Preface
This document covers various aspects of accounting and finance management such as statutory, budgeting,
accounting, management and controls and preparing for audit. Therefore, the manual has been documented
as a step towards increasing the efficiency of SOGON’s finance department’s staff members, to have inbuilt
mechanisms such that each staff member at SOGON contribute towards achieving internal control over
various resources (inputs) including man, material, and money and to be a catalyst in ensuring
implementation of the same even at the grassroots level.
Purpose of Manual
This manual has been designed as a ready reference for all staff members at SOGON to serve the following
purposes:
1.Accumulate a summary of accounting and related procedures for reference purposes; to ensure
transparency, accountability and good governance in the management of SOGON activities and
programmes.
2.Ventilate existing Financial Management systems and procedures to the Executive Council, Board of
Trustees and other users to come.
3.Establish accounting policies and procedures that will contribute to the preparation of effective,
efficient, clear and transparent accounts.
4.Standardize and codify the accounting system, rules, procedures and forms to be used for financial
recording and reporting.
5.Describe the systems and procedures that will direct the finance personnel and help them to fulfil
their accountability.
Objectives of the Manual
To maintain a uniform recording, reporting and financial control system for all its activities and
programmes, SOGON requires a well-defined Financial Manual. Therefore the objectives of this Financial
Manual are:
1.To have a uniform accounting and financial system, rules and procedures.
2.To assist management with the necessary financial information required to ensure efficient program
monitoring and implementation.
3.To achieve accurate and timely financial reporting to the Executive Council and Board of Trustees of
SOGON as well as to the donors.
4.To aid understanding and utilization of the accounting systems and processing of accounting
transactions.
5.To develop consistency within the SOGON systems in the application of accounting systems and
procedures under the approved Chart of Accounts.
These objectives can only be achieved by strict compliance with approved policies and procedures and the
maintenance of accounts in a professional manner. The Financial Manual sets forth the accounting policies,
procedures, classification of costs, receipt of funds, budget and budgetary control system, reporting
procedure, financial authority, documentation system, fund management, payment procedure, chart of
accounts, etc. as a guideline to attain the above mentioned objectives.
Accounting Principles and Policies
∙Basis of Accounting – The Financial Statements of SOGON is prepared on a going concern basis
under the historical cost convention using the accrual basis of accounting in accordance with the
International Accounting Standards (IASs) and International Financial Reporting Standards (IFRS)
and in compliance with the applicable laws and regulations of Nigeria. However, sometimes project
financial statements are prepared in accordance with Donor guidelines and requirements.
∙Accounting Period – The Accounting Year of SOGON is from January to December. But the project’s
financial year may vary according to the project agreement and requirements.
∙Recognition of Property – SOGON acquires property in the following three ways:
a)Purchased Property and Equipment – When any property or equipment is purchased by
SOGON, it is recognized as an asset and capitalized if the following two conditions are satisfied:
oThe minimum value for capitalization of an asset shall be 50,000 Naira (Fifty thousand).
The purchase value of any asset less than 50,000 Naira shall be charged as revenue
expenditure.
oThe expected useful life of the asset shall be for at least 3 years.
b)Donated Property and Equipment – Donated or grant-funded property and equipment such as
building, furniture & fixtures or other equipment are recognized as deferred income. A donated
land is to be recognized at fair value. At the close-off of the projects the donated property and
equipment will be adjusted in book value with the organization’s asset.
c)Leasehold Property and Equipment – Property which is held under a lease agreement for a
period is to be classified as a leasehold property. It should be differentiated from the freehold
property. In the case of leasehold property, SOGON will book it as assets at the lease value. The
following formula or equation is used to calculate depreciation for leasehold property.
Annual Depreciation = [(Cost of Assets (i.e. lease value) – Scrap Value)/Estimated Life of the Asset or
Lease period whichever is earlier]
∙Classification of Property and equipment – These are classified as follows:
oLand – Purchased and donated land.
oBooks – Books purchased and used for official purposes only
oBuilding – Purchased building or fully constructed building on purchased land
oFurniture & fixtures – Chair, table, bookshelf, file cabinet, file rack, decoration, partition,
counter, sofa, door, fan, etc.
oEquipment – Computer, printer, UPS, server, scanner, fax machine, photocopier, generator,
machinery, motor, air cooler, inverter, solar panel etc.
oVehicle – Four-wheel car, jeep, pick-up, three-wheel scooter, Motorcycle, Bicycle, etc.
oCapital Work in Progress: Under-construction facilities
∙Depreciation policy
oA full year’s depreciation is charged on property and equipment at any time point in the year
of acquisition.
oNo depreciation is to be charged in the year of disposal or in the year of writing off of any
property and equipment.
oSOGON follows Diminishing Balance Method in calculating depreciation on its Property and
Equipment
∙Rates of depreciation
SOGON deprecates property and equipment at the following rates:
oLand nil
oBooks nil
oBuilding (permanent structure) 10%
oBuilding (temporary structure) 20%
oFurniture & fixture 10%
oEquipment 15%
oLaptop/ desktop 33%
oVehicle 20%
oOther Assets 20%
∙The depreciation method should be reviewed at least annually and, if the pattern of consumption of
benefits has changed, the depreciation method should be changed prospectively as a change in
estimate.
∙Inventory – The inventory of stores is to be valued at cost following the FIFO method (Necessary
adjustments should be made based on the physical count of all inventory held at the year-end.)
∙Income Recognition – SOGON shall raise funds through the following sources
oRegistration fees
oYearly subscription/membership dues
oLevies and fines
oDevelopment fees
oEndowment fund
oDonations
oEarnings from projects and product endorsement
oEarnings from properties and investments
oEarnings from Seminars and Conferences
oOther sources include sales of branded items, gowns etc
The actual amount to be paid shall be as determined from time to time by SOGON Executive Council
with the approval of the Board.
∙Expenditure
oAny payment or obligation for payment for a particular year shall be recognized as an
expenditure in that year. Expenditure accrued or incurred but not paid shall also be
considered as expenditure in the year it was committed.
oAll expenditures shall be accounted for in the respective account
oAny Bank charge or commission paid or deducted by banks for usual banking transactions or
bank overdrafts shall be considered an expense as follows:
Any bank charge, commission, interest or fee paid is debited to the respective
account.
Any bank interest charged against loans received for the acquisition of capital assets,
construction of buildings, facilities and major renovation of the SOGON office and
other project offices is to be considered as capital expenditure.
Interest or fee for the working capital shall be considered as expenditure under the
head “Bank Interest, Charge & Commission.”
∙Common cost recovery – Common cost of SOGON is recovered from different donor-funded
projects based on the project budget for a particular period. If total recovery as per all project
budgets exceeds the total common cost expense and vice versa, then some projects are charged less
or excess so that there is no surplus recovery. The common cost recovery basis should be approved
by the Executive Council from time to time.
∙Foreign currency gain and loss – When a foreign donation to SOGON is deposited to the Bank in
foreign currency the Bank deducts a percentage from such donation through a foreign currency
retention account and the rest donation is deposited in the Designated Account (DA) of SOGON. The
foreign currency kept in the hand of the Bank generates foreign currency gain and loss and such
foreign currency gain and loss is recorded in the respective project accounts.
∙General Fund – This is an unrestricted fund of the organization. The surplus/deficit for the year is
presented as a part of the ‘General Fund’ in the Balance Sheet.
Financial System
The financial system refers to the processes and procedures used by an organization’s management to
exercise financial control and accountability. These measures include recording, verification and timely
reporting of transactions that affect revenues, expenditures, assets and liabilities. SOGON has a well-defined
financial system where at every stage segregation of duties and responsibilities are well defined for each
responsible person. An effective internal control system is also developed within the organization which
helps to achieve financial control of the organization.
∙Accounting Software – At present EXCELBOOK ACCOUNTING PACKAGE is being used by SOGON.
Right now SOGON is using Accounts Module and HR and Payroll module for financial management.
The software has the flexibility of customization.
∙Maintenance of Books of Records – SOGON maintains books of records at the Secretariat office.
oCash and Bank books and Payment vouchers are maintained electronically.
oThe following registers are also maintained manually at the Secretariat
Cheque Register for each Bank Account
Fixed Assets Register
Stock and Store Register
Journal Voucher Register
Security Deposit Receipt Register
Purchase Order/ Work Order Register
Bills receivable Register
Bills payable Register
Grant receipts Register
Gratuity fund and Earn Leave Register
∙Recording system – The whole recording system comprises two stages. The first preliminary
recording refers to voucher processing and permanent recording, that is making permanent entry
posting in the books of records. A voucher is a basic record of financial transactions. SOGON
maintains Receipt (credit) vouchers, Payment (debit) vouchers and Journal vouchers. Receipts and
Payments vouchers are prepared project-wise and each voucher is numbered project- and date-wise
chronologically in an accounting year. Separate serial is maintained for credit, debit and journal
vouchers. All types of Journal vouchers are prepared by the Secretariat office. All vouchers are
checked and approved by Treasurer/Finance Director according to the financial authority limit.
∙Cash Book Recording – Cashbook is maintained in the accounting software at the SOGON
secretariat office. All credit vouchers are written on the left side and all debit vouchers in the right
side of the cashbook. Contra entries are recorded for cash deposits and withdrawals from the bank.
Cashbook recording should be clear and necessary information such as reference of deposit slip,
cheque number with date, name of the person involved etc. should be inserted in the cash book. No
overwriting will be acceptable in recording the cashbook.
∙Reporting system – One of the main objectives of a financial system is to facilitate rendering
management information in the form of financial statements and various financial reports. An
organization should have an effective reporting system that helps management to plan and control
the operations of the Organization and also to make routine decisions. The following points are to be
considered while issuing an effective and efficient report.
oThe title of the report should be self-explanatory.
oThe report should contain the period to which it relates, the date of preparation and the
names of the persons responsible for preparation.
oThe report must contain sufficient information and must be clear and concise to be easily
understood by all levels of management in the organization.
oWhere comparisons are made it must be accurate and all figures must be on a comparable
basis.
oThe report must address the appropriate recipients
oSubmission of the report must be within the stipulated time
Under the supervision of the Finance Director/Treasurer, the Account Officer produce periodic
statutory reports for Donors, the Executive Council, the Board of Trustees, and the General Congress.
∙Statutory reports
a)Annual Financial Statements – The accounting software used by SOGON generates a trial
balance. The Annual Financial Statements are prepared manually from the trial balance
through Microsoft Excel. The Annual Financial Statements are prepared on an accrual basis
in accordance with the International Financial Reporting Standards (IFRS) and International
Accounting Standards (IAS) and it consists of:
a.Statement of Financial Position
b.Statement of Comprehensive Income
c.Statement of Cash Flows
d.Statement of Changes in Equity
e.Statement of Receipts & Payments, and
f.Notes to the Financial Statements
The Annual Financial Statements are signed by the Treasurer/Finance Director and
submitted to Executive Council for approval for statutory audit. The Annual Report including
the Audited Financial Statements, both signed by the Chairman and Finance Director, is
submitted to the General Congress in the Annual General Meeting (AGM).
b)Budget Variance Report – For foreign donor-funded projects, SOGON prepares project-wise
financial statements and budget variance reports at the end of each period and submits them
to the donor as stipulated in the grant agreement and guidelines.
c)Donor-wise Project Report – SOGON also has to submit a project report to Donors as per
their requirements. The reporting format of the Donors’ report is guided and provided by the
Donors.
∙Management report
To keep the records up to date and the management (Executive Council) timely informed on all
organizational aspects, the Finance Director must ensure the preparation of the following
management information reports:
oProject fund control statement
oProject-wise monthly financial statement
oTransactions for the quarter and cumulative since the beginning of the project along with
budget variance.
oQuarterly analysis of income (other income-generating activities).
oQuarterly payroll statement (in Software)
oAnalysis of advance payments for the quarter and cumulative since the beginning of the
project/year.
oProjected Cash Flow Statement along with source and application of funds
∙Project fund control statement – After completion of voucher posting, print out of monthly project-
wise trial balances are taken. If the trial balances are okay, then a project fund control statement is
prepared. Debit and credit balances of project fund control of each project are taken and the
balancing amount is figured out. The balancing figure (debit balance) of the fund control statement
should be equal to the month-end closing cash and bank balance of SOGON. Through this statement,
anybody can understand the fund position of each project at the end of every month as well as the
number of running projects.
∙Project-wise Monthly Financial Statement – The Accounts Officer is responsible for the
preparation of project-wise monthly Financial Statements. All vouchers are recorded in the
Accounting Software project-wise. Printout of the project-wise trial balance is taken from the
Software and the trial balance project-wise report is prepared manually (in Excel).
Cash and Bank Control
The Accounts Officer is responsible for cash dealing and maintaining the cashbook. Balancing of the
cashbook should be done at the close of daily transactions. No deficit balance shall exist after balancing the
cashbook. The Accounts Officer will check the correctness of the cashbook recording, check cash-in hand
balance physically and verify the correctness of the bank reconciliation statement.
∙Cash and cheques received – The person who handles cash and cheques shall not conduct the
following duties and functions:
oPreparation of Cash Memos, Bill and Credit Notes to third parties
oDispatching Cash Memo, Bill and Credit Notes to third parties and follow-up with Debtors
oApproving discounts, allowances or bad debt write-offs.
oReconciliation of bank statements
oApproving cash receipts and payments vouchers
oPosting to the general ledger
On receipt of cash and cheques acknowledgement receipt will be prepared of which the original will
be given to the payer, 1st copy will be attached to the voucher and the 2nd retained in the receipt
book. Daily receipts of cash and cheques will be entered into the cash book based on Receipt
Vouchers (RV). Receipt vouchers will be prepared based on the receipt issued. Only the person
receiving cash/ cheque may sign the receipts, but on the following day, a responsible Accounts
Officer will compare the duplicate of each issued receipt with the entry in the cash or bank book and
render his initial. The same official will also initial each bank pay-in slip to confirm the deposits of
cash and cheques received on a preceding day.
Direct credits by the bank (for remittances, interest etc.) will be entered in the bank book using RV
prepared by the Accounts Officer. This RV will be prepared after the relevant bank advice is received.
Posting is to be done directly based on each RV where transactions are few or through a summary
sheet where transactions are numerous.
∙Cash and cheque payments
oThe cash transaction (other than internal payment) limit is 50,000 Naira (Fifty Thousand)
and payment over this amount should be made through crossed cheque. Cash payment
vouchers will be prepared only after authorization for the same duly accompanied by
supporting documents. On paying out, the acknowledgement of the payee is to be attached to
the payment voucher.
oCheque payment vouchers will be prepared likewise, including writing up the cheque itself,
only after authorization for the same duly accompanied by supporting documents. These will
be presented to the designated signatories of the cheque for their signatures. On paying out
the cheque, acknowledgement of the payee will be obtained and attached to the voucher. All
cheques handed over personally, except in authorized cases, should be crossed “A/c. payee
only.”
After the cash/ bank payment vouchers are prepared, they are to be recorded in the Cash and bank
books maintained in the software system. At the close of each day, the Accounts Officer compares the
payment vouchers with the entry in the cash or bank book and renders his/her initials to that effect.
Direct debits by the bank (bank interest, charges, etc.) will be dealt with similarly as in the case of
direct credits.
All bank pay-in-slips are periodically checked with the bank book.
∙Cash Withdrawal from the bank – A cash withdrawal requisition format is required to withdraw
money from the bank. The Accounts Officer is responsible for cash handling and preparing cash
withdrawal requisitions. The amount of required money is assumed based on Advance/temporary
advance (IOU/ T-Advance) submitted and pending bills. As per requisition, s/he prepares a cheque
and submits it to the Finance Director and the Chairman for their approval and signatures.
∙Banking and Cheque Signatory – All SOGON funds shall be deposited in Council’s approved
bank(s) in Nigeria. The signatories to SOGON’s main bank account shall include the Chairman,
Treasurer and Secretary. Joint signatures are required to withdraw money from the bank. The
Chairman’s signature is mandatory.
∙Petty cash – A Petty cash book (Imprest System) is maintained in the Accounts Department. The
Petty cash book is maintained for daily administrative cash transactions such as general services and
fuel and maintenance of vehicles. The petty cash limit is 200,000 Naira (Two Hundred Thousand)
monthly per project. The Account Officer makes payments from the petty cash and makes entries in
the daily petty cash transaction sheet according to the respective project. Any unused cash amount is
kept in a vault that is always locked by the Accounts Officer at the Secretariat and then retires at the
end of each month.
∙Safety of Cash and Cheque Book – The Accounts Officer is responsible for cash handling and
deposit/withdrawal of cash from the bank and the safety of the cash and chequebook. These should
be always under lock and key in the designated vault within the secretariat office. The key should
remain with the Accounts Officer and Finance Director only. The cash vault should be established in a
restricted area. The general office staff are restricted from entering this area of the office.
∙Bank Reconciliation Statement – This statement is prepared at regular intervals (preferably
monthly) to reconcile the difference arising between the balance in the bank book and that
appearing in the bank statement at a particular date. This normally represents cheques issued but
not presented to the bank for encashment by the payee and lodgments not yet credited by the bank.
Cheques not presented to the bank for encashment within six months from the date of an issue
becomes time-barred by operation of law and these will have to be taken back into the books.
Lodgments not credited by the bank within a reasonable time will have to be enquired to note
whether any cheque has been dishonoured. In such cases, necessary adjustments shall be made
through a voucher reverting the original entries.
Differences in the two balances may also occur due to debits or credits made by the bank on various
accounts, such as interest, other charges, remittances, etc. and these have to be accordingly dealt
with using vouchers for proper reflection in the books of account.
The designated Accounts Officer prepares bank reconciliation and reports to the Finance Director.
Property and Equipment Control
∙Purchase of property and equipment – Only the Chairman should sanction the purchase of
property and equipment. The actual cost is checked against sanctioned budgeted costs. Bill for the
purchase of property and equipment is to be supported by the original copy of the following
documents:
oRecommendation of the Secretary/Program Director.
oRequisition of the Project manager.
oQuotation, comparative statement.
oWarranty from the supplier.
oOriginal bill/ Challan/ Money receipts
oAny other paper as the situation demands.
∙Recording of property and equipment – The ownership of all property and equipment purchased by
SOGON is to be recorded in the name of SOGON. A fixed asset register is to be maintained
incorporating the classification of assets, code number, date of purchase, value, location code,
depreciation rate, transfer history, signature of the transferor and transferee, etc.
∙Physical verification of property and equipment – All the purchased property and equipment
except land and building are received at the secretariat. The basis for declaring a property and
equipment unserviceable is based on physical verification. Physical verification of property and
equipment is to be done at the end of each year. But if it requires physical verification of property
and equipment it can be done on a need basis.
∙Write off /Disposal of Fixed Assets – A report is prepared for the items of property and equipment,
which are unusable and uneconomical for repair. Later these items are to be marked as
“unserviceable” and disposable upon approval of the Chairman. A sub-committee comprising the
Vice-Chairman, Secretary, and Treasurer/Finance Director will inspect and assign the salvage value
for the items to be disposed of. If any property and equipment are found serviceable, in this situation
entire amount of asset will not be charged out as depreciation. A minimum balance of one thousand
Naira will be kept as the existence of that asset. When the property or equipment is found
unserviceable, then such an asset will be written off from the property and equipment register after
taking proper approval from the Executive Council. Then the disposal/ sales procedure will be
followed. However, Chairman will have the approval authority for writing off an asset if any loss or
damage occurred during the handling of the asset up to the book value of twenty thousand Naira
(20,000).
∙Sale/Disposal procedure of property and equipment – This is to be made only after specific
authorization and routine procedure should provide for prompt reporting of such sales/disposal to
the Finance Director. Property and equipment will be sold to the highest bidder after advertisement
in the newspaper/ internal circulation and collecting quotations from bidders. In case of any written-
off assets have no sales value, then they may be disposed of by following the proper disposal
procedure.
Fund Management
∙Fund Requisition to Donors – Fund requisitions are submitted to donors as per the project
agreement and budget. Monthly, quarterly, half-yearly and yearly fund requisitions are submitted. In
the requisition project name, project identification number, period of requisition, installment
number, heads of expenses, required amount, previous balance, name of bank with account number,
etc. are mentioned. In most cases, fund requisitions are submitted along with the last period’s
(quarterly, half-yearly or yearly) financial statement. Some donors have a specific format for fund
requisition. Under the proper guidance of the Finance Director, the designated Accounts Officer is
responsible for individual project fund requisition. Finally, with the signature of the Programme
Director, requisitions are submitted to the donor.
∙Acknowledgement of Grant Receipt – This is to be provided to the donor after crediting grants to
the SOGON bank account. Some donors have specific grant acknowledgement formats. The Accounts
Officer that is responsible for individual project accounts, prepare acknowledgement of fund receipt
under the proper supervision of the Finance Director. The Programme Director signs the
acknowledgement on behalf of the organization, as s/he is the legal holder of the project.
∙Investment of Fund – The Chairman will decide the investment of the surplus fund of SOGON. The
Finance Director shall put the proposal of investment showing different alternatives together with
the rate of return under each alternative to the Chairman. Similarly, to encash any invested
instruments proposal is to be put up to the Chairman. In case of urgency, action may be taken by
Finance Director after discussion with the Chairman.
Liabilities
∙Contributory Pension and National Housing Fund – SOGON makes provision for its liability on
account of contribution to employee’s pension and housing funds every month at the time of
disbursement of monthly salary. After the disbursement of salaries, employees’ contributions are
deducted from their salaries and SOGONs contributions to the Funds are transferred to the
nominated Employees’ Fund Accounts. The amount so deducted and SOGON’s contributions not
transferred to the Employees’ Provident Fund Account are reflected in the Financial Statement as
liabilities of SOGON.
∙Provision for earned leave – SOGON makes provision for earned leave as per the Service Rules.
∙Inter-project Loan – Sometimes it may be necessary to borrow from one project fund for another
project due to the unavailability of funds or late release of funds. In this situation, a temporary loan
arrangement from one project to another project is done without charging any interest subject to the
approval of the Executive Council and consent of the donor where applicable.
∙Liabilities for expenses – Necessary provision is maintained for the expenses payable to different
parties and recorded as current liabilities. Unpaid liabilities are monitored regularly and paid and
adjusted accordingly.
Payroll Management and Other Employee Payments
∙Preliminary – Payroll management is a system of procedures and records through which it will be
possible to determine how much each staff is to be paid, how much is to be deducted from the
earnings for payroll taxes, advances, etc. to prepare pay sheets and make the payments promptly to
the employees. Proper records of all personnel and timely reporting of staff appointments,
attendance, leave, increments, terminations, resignations and retirement etc. should be made
available to the payroll section in time. Expedient and accurate preparation of salary sheets and
prompt disbursement thereof are essential in exercising proper control over the payroll function.
∙Personnel records – To implement the above functions it is necessary to maintain adequate and
accurate personnel information including attendance register, time sheets etc. Separate individual
files are maintained for each staff by the HR Department. A monthly summary of attendance and
staff advice from the HR department is the basis for payroll preparation and such is to be verified by
a designated official before the payroll preparation is taken up. In this respect, proper coordination is
maintained by the Accounts Officer with the HR department.
∙Payroll preparation and disbursement – Salaries shall fall due ordinarily on the last day of the
month during which the salary is earned. Persons responsible for payroll preparation should
consider the pay increases, the inclusion of allowance as per regulations or instructions, and
deductions including adjustment of any loans or advances given to the staff. To ensure prompt
preparation of the payroll, attendance register/time sheets are to be closed for the 25th day of the
month. Payroll sheets are to be prepared by the Accounts Officer and are authorized for payment by
the Finance Director and Chairman. Preparation of the payroll should have all the necessary control
aspects such as paying the correct amount, not including discharged persons, making the proper
deductions, ensuring that calculation and posting are accurate, preventing the inclusion of fictitious
persons on the payroll, proper treatment of unclaimed salaries etc.
∙Contributory Pension Fund (CPF) – Any employee in the confirmed service of SOGON including
those on contractual service as per the contractual agreement is eligible for the CPF but casual
employees are not eligible. An eligible employee shall contribute 10% of their basic pay, which will
be deducted from their monthly salary and SOGON contributes an equal amount to the CPF on behalf
of the staff. A sum of money equal to the amount of monthly contribution of the staff and SOGON is
transferred to the respective account of the Pension Fund Administrator (PFA) chosen by the staff by
the 7th day of the following month.
∙Income Tax – Staff’s income tax is deducted at source at the time of salary payment. Deducted tax is
deposited to the Lagos State Revenue Income Authority (LSRI) as per the Persona Income Tax Law
(PITA).
∙Conference/Seminar/Workshop/Training – Any payment to the Executive Council members,
project managers, and other staff to participate in any local r international
conference/seminar/workshop/ training, etc. is made as per HR and Admin Rules after submitting
authorized bill with the following supporting documents to Finance and Accounts department:
oAuthorized tour plan,
oOriginal transport bill (bus, train, air ticket etc.),
oInvitation card
oEvent report
oAny other supporting
Budget & Budgetary Control
∙Introduction
A budget is a pre-determined estimate of receipts and payments of an Organization for a specific
period that includes the projection of resources and estimated expenditure to express all goals of the
Organization in numeric terms. The purpose of preparing a budget estimate is to ensure the proper
utilization of limited resources to their maximum potential, for which adequate planning, organizing
and controlling are essential.
∙Budget Period – A budget is prepared annually. The Budget shall be prepared for every financial
year i.e. from January to December each year. A project/program budget is prepared as per the
project period.
∙Classification of Budget – SOGON has the following two budgets:
oOrganizational Budget
oProject/ Program Expenditure Budget
Each budget is prepared with details of every component under each line item. SOGON Executive
Council shall prepare Organizational Budget showing head-wise income and expenditure. The
project/Program expenditure budget is prepared for both the revenue and capital expenditure of the
project/program.
∙Preparation of Budget – The budget shall be drafted by the Treasurer/Finance Director based on
the actual of the last budgeted period. After obtaining approval from the Executive Council, the draft
budget estimate is submitted for approval by the Board of Trustees (for Project/Program
Expenditure Budget) or the General Congress at the AGM (for Organizational Budget). The Budget
shall be accompanied by necessary explanatory schedules & forecasted cash flow statements. The
budget process starts in October and the budget is to be finalized by December.
∙Budgetary Control System – This is a system of planning and controlling costs which starts with the
establishment of budgeted goals of activities to be carried out to achieve SOGON’s objectives and
regular comparison between budget and actual results/costs, analysis of variances and corrective
measures. From the functional point of view, a Budgetary Control System serves the purpose of
Planning, Coordination and Control. The objectives of the System are as detailed below:
oPlanning and controlling income and expenditure to determine Organization need,
oActing as a guide for management decisions,
oProvide a yardstick against which actual results are compared,
oA tool pointing out the areas where management action is required.
∙Proper implementation of budgetary control – This requires an approved budget for the year. To
implement a budgetary control system the proposal for taking approval of any expenditure must be
processed in the following ways:
oAfter assessing needs the budget proposal will be sent by the Finance Director to the
Chairman for his/her opinion regarding the budget provision and his opinion if any as per
the record of the accounts.
oThe Finance Director will then place the final revised budget to the Chairman or General
Congress for approval.
oThe process of purchase will be completed as per purchase rules and provisions of SOGON.
oThe Finance Director will work as chief of budgetary control under the supervision of the
Chairman.
∙Budgetary control over expenditure – This is ensured in the following ways:
oBy ensuring that no expenditure is incurred unless it has either been budgeted for or
specifically sanctioned by the Chairman.
oCapital expenditures exceeding the budgeted amount must have the prior sanction of the
Chairman.
oBy regular comparison of actual expenditure with the budgeted amounts and accounting for
variances.
oBy critical evaluation of prices quoted for supplies and services and requiring competitive
quotations where necessary.
oBy observing the principle of the cost-benefit equation in the overall expenditures of the
Organization.
oAfter every payment, every Original bill/invoice should be marked “Paid” to avoid any
multiple payments.
oEnsure legal compliance and Government rules & regulations on payment.
General Accounting
∙Income/money Receipts – SOGON for its sustainability aimed to operate some income generating
unit. By selling the services such as gowns, souvenirs etc., SOGON can earn some revenue regularly.
Printed receipts will be issued in triplicate against their sale of services. The service receiver will get
1st copy, 2nd copy for the accounts section to attach with the credit voucher and 3rd copy to be
retained with the book. The description on the receipt will be written clearly. Money receipts are
given for all types of cash and cheque receipts. The authorization of a designated Accounts Officer is
required on every handmade receipt.
∙Payments – Payment is made after the approval of the payment by the respective authorities. Bills
and supporting documents must be examined before making any payment. All payment cheques
should be signed by the Chairman and either the Treasurer (Finance Director) or Secretary. Only the
designated Accounts Officer authorized to prepare cheques should have access to the chequebook.
All void cheques should be retained. All payment vouchers should be marked as “Paid” to avoid any
multiple payments.
Accounting Protection
The accounting system suggested in this manual is designed to provide amongst other things, the following
details of protection:
a)all transactions must be recorded.
b)all receipts and vouchers shall be kept chronologically according to their number in a file.
c)recording documents are verified in the largest practical measures by someone other than the one
recording the same.
d)all the transactions are approved and executed by authorized persons.
e)cost, prices or values are verified.
f)separate files for different series of vouchers/documents shall be kept under safe custody.
g)only authorized persons shall have access to those documents/ vouchers.
h)all documents, vouchers, files, contracts, etc. shall be kept at least for 7 years after the end of the
financial year to which these relate.
External Audit
∙Selection of Audit Firm – A reputable audit firm enlisted by SOGON will do external audits of
projects and organizational financial activities. The Executive Council with the consent of the Board
of Trustees and approval of the General Congress at the AGM selects an audit firm to audit the donor-
funded project and organizational accounts.
∙Audit Period – SOGON’s annual audit will cover the period from 01 January to 31 December. The
period of the project audit will depend on the project agreement signed between SOGON and the
donor. Donors may require audit reports of any period like quarterly, half-yearly or annually.
∙Terms of Reference – Before starting audit action a terms of reference (ToR) is to be signed
between SOGON and the audit firm. The Chairman on behalf of SOGON and a partner on behalf of the
audit firm will sign the ToR. This procedure will be applicable for both annual and project audits. A
format of ToR for annual audit. Schedule, covering areas, fees, report submission, etc should be
mentioned in the ToR. Regarding donor-funded project audit, suggestions from the donor will be
required on the proposed ToR. After getting consent from the donor it will be proposed to the audit
firm for their consent. The audit firm will sign on the ToR as a symbol of their consent. The audit firm
will start and complete the audit function as per the schedule mentioned in the ToR.
∙Reporting – External auditors will submit four copies audit report and four copies observation for
management report to SOGON management for annual and project audits. The requirement of an
audit report should be mentioned in the ToR. Before submission of the final report, a draft report
should be submitted. A discussion should be held in an exit meeting between the auditor and the
SOGON finance section on the draft report. The audit report will be finalized in that meeting.
Review and Approval
∙SOGON can modify, amend, replace, revise and/or add any of the provisions of this Manual in such
manner and to such extent, as may be deemed fit subject to the approval of the Executive Council and
Board of Trustees.
∙The manual is approved on behalf of the Executive Council and Board of Trustees of SOGON on
Wednesday 31st May 2023
Signature:
Dr Kehinde Okunade
Secretary, SOGON Lagos Sector