and records will be designed and
  pre-numbered to
• maintain control
• accountability and
• to ensure that they capture all relevant
  information and authorizations.
• The pre-numbering of documents and records will
  facilitate the
• recording of all transactions and
• prevent duplication of transactions.
• Duties within the countys financial management
  system should be segregated so that the work of
  one individual automatically provides a cross
  check on the work of another such that there are
  added benefit of an independent check results.
• Signatories to the county bank account must
  compare the amounts on checks prepared by the
  Finance Officer with amounts on supporting
  documents before signing the checks.
• Supporting documents and payment vouchers must be
  initialed by the signatories as evidence of
  performance of independent checks.

28
Control Procedures

• Segregation of duties
• Essential to the control system is the concept of
  segregation of duties. Every financial
  transaction involves five steps
• Step 1 Request i.e. request to procure/purchase
  from the end user
• Step 2 Approval i.e. authorized personnel
  approve request
• Step 3 Authorization i.e. approval to
  procure/purchase, issuance of purchase order, to
  make payment
• Step 4 Execution i.e. procuring/purchasing,
  receiving and payment
• Step 5 Recording i.e. accounting
• No one person should handle all aspects of a
  single transaction from start to finish.
• For each transaction the responsibility for
  authorization, accounting for and custody of the
  related assets must be separated.
• The custody of assets must be separated from the
  responsibility for accounting for these assets.
  For example The person who maintains the
  inventory records should not also be receiving or
  issuing supplies.

29
Control Procedures

• Segregation of duties (Contd)
• A CEO should not have responsibility for
  recording or entering the accounting entries in
  the ledger, the Finance Officer should take on
  this responsibility.
• The authorization of transactions must be
  separated from the custody of related assets.
• The storeroom staff distributing supplies should
  not also be able to approve the distribution of
  supplies.
• Finance Officer cannot be authorized to approve
  cash disbursements.
• The CEO approving purchase of supplies may not
  also keep the county supplies inventory.
• The authorization of transactions must be
  separated from the accounting for the
  transactions. For example, check signers should
  not also be authorized to record accounting
  transactions.

30
The filing system for financial documentation

• Transactions are the focus of the filing system
  for the countys financial documentation as they
  represent exchanges of assets and services
  between the county and the public. A focus must,
  therefore, be to ensure that transactions are
  initiated and processed in a way that follows the
  procedures set out in GoL financial guidelines
  and that prevents misstatements and promotes
  transparency.
• The County filing system for financial
  documentation shall therefore
• Identify and record all bank and cash
  transactions of the county that occurred in the
  current period
• Ensure that recorded assets and liabilities are
  the result of transactions that produced rights
  to or obligations for those items
• Measure the value of transactions in a way that
  allows their proper monetary value to be
  recorded
• Capture sufficient detail of all transactions to
  allow their proper presentation in the financial
  reports
• Provide appropriate, timely and accurate
  information to the county for efficient
  implementation management and Ensure effective
  communications with the Division of Finance, MoE,
  Supervisory Agencies, suppliers, etc.
• The countys filing system for financial
  documentation must provide the audit trail for
  each transaction.

31
Fraud and corruption

• There may be occasions when internal financial
  control systems fail to prevent losses through
  theft, fraud or other irregularities.
• Fraud is defined as a deliberate, improper
  action, which leads to financial loss to the
  county. This includes
• theft of goods or property
• falsifying expenses claims and
• falsification (or destruction) of records to
  conceal an improper action.
• Fraud does not include
• accounting errors,
• actions condoned by established practice, and
• cases where no loss is incurred.
• Other irregularities include
• unauthorized activities for private gain e.g.,
  borrowing from petty cash.
• It is the responsibility of all persons to report
  any suspicion of fraud.
• Anyone who has a suspicion of fraud should
  communicate that suspicion without delay to the
  school CEO or School Board or, if appropriate, to
  the Division of Finance and/or the Ministry of
  Education.