Financial Management, Monitoring and Evaluation System with the Grant Management Software (GMS)

For

The Implementing Entities of Arannayk Foundation Funded Projects

Financial Management, Monitoring and Evaluation System

With the Grant Management Software (GMS)

For the Implementing Entities (IEs) of Arannayk Foundation (AF) Funded Projects

  1. Introduction

The Grant Management Software (GMS) has been developed by the Arannayk Foundation finance department for the Implementing Entities of AF funded projects. The major objectives for use of this financial management and monitoring software are –

  • to record quarterly planned expenditure and annual budgetary information;
  • to record actual expenditure in detail;
  • to manage advances and prepayments;
  • to generate financial reports and fund requests
  • to show financial progress against total and annual financial plans and budget variances;
  • to make financial analysis;
  • to calculate project overhead;
  • to reconcile bank and cash balances;
  1. Software Modules

There are eight modules in the software and they are interlinked. The modules are:

2.1Master Data

The Master Data module requires basic information to be entered for setting up the GMS for recording, reporting and searching financial data that have been described below:

a)GMS Title: A short title preferably representing the project and implementing entity will be written here.

b)Designated Institution: Name and address of the implementing entity will be entered here.

c)Agreement Reference No.: The reference number given at the top of the Grant Agreement will be written here.

d)Project Title: The full title of the project as mentioned in the Grant Agreement will be written here.

e)Bank Reference: The title of the bank account, bank name, branch and address of the bank will be written here at which grant amounts will be disbursed.

f)Overhead: Percentage of overhead as per approved project budget will be entered here.

g)Bank Accounts: Bank account numbers (in case of having more than one bank account) will be entered serially.

h)Time Cost: Designation of the project personnel with number of persons employed will be written here. For example: 1.01-Project Coordinator (1); 1.02-Field Officer (3)

i)Other Direct Costs: There are six line items generally used under “Other Direct Costs” have already been entered. The line items can be changed as per approved budget.

2.2Cash Book

There are 16 columns in the cash book out of which 11 columns are editable and 5 columns are programmed for providing information depending on the inputs given in the fields under editable columns.

Basic Instructions to Work With the Cash Book

  • Click the drop-down button at any column heading(s) to view selected data, ledger, register etc.
  • Do not enter/modify the yellow marked areas (programmed fields);
  • Make new entry and edit / modify / delete the entrieswithin the white areas only (editable fields);
  • Do not insert or delete any row or column;
  • During recording transactions do not think about later or earlier dates. If the “Refresh” button is clicked, all the data will be sorted by dates in ascending order and blank rows for deleted data will be removed;

Editable Fields

a)Date: Actual date of the transaction (e.g. receive, payment or settlements) will be entered here. The format is by default “DD-MM-YY” and can be changed through regional settings of the local machine.

Field Type: Date

b)Voucher: The transaction voucher number will be entered here to find out the physical voucher with supporting documents.

Field Type: General (text, number or alphanumeric)

c)Narration: Detail explanation of the transaction will be entered here. Budget line description should not be entered here since it will appear automatically when line item code is entered.

Field Type: General (text, number or alphanumeric)

d)Line Item: Line item code of the budget/expenditure will be entered here. The list of codes with full description has been provided in Annuxure-1.The general line items commonly used are:

B = Grant Received

C = Prefinance / Adjustment

D = IEs Contribution / Other income

1 = Time Cost (e.g. 1.01 = Project Coordinator; 1.02 = Field Officer)

2 = Other Direct Costs (e.g. 2.01 = Program administration; 2.02 = Field supervision & monitoring)

4 = Overhead

5 = Advances and settlements

Field Type: General (text, number or alphanumeric)

e)From / To: Name of the payee or payer will be entered here. Short name is preferable but long name can also be entered. For example:

Payee: Name of employee, supplier orservice provider

Payer: Name of person/organization from whom money is being received.

Same spelling has to be used for same payee/payer. Otherwise the GMS will find it as different person/organization.

Field Type: General (text, number or alphanumeric)

f)Pmnt. Ref.: Payment reference such as check number, pay order number etc. will be entered here. The field may be kept blank in case of transactions made in cash.

Field Type: General (text, number or alphanumeric)

g)Bnk #: This filed will be kept blank if there is only one bank account. In case of having more than one bank account through which transactions are made then following instructions are to be followed:

  • Enter the account number against each account serial
  • Enter the account serial number in the field “Bnk #” in cash book against each transaction

Field Type: Numeric

h)Track: This field will be used for transactions related to advance, prepayments and their settlements. Track code against each transaction type has been shown below:

Transaction Type / Track Code
Advance paid ( - ) / A
Balance paid (-) / Received (+) / B
Settlement journal / S

Field Type: Text

i)Bank: Amount of transactions made through bank account (by cheque, payorder, bank transfer etc.) will be entered in this field.

Transaction Type / Numeric Sign
Expenditure / Payments / ( - )
Income / Receipts / ( + )

Field Type: Numeric

j)Cash: Amount of transactions made in cash will be entered in this field.

Transaction Type / Numeric Sign
Expenditure / Payments / ( - )
Income / Receipts / ( + )

Field Type: Numeric

k)Bank Date: This field will be used for bank reconciliation. Date of the transaction appeared in the bank statement will be entered here against each amount written in the field under “Bank” in the “Cash Book”.

Programmed Fields

l)Balance: Closing balance of cash at bank and in hand after each transaction will be shown here depending on the amount entered in the fields under “Bank” and/or “Cash”.

m)Line Item Description: Description of theline item code will be shown here depending on the code entered in the field under “Line Item”.

n)Period: Year and month of the transaction made will be shown here depending on the data entered in the field under “Date”. e.g. 2007.12 = December 2007; 2008.01 = January 2008;

o)Quarter: Transaction quarter will be show here depending on the data entered in the field under “Date”. Each financial year (July to June) is divided into four quarters as follows:

Jul-Aug-Sep:Quarter-1 (Q1)

Oct-Nov-Dec:Quarter-2 (Q2)

Jan-Feb-Mar:Quarter-3 (Q3)

Apr-May-Jun:Quarter-4 (Q4)

p)Financial Year: Financial year of the transaction will be shown here depending on the data entered in the field under “Date”. e.g. 2007-08 means “From July 2007 to June 2008”.

2.3PE Book (Planned Expenditure Book)

Quarterly planned expenditure with detailed description will be recorded herethat also describes a brief work plan.

If any expenditure that was planned in a particular quarter but could not be spent in that quarter, such expenditure has to be included again in planned expenditure of the quarter in which it is to be spent.

The recording format looks like below:

2.4FRpt (Financial Report)

The financial report will be generated automatically and updated with recording each transaction in the Cash Book.The FR shows quarterly, yearly and up to date accumulated financial progress with opening and closing balances of fund and its utilization.

It just needs to click the"Arrow Button" up/down at the top right of the Financial Report to changethe quarterly or yearly pictures.5) One can see the report in summary or detailed form depending on clicking the buttons “Summary Report” or “Detailed Report”. The reporting format has been shown below:

Definitionof terms used as the Row Headings of the FR:

A. Opening balance: Cash in hand at the beginning of each quarter. Closing balance shown in the last quarter’s statement will be the opening balance in the following quarter.

B. Grant received from AF: Amounts of grant disbursed by Arannayk Foundation to the grantee during the reporting quarter. This would generally be equal to the amount of request for grant (RFG) made in the last quarter’s financial report (FR) by the grantee and approved by AF.

C. Pre-financing / (adjustment) if any: If the implementing entity requires using their own fund for the AF project due to shortage of project fund they can borrow fund from their mother account to meet up emergency expenditures. Receiving and repayment of loan from/to mother account will be shown under this line item.

D. IEs Contribution / Other Income: Any income generated out of the funds provided by AF such as interest income on the deposits etc.

E. Fund available: Fund available for spending in the reporting quarter will be the addition of opening balance of cash/bank, total payment received from AF, pre-financing/(adjustments) and Other income during the reporting quarter. The fund available equation would be (E = A + B + C + D).

F. Expenditures as per budget line: Expenditure break-down as per budget line item will be shown in following categories:

1)Time Costs: Expenses for staff salary and allowances

2)Other Direct Costs: Expenses for project operation

3)Contingency

4)Overhead (as calculated based on the approved % on G)

G. Sub-total expenditure: Addition of all the expenditures excluding overhead to calculate the amount of overhead equated as (G = 1 + 2 + 3).

H. Total expenditure for the project: Addition of all the expenditures including overhead equated as (H = 1 + 2 + 3 + 4).

5) Advance against expenditure: Any amount advanced to the staff against project expenditure as (+) and settlement thereon as (-). The equation would be Receivable from / (Payable to) the staff = Advance paid – Settlement made in the cash book.

I) Grand total: Addition of total expenditure for the project and unsettled advances / (payables). The equation would be (I = H + 5)

J) Closing balance: Cash at hand/bank at the end of the quarter as shown in the books of accounts of the grantee. To determine the closing balance, equation would be (J = E - I).

K) Planned expenditures: Total planned expenditure for the next quarter. A separate statement showing estimated cost break down as per budgeted line item for the following quarter with a brief description of the amounts estimated is also provided separately.

L) Request for grant disbursement (RFG): Planned expenditure for the next quarter less closing balance at hand/bank. AF will pay the amount shown under this line item to the implementing entity to cover the next quarter’s expenditures subject to necessary approvals of AF and satisfactory progress report. This payment will be recorded in AF books of accounts under the particular grantee’s subsidiary ledger and as Grant Award expense. To determine the RFG, equation would be (L = K - J) that is by deducting the closing balance from the planned expenditure.

Definition of terms used as the Column Headings of the FR:

I) Line Item: Item descriptions as explained above.

II) Total Grant Award: Amount of total grant (project budget) approved by AF for the Implementing Entity by expenditure line item.

III) Actual Status up to the Last Year: Total fund received and expenditure made by line item and closing balance of fund as at the end of the last year.

IV) Annual Budget for Reporting year: Approved budget for the reporting(current) financial year as per Annual Plan of Operation (APO) by expenditure line item.

IX) Actual Status of the Reporting Year: Total fund received and expenditure made by line item during the reporting (current) financial year and closing balance of fund as at the end of the reporting financial year updated and divided into four quarters e.g. Q1, Q2, Q3 and Q4 (IX = V + VI + VII + VIII).

X) Status Up to Date: Total fund received and expenditure made by line item from inception and closing balance of fund up to the reporting(current) quarter/ financial year (X = III + IX).

XI) Budget Balance of Reporting (current) finnacial Year: Total annual budget as per APO less total expenditure made by line item during the reporting(current) financial year (XI = IV – IX).

XII) Budget Balance Up to Date: Total grant approved less total expenditure made by line item up to the reporting (current) quarter/ financial year (XII = II – X).

XIII) Progress in This FinancialYear: Financial progress as % of annual budget of the reporting(current)financial year. Over / under spent is indicated here (XIII = IX / IV * 100).

XIV) Cumulative Progress: Financial progress from inception up to the reporting (current) quarter / financial year as % of total grant (project budget) approved by AF. Over / under spent is indicated here (XIV = X / II * 100).

Overhead calculation table:

On the top right side of the FR, there is an overhead calculation table automatically updated with each input in the cash book. One should be able to know how much overhead is earned by the IE based on the fund spent and how much is withdrawn and how much is yet to be.

2.5PExp (Planned Expenditure Report)

The planned expenditure report (quarterly approved budget) will be generated automatically and updated after recording the approved plan in “PE Book”.The Planned Expenditure (PE) report shows the quarterly plan with a brief description/calculation of the amounts that are planned to be spent in the following quarter. It also shows the progress and over/under spent against annual budget with inclusion of the planned expenditure.

It just needs to click the "Arrow Button" up/down at the top right of the “PExp” to change the quarterly or yearly pictures.One can also see the report in summary or detailed form depending on clicking the buttons “Summary Report” or “Detailed Report”.The reporting format has been shown below:

Definition of terms used as the Column Headings of the PE:

I) Line Item: Item descriptions as explained above.

II) Amount: Estimated amount that is planned to be spent in the following quarter by line item.

III) Description: Itemized explanations and basis of calculation of the amounts estimated for the next quarter that also describes a brief work plan.

IV) Utilized Current Year: Financial progress as the % of total actual plus planned expenditure on the annual budget of the reporting(current) financial year. Over / under spent including the planned expenditure itself against the annual budget is also indicated here.

V) Utilized Upto Date: Financial progress as the % of total actual plus planned expenditure on the total approved grant (project budget) for the project. Over / under spent including the planned expenditure itself against the total project budget is indicated here.

2.6OSM (Outstanding Management - Advance & Prepayments)

The OSM report shows the amounts due from / due to the individuals against advance/prepayment and their settlements.

Clicking on the button “Settlement Journal Check” will show whether all the settlement journals are correctly entered in the cash book with equal debits and credits.

Clicking on the button “Outstanding Balances” will show the amounts due from / due to the individuals that are yet to be settled.

2.7BR (Bank Reconciliation Statement)

Preparation of bank reconciliation statements will be required if the closing balance as per Financial Report does not match with the closing balance as per bank statement. Following items will be recorded in the BR:

  • Amounts that were received in the cash book but not credited in the bank statement yet.
  • Amounts that were shown paid in the cash book but not debited in the bank statement yet.
  • Date of the transactions recorded.

Filtering the “Bank Date” field in the cash book will provide a list of the above mentioned pending items, if any to make it easier.

2.8Comments

Comments on the quarterly records, reports and financial analysiscan be exchanged through this module. Actions taken/to be taken will also be stated. The format looks like the table below:

  1. Financial Management, Monitoring and Evaluation of the Implementing Entities (IE)s

3.1Project Bank Account: After signing of Grant Agreement, the IEs shall open a separate bank account at any scheduled bank of Bangladesh and submit a payment authorization form to AF with required information as presented in Annexure-1. All the project related transactions with AF will be made through this designated bank account. If circumstances deserve and upon request of the IEs AF may approve making transactions through the mother account of the IE.

3.2Inception Report: Within the first quarter, the grant recipient shall submit an inception report to AF, including the updated project document (prepared in consultation with AF Secretariat) and Annual Plan of Operation for the first year.

3.3GMS Installation & Orientation:The AF Secretariat will install the Grant Management Software (GMS) to record, report and analyze the financial information and provide an orientation on the financial management and monitoring procedures to the grant recipients.

3.4Grant Disbursement:The AF Secretariat will disburse grants to the implementing entities (IEs) in quarterly installments or as specified in the grant agreement and on the basis of satisfactory physical and financial progress reports submitted by the IEs. In case of fixed price contract grants will be disbursed as per scheduled installments as mentioned in the grant agreement.

The first installment shall be disbursed by the Secretariat upon receipt and approval of the work plan and planned expenditure for the first quarter of the project.

The subsequent installments shall be released after the Secretariat receives and approves the following documents (in prescribed format as stated in Section-2) submitted by the grant recipients: