FINANCIAL MANAGEMENT MANUAL

For
UGANDA COOPERATIVE SAVINSG AND CREDIT UNION LIMITED (UCSCU)

Admin. & Finance Manual UCSCU 2009

Page 1 of 29

TABLE OF CONTENTS

Admin. & Finance Manual UCSCU 2009

Page 2 of 29

ABBREVIATIONS
FAM AA FEW IFAD MFI MFPED MOU RFSP MTTI CCD CM RCS SACCO UCSCU LPO IA PO CEO PFA GPR GRN RFOM Regional Field Operations Manager Chief Executive Officer Financial Extension Worker International Fund for Agricultural Development Micro finance Institution Ministry of Finance, Planning, & Economic Development Memorandum of Understanding Rural Finance Support Program Ministry of Tourism Trade and Industry Commissioner for Co-operative Development Commissioner Microfinance Registrar of Co-operative Societies Savings and Credit Cooperative Society Uganda Cooperative Savings and Credit Union Local Purchase Order Internal Auditor

Admin. & Finance Manual UCSCU 2009

Page 3 of 29

1.0 INTRODUCTION
Uganda Co-operative Savings and Credit Union is the Apex of Savings and Credit Cooperatives in Uganda. UCSCUs mission is to be a sustainable SACCO- owned institution that offers demand driven quality financial services to member SACCOs for growth and profitability. In order to achieve this, UCSCU must put in place policies to guide its internal administration and finance management. In 2008 UCSCU signed a MoU with GoU to: Support formation of SACCOs in Sub-counties where none exists Support Strengthening of existing weak SACCOs Facilitate strong SACCOs through opening branches to take services nearer to more people. The above is meant to build capacity of SACCOs to enable them handle PFA funds. This is done through: Training Provision of kits Provision of funds for salary of Manager, Casher and Watchman Funds for Office rent Office refurbishment and boggler proofing. Funds for audit services

2.0 PURPOSES AND SCOPE OF THE MANUAL

This manual therefore is to provide guidelines on: Operating procedures for the receipt, disbursement, and accountability for funds, use of assets and other resources Reporting to the Board, members, RFSP, Government, donors and other stakeholders External Auditing of UCSCU and the RFSP programme

3.0 OBJECTIVES OF THE MANUAL

1. Ensure that adequate rules governing financial planning and management of funds received by UCSCU are put in place. 2. Ensure that adequate accounting and related records are properly kept in accordance with the standard set forth in the manual 3. Introduce adequate internal controls for the adequate management of the funds and asset

Admin. & Finance Manual UCSCU 2009

Page 4 of 29

4.0 MANAGEMENT OF UCSCU FUNDS 4.1 OVERALL FUNDS MANAGEMENT I. Introduction I. In order to be efficient, effective, and economical in the course of implementing UCSCU activities, funds must be managed in such a way as to minimize their loss or misuse. Funds held in cash, as well as in UCSCU bank accounts should be controlled, managed, and used in such a way as to ensure value for money. Adequate controls over access, custody, and use of funds should be maintained at all times. II. Other than cash held on hand for the petty cash imprest, UCSCU transactions shall be carried out via the bank accounts. Exceptions to this requirement include the following: a) A payment to UCSCU by a vendor, beneficiary, creditor, or donor is made in cash b) A refund by staff of unused portion of a working advance c) An emergency working advance request by a member of staff d) An emergency purchase request where such purchase cannot be settled by cheque/draft III. Management of Cash a) Receipt of Cash: All cash received should be acknowledged by issuing an official Cash Receipt to the person making the payment. The Cash receipt is serially numbered and printed in triplicate. The original is issued to the person paying in the duplicate is attached to the pertinent voucher, while the triplicate remains in the book for updating of the cashbook. Cash Payments: All payments in cash must be evidenced by a payment voucher, and supporting documentation explaining the nature of payment must be attached to the voucher. The person being paid must properly identify her/himself, and must personally sign for the funds and issue a receipt in the names of the company/entity he/she represents. For payments to staff, a signature acknowledging receipt of the funds is sufficient. Updating the Cashbook: A separate cash book shall be maintained for purposes of recording all cash transactions which are not part of the petty cash imprest. d) e) The Cashbook is debited for all cash receipts The Cash Book is credited for all cash payments. The balance on hand shall be reflected at the end of each day.

b)

c)

All cash collected should be banked within 48 hours of receipt. A safe deposit box or other secure facility should be used to keep cash and other valuables in safe custody.

Admin. & Finance Manual UCSCU 2009

Page 5 of 29

iv.

Management of Bank Accounts a) UCSCU Bank Accounts: UCSCU shall maintain a bank account for each donors funds in compliance with the specific donor requirements. UCSCU shall also open and operate a US dollar account into which the consultancy fees shall be deposited. Where the donor(s) remit the funds in hard currency, the account shall be maintained in an easily convertible hard currency account UCSCU shall also maintain an account from which its core business operational disbursements shall me made. UCSCU will also open bank accounts for each Region through which Regional Officers will receive funds for operations based on activity. This will reduce the need for Officers to carry bulk cash. Separate cashbooks shall be maintained for each bank account operated by UCSCU All Accounts shall be designated as Uganda Co-operative Savings and Credit union limited and the name of the donor, where applicable. Board of the need to

b) Opening of Bank Accounts Prior to opening any bank account, the CEO shall notify the open a bank account, with justifications

The Board, in collaboration with CEO and/or the Donor, shall pass a resolution authorizing the opening of the account, designating the bank in which the account is to be opened.

c) Bank Account Signatories The signatories to all UCSCU bank accounts will be the CEO and the FAM. In case of a special requirement by a donor, the RCS will be requested to approve the extra signatories. Regional bank accounts will be operated by the Field Officer and RFOM A list of the signatories will be maintained and regularly updated. The CEO should immediately notify the bank in writing in the event of a change in signatories on a given Account,

Admin. & Finance Manual UCSCU 2009

Page 6 of 29

5.

Transfers from IFAD/GOU and other Donors to UCSCU a) b) Annually the CEO shall prepare a work plan and budget for the AGM. approval of the

Quarterly reports will be made to the Board of Directors indicating the performance of the work plan and budget and facilitate a guided review of UCSCU operations. For Donor funds, the CEO, with consultation from the FAM, shall prepare a work plan and budget for planned activities on a quarterly basis and submit to IFAD, GOU, CCA or other donors.

c)

The CEO shall also include a monthly funds Account reconciliation statement, showing how previously advanced funds were spent, and the balance at the end of the month. The work plan and budget, funds reconciliation statement, and replenishment request, should be sent to PAU within two weeks after the close of the month of accountability. The CEO shall negotiate with the banks for the best possible foreign exchange rates while converting hard currency into Uganda Shillings, or vice versa. All transfers shall be by cheque or money transfer directly into the designated bank account.

d)

e) f)

VI. Payments from the Bank Accounts a) Cheque payments to vendors should be initiated by the Procurement Officer who will complete a Payment Requisition Form (Appendix 16), attaching all relevant documentation for contracts, LPOs, etc. The duly completed form shall be submitted to the Administrative Assistant for review and verification for completeness and accuracy. Supporting documents include invoices, purchase requests, LPOs, goods received notes/service completion certifications, internal memoranda, etc Cheque payments to staff for working advances and other official purposes shall be initiated by the respective staff, attaching relevant sections of approved work plans and activities. The staff who have received advances should account for the money within two weeks after completion of the assignment. No more money should be advanced to a staff without completing accountability. Failure to account for money will lead to the staff being required to refund the money or it will be deducted from his/her salary. Cheque payments to statutory and other bodies shall be initiated by the Administrative Officer with relevant documents. After approval of the payment requisition, the Assistant Finance Officer will then prepare a Payment Voucher (Appendix 17) and indicate the correct coding information for classification purposes, as well as the cheque and submit to the FAM for approval and signature. The administrative Officer shall also write a letter to the

b)

c)

d) e)

Admin. & Finance Manual UCSCU 2009

Page 7 of 29

bank listing each cheque issued, the payee, and amount. The cheques and confirmation letter are submitted to the signatories. f) Each cheque signatory is responsible for ensuring the validity of the payment, accuracy and completeness of the documentation submitted, adherence with relevant policies and procedures, coding, approval, and other details. After signing, the cheques are returned to the Assistant Finance Officer for issuance. Signatories should also ensure that the cheques listed on the confirmation letter are in agreement (both payee and amount) with the actual cheques written. On receipt of the signed cheques, the Assistant Finance Officer calls all payees to collect their payment, alerting them of the need to issue official receipts on collection of the cheques. All cheques shall be kept under lock and key for safety purposes. Once a payee or their duly designated representative comes to collect payment, the Assistant Finance Officer should request them to positively identify themselves, issue the receipt for the payment, and sign for the cheque(s) in the cheque payment register. The Assistant Finance Officer shall then enter details of all payments effected in the cashbook and appropriate ledger, including the date, description, payee, cheque number and mount, as well as the relevant account code. The Assistant Finance Officer shall stamp all invoices, vouchers, and other supporting documentation PAID, attach the receipt obtained, and file sequentially in chronological order.

g)

h)

i)

j)

VII. Cheque Book Maintenance a) b) Cheques are valuable, and should be kept in a safe and secure place. On receipt of a new chequebook, the FAM shall verify that all cheque leaves are intact prior to leaving the bank. In the event a leaf is missing, the chequebook should be rejected, and the CEO promptly informed. Chequebooks shall be kept under lock and safe by the FAM. The cheque books should be registered and controlled. Even the cheque book under use shall be kept under lock and key by the FAM, and issue it out to the AFO when cheques are to be written. Cheques should be written sequentially, and from one book at a time, until such book is finished. Cheques should be written clearly in indelible ink. No spaces should be left before or after words and figures. All unused space must be crossed out to avoid insertion of additional data. For each cheque written, the cheque stub (counterfoil) should be completed, including the following information: Date Payee

c)

d) e)

f)

Admin. & Finance Manual UCSCU 2009

Page 8 of 29

 a) b) c)

Brief description of the nature and purpose of the payment Cheque amount Initials of the signatories Payment voucher number

Cheques should be made out payable through the payees account Cheque stubs from fully used cheque books should be kept in a safe All signed cheques should be returned to the Assistant Finance Officer who will prepare a register for all outgoing cheques. viii. Regional Branch Management

Reporting system i. Bank Statements and Reconciliations a) b) c) At the end of each month, the FAM should obtain a bank statement from each bank. The statement should cover the whole month. (Appendix 18) The AFO should print out a listing of all bank transactions for the month (bank ledger) and submit to the FAM and IA The FAM should then reconcile the cash book balance to the bank statement balance by checking off all items that appear on both records, taking into account unpresented cheques and un-credited deposits In the course of the reconciliation, the FAM should investigate all discrepancies and items outstanding for over a month. FAM should identify and credit the members who have paid their fees through the bank. The Assitant Finance Officer should obtain documentation from the bank detailing the bank charges levied, interest earned, etc for the period Errors on the bank statement should be noted and the bank informed promptly in writing The bank reconciliation should be signed by the FAM, reviewed by the IA and approved by the CEO by the 10th day of the following month.

d)

e) f) g)

X. Canceled Cheques a) For a cheque to be cancelled, the FAM must be informed of the intended cancellation, with justification.

Admin. & Finance Manual UCSCU 2009

Page 9 of 29

b)

The word cancelled should be written across the cheque and on the stub, and holes punched in the cheque. The payment voucher should be marked and a note made in the cashbook and ledger. The cancelled cheque should be stapled back into the chequebook on the corresponding cheque stub. Before a replacement cheque is written and signed, the cancelled cheque, together with all pertinent documentation, should be availed to the FAM and IA for inspection The original payment request and other papers may then serve as documentation in support of a replacement voucher and cheque Details of the replacement cheque should be cross-referenced to the cancelled cheque

c) d) e) f)

XI. Stale Cheques a) Cheques issued to payees but remain un-presented for a period exceeding six months should be considered stale. The amount of the cheque should be reinstated to the cashbook, and the payee notified. Upon surrendering of the stale cheque, a replacement can be issued. Notify the bank promptly in writing by listing the pertinent cheque numbers, payees, and amounts. Ensure bank acknowledges correspondence by officially stamping a duplicate of the letter.

b)

XI. Lost or Stolen Cheques a) b) c) d) XII. a) b) c) Notify the bank immediately upon loss/theft of any cheque books/leaves, noting the serial numbers. Where the cheques were already written at the time of loss/theft, issue a stop payment order to the bank. Have a listing of such cheques available to members of staff so that bank statements can be thoroughly investigated Notify the police and open a police file for the lost cheques Bank Charges and Interest Upon receipt of the monthly bank statement, the FAM should thoroughly examine it for any bank charges, interest income, and other bank-originated transactions. Questionable charges should immediately be brought to the attention of the CEO for further investigation The AFO should then generate journal entries and attach a copy of the relevant bank statement section, then submit to CEO for approval.

Admin. & Finance Manual UCSCU 2009

Page 10 of 29

d)

The journals should be passed and a new bank ledger printed out for the bank reconciliation process.

XIII. Receipt of Funds (Cash/Cheques) In the course of implementing activities of UCSCU, funds will come from the following but not limited to: a) Funds will be received from members share capital, entrance fees, Loan protection Fund, National educational fund, members deposit into the central fund, interest on loans and annual contribution b) Grants and donations: c) d) e) f) g) RFSP/IFAD Government of Uganda CCA/WOCCU Proceeds from disposal of assets Staff advance refunds Sale of bidding documents Donations Loans Contributions from beneficiaries for UCSCU services

All incoming funds should be received by the AFO and an official receipt issued to the person making the payment. Each cheque or cash receipt should be entered into the relevant cash book Prior to the close of each day, the daily receipts should be summarized.

All funds received must be banked intact within two (2) business days. Since UCSCU operates a petty cash float, spending funds upon receipt is not permissible. After banking, the cash receipt and bank pay-in slip should be batched and journalized.

4.2 PETTY CASH I. Petty Cash Defined An amount of money set aside to cater for payments for small, routine expenditure. For purposes of meeting such small expenditures, a petty cash imprest will be maintained. This means that replenishments to the fund will be for the total expenditure paid out, in order to restore it to its normal level. II. Petty Cash Imprest Amount For the purpose of meeting small, routine, and sometimes emergency payments, a petty cash imprest of UGX 2,000,000/= shall be maintained by the AFO at head office and UGx 800,000/= by the Administrative Assistant at regional offices.

Admin. & Finance Manual UCSCU 2009

Page 11 of 29

III. Record Keeping for Petty Cash transactions A separate cashbook for the petty cash imprest will also be maintained to record petty cash transactions. Supporting documents (vouchers, receipts, etc) should also be maintained in a separate file. IV. Receipt of Funds into Petty Cash Imprest a) b) c) UGX 800,000/= (the value of the imprest amount) shall be remitted to the Regional Bank Account as the petty cash imprest. UGX 2,000,000/= will be cash imprest for Head Office Subsequent replenishments shall be on the basis of a duly authorized petty cash replenishment requisition, using a Payment Requisition PR (Appendix 12), after the following procedures have been fully performed: d) Proper Accountability for previous imprest is submitted and scrutinized by the Internal Auditor FAM classifies and summarizes all petty cash vouchers by account code AFO prepares a Payment Requisition detailing the nature and amount of summarized expenses AFO submits the Payment Requisition, together with the pertinent Petty Cash Vouchers PCV (Appendix 14), and the Cash Count Certificate to the IA for review and to CEO for approval. After approval, AFO prepares a cheque for the value of approved petty cash expenditure to replenish the imprest. The optimal level for triggering replenishment is 150,000/=, and can be revised in consultation with the FAM and CEO.

V. Accessing Petty Cash The maximum amount of money that can be obtained from petty cash is 100,000/=, and a staff member can only have one petty cash advance at any one time. Breaking down expenditure amounts to circumvent the petty cash policy is prohibited. The following simple steps set forth the procedure for requesting and receiving money from the Petty Cash Custodian (AA): a) b) c) d) A staff member picks up a Petty Cash Voucher (appendix 14), fills the top (advance) part for staff who need money to carry out activities, or the bottom part (settlement) for staff who have already used their own money and are seeking reimbursement. The completed PCV is submitted to the immediate supervisor for approval Submit the approved PCV to the AFO (petty cash custodian) for payment Sign the Received by section of the PCV upon receiving payment

Admin. & Finance Manual UCSCU 2009

Page 12 of 29

6. Accounting for Petty Cash Whether a staff member took an advance or they used their own money, the following is the procedure for accounting for petty cash: a) b) c) d) e) f) g) h) i) As far as practicable, obtain from vendors receipts for all moneys you pay out. Complete the Accountability form and have it signed by Head of Department. Attach all receipts and other evidence of accountability Sign the form and submit to immediate supervisor for approval Submit approved PCV to FAM through the IA. For advance holders, FAM compares the amount of the advance to the actual expenditure. No over expenditures will be entertained. Petty cash advances should be accounted for within 48 hours, or as soon as the activity for which the advance was taken is completed Staff who fail to account for petty cash advances will have the outstanding amount deducted from their salaries, and may be denied access to petty cash in future Staff can only have one advance at a time, and can only access subsequent advances after fully accounting for previous advances

4.3 a. a)

PAYMENT FOR GOODS AND SERVICES IFAG/GOU

Payment to Service Providers for Services Rendered Service Providers are individuals, organizations, and firms, which have entered into a MOU to provide specific services to RFSP/SACCOs. They may include pre-qualified individuals, NGOs, CBOs, CSOs, or private companies. For Community-wide activities, UCSU contracts to pay the service provider between 50% and 75% of the agreed upon cost in accordance with terms set in the MOU, the balance is payable after the work is completed. For services to SACCOs, the beneficiary group/person is paid 50% of the agreed contract sum to BCF on signing of the MOU. UCSCU then pays the balance upon completion and submission of all relevant documents and invoices. The service provider, or their duly designated representative, identifies him/herself, receives the cheque, issues a receipt, and signs for the cheque in the cheque register. Payment to Vendors for Goods Supplied to IFAD/GOU Program SACCOs

b)

c)

d) II. a) b) c) d) e)

As part of capacity building under RFSP one selected SACCO per sub-county will be provided with a safe, filing cabinet, 2 bicycles or one motor cycle, Generator or solar panel and have their offices refurbished. A team of officers from UCSCU and RFSP/PAU will do a needs assessment for SACCO before the assistance is given For office refurbishment, an Engineer will be contracted to assess the requirement. Service providers will be engaged using procurement guidelines. Purchasing of stationery and other goods will follow the same route. Once the vendor supplies the specified goods, meeting quality, quantity, and delivery standards stipulated in the contract, they will be paid.
Admin. & Finance Manual UCSCU 2009 Page 13 of 29

f)

The Administrative Officer prepares a memo certifying that the goods were delivered, and recommend payment to the vendor. All documentation, together with certifications, is submitted to the PO to originate payment. The PO reviews the documentation for completeness and compliance with procurement policies and procedures and, if satisfactory, prepares a payment request. The FAM reviews the request and attachments, and approves. The approved payment is then submitted to the AFO for cheque writing. After the cheque is written and signed (as spelt out in this manual), the AFO calls the vendor to pick up their payment and issue a receipt. The vendor, or their duly designated representative, identifies him/herself, receives the cheque, issues a receipt, and signs for the cheque in the cheque register at UCSCU offices. or picks their cheque from the Regional Offices.

g) h) i) j)

In the event that a service provider, vendor, fails to deliver goods/services satisfactorily, part or all of their payment may be withheld until a satisfactory remedy is provided. Vendors/service providers who consistently fail to discharge their obligations to the satisfaction of UCSCU will be blacklisted.

4.4 ACCOUNTING RECORDS

1. Overview This section outlines the various accounting documents, their use, how to handle and store them. 11. Responsibility for Maintenance of Records The FAM, through supervising the FO and AFO, is responsible for ensuring overall safety, maintenance, and custody of all accounting records. Movement of accounting records should strictly be with written authorization from the FAM All accounting records should be maintained in safe custody for a minimum of six years 111. The Cashbook The Cashbook (manual or a computerized printout) should be updated with all monies received and paid out (cash, cheques, transfers, direct debits/credits, etc). Cash and each bank account must each have separate cashbooks/ledgers. Cashbooks should be updated daily using payment vouchers, receipt vouchers, bank advices (with appropriate journals), and bank statements (with journals). At the end of each month, the cashbook or computerized cash ledger should be balanced. The balance per the cashbook/ledger should be reconciled to the bank statement by the 10th of each month for the previous month. The FAM is responsible for reconciling each account. The IA
Admin. & Finance Manual UCSCU 2009 Page 14 of 29

should verify each months reconciliation and sign off to certify the verification. The CEO shall approve each bank reconciliation. The cashbook or computerized cash ledger should have the following details: IV. Date of the cheque/receipt/journal A sequential reference number for the cheque/receipt/journal A description of the payment or receipt The name of the payee or person/entity making the payment The amount of money paid/received The Receipt Book a) A receipt book should be maintained and used to record all monies received, whether in cash or by cheque. b) Separate receipt books be used for each programme IFAD, GOU and UCSCU c) The Receipt book shall be maintained in triplicate. The original copy is issued to the payer, the duplicate copy attached to the supporting documentation, and the triplicate retained in the book. d) Receipt books shall be pre-printed, and sequentially numbered e) Each receipt shall contain the following information The date payment is received The name of the person making the payment Reason/explanation for the payment Amount received, both in figures and words Details of the cheque (if payment by cheque) Signature of cashier Stamp V. The Payment Voucher a) All payments are to be made on a fully completed and authorized Payment Voucher b) Separate payment vouchers be used for each program- IFAD, GOU and UCSCU main c) A payment voucher is an accounting document, and as such is only initiated by a member of the finance department (FAM, FO or AFO). It should be based on an invoice or cash requisition initiated by the staff requesting payment, or department responsible for the transaction d) Completed Payment Vouchers become part of the supporting documentation for the relevant payment. They should be attached e) Where possible, Cash requisition forms should be accompanied by quotations, invoices, budgets/work plans, etc VI. Supporting Documentation
Admin. & Finance Manual UCSCU 2009 Page 15 of 29

a) Supporting documentation for each transaction must be attached to the payment voucher and filed in sequential number order b) Where applicable, a separate file should be maintained for each bank account, as well as petty cash c) Access to financial records should be restricted to finance staff, and movement of such records should be recorded indicating who, when, where, and when returned. Persons outside the finance department who need to access finance records should sign for them d) All documents and records should be available for review, inspection, and scrutiny by both internal and external auditors. 5.0 FINANCIAL REPORTING AND MONITORING (a) Annual Accounts and Balance Sheets will be presented to the member SACCOs at an Annual General Meeting to be held within three months of the end of the fiscal year which ends in December (b) Financial reports on all RFSP/GOU activities are prepared for purposes of accountability of the funds to donor. (c) Financial reports for internal monitoring of progress are prepared on a monthly basis, within two weeks after the close of the month. (d) Financial reports on UCSCU core business to UCSCU Board are prepared on a quarterly basis, within two weeks of the close of the quarter. (e) The Quarterly reports should include detailed budgets (activity and financial), actual performance, and variance. Variances of more than 10% should be flexed and explained. (f) At least once in a quarter, the IA will visit the Regions to review financial management systems, as well as to monitor fund utilization. (g) On an as needed basis, the IA may do spot checks to Programme SACCOs to monitor the use of kit and funds provided to SACCOs for office rent and salaries in accordance with laid down policies and procedures. (h) On an as needed basis, the IFAD/GOU Financial Controller/Auditor General may do a spot check of RFSP/GOU program financial records (i) Reports to PAU/IFAD/GOU to consist of the financial report, activity report, narrative, and original financial documents with attachments. (j) All financial reports will be produced by use of an accounting soft ware. 6. 0 PREPARATION OF WORK PLANS AN BUDGETS

Admin. & Finance Manual UCSCU 2009

Page 16 of 29

(a) The Board and management will prepare Annual work plans and budgets for approval by the Annual General Meeting b)``The activities to be carried out, agreed upon progress indictors and deliverables, as well as timing and budgets will be as spelt out in the MOU between UCSCU and other stakeholders. c) The activities stipulated in the MOU, and other agreed upon and documented discussions form the basis for work plans and budgets.

7.0

PROCUREMENT OF GOODS AND SERVICES

7.1 PURPOSES AND SCOPE

These policies and procedures govern the acquisition, use, maintenance, management, and disposal of assets for the implementation of UCSCU activities. They are intended to provide staff, management, and other stakeholders of UCSCU with guidelines aimed at ensuring proper use of assets, as well as preventing their abuse and misuse. These policies also spell out the staff members responsible for various aspects of UCSCU activities. The policies and procedures laid herein conform to both Members, Donors and Government of Uganda requirements. 7. 2 Overview

Procurement is the process of buying, leasing, or other legal means of acquiring the right for goods, works, and services to satisfy defined needs at the right time, from the right supplier, in the correct quantities, and at the right price. For procurement to meet the above conditions, the following guidelines should be followed: 7.3 Provide equal opportunities for all qualified bidders to compete favorably Encourage local manufacturers/providers to participate in the process Emphasize transparency in the process Ensure economy and efficiency Procurement Methods Goods and Works

Acquisition of assets under projects or donor programs, provisions in the contract/MOU will be strictly adhered to. The following methods will be used in the procurement of all goods, services, and works: I. International Competitive Bidding (ICB): This provides equal opportunity to suppliers from World Bank member countries. It involves advertising tenders internationally and should be used to procure goods, services, and works valued at or above. It is mainly used for procurement of vehicles, motorcycles, computers, etc.

Admin. & Finance Manual UCSCU 2009

Page 17 of 29

II. Limited International Bidding (LIB): This method is appropriate where there is no open advertisement, e.g. when there are a limited number of suppliers. This involves direct sourcing internationally III. National Competitive Bidding (NCB): It involves advertising locally and inviting company to tender. Is used for procurement within Uganda, for goods and works estimated to cost less than USD 200,000 but more than USD 20,000 per contract. IV. Direct Purchase: This method will be used in extending existing contracts e.g. standardization and repair of equipment. V. Local Shopping: Is used to procure off the shelf, or relatively cheap items, especially common user products, and involves obtaining quotations from at least three different reputable suppliers. The contract is awarded on the basis of quotations obtained from three qualified contractors in response to a written invitation. VI. International Shopping: Will be used for small value products not readily available locally in Uganda. The contract is awarded on the basis of obtaining three quotations from various countries. 7.4 Procurement Methods Consultancy Services

The following methods shall be used in the procurement of consultancy services: I. Quality and Cost-based Selection: This method involves selection on the basis of cost and comparing the quality presented by each consultant. II. Least Cost Selection: This method is used with goods of standard price for routine assignments, e.g. audits III. Single Source Selection: IV. Selection under Fixed Budget V. Service Delivery Contracts

7.4

The Procurement Cycle

The following procedures apply to the procurement of goods, services, and works. I. Articulation of Needs in the Annual Work Plans: UCSCU being a private Institution, which also accessed GOU and IFAD program funds with clearly defined activities and expected outcomes, procurement requirements for goods and services should be clearly articulated in the annual work plans. This will allow for adequate procurement planning and availability of the expected deliverables in a timely manner. II. Complete a General Purchase Request (GPR) Form: An authorized staff member should complete a General Purchase Request Form (Appendix 1), specifying the goods or services required, with reference to the activity (activities) in the work plan to which the procurement relates. The requestor, with the assistance of the Procurement Officer, should clearly indicate the specifications, bills of quantities, or clearly articulated terms

Admin. & Finance Manual UCSCU 2009

Page 18 of 29

of reference, as well as the delivery locale and time line. The completed form is then submitted to the Finance & Administration Manager. III. Administrative Review: The Finance & Administration Manager (FAM) reviews the GPR/RFS to ensure compliance with budgetary and programmatic aspects. If these are complied with, the FAM approves the GPR/RFS (CEO for larger items). The approved GPR is then forwarded to the Procurement Officer who is responsible for completing the procurement. IV. Invitation of Providers: Upon receipt of the approved GPR/RFS forms, the Procurement Officer (PO) summarizes the procurement request and invites eligible providers/suppliers using the relevant procurement method. The GPR/RFS is logged onto the Procurement Status Report PSR (Appendix 3) for tracking and monitoring. A minimum of three quotations/bids should be obtained. Where this is not possible, reasons should be documented and approval sought from the CEO. V. Evaluation of Quotations/Bids: On expiry of the quotation/bidding period, the PO prepares a summary of all quotes/bids received, specifying compliance with terms and conditions, technical responsiveness, delivery time table, and price, using a Summary Quote/Bid Analysis Form SBA (Appendix 4). For procurement of goods and services below UGX 5,000,000/=, the PO and FAM shall review the summarized quotes/bids and select the supplier/provider. For quotes/bids above UGX 5,000,000/=, but below UGX 20,000,000/=, the PA and FAM shall recommend to the CEO for approval. For quotes/bids above UGX 20,000,000/=, the Procurement Committee shall evaluate and approve VI. Award of Contract: After approval of the SBA, the PO shall notify the firm with the winning quote by issuing a Local Purchase Order (LPO) for procurement of goods and services valued at UGX 10,000,000/= and below, or prepare a contract for procurement above UGX 10,000,000/=. In either case, the LPO or Contract should clearly spell out the terms and conditions of the procurement, including: Price for the goods or services Delivery locale and date a. Description of the goods/services, including quality, and quantity Price of the goods/services inclusive of taxes, and validity of such prices Passing of title and assumption of risk Penalties for failure to deliver, or for delivery of goods/services not of the type, quality, or quantity specified in the agreement The LPO is completed in quadruplicate, with one copy for the supplier, one for the requestor, one for the FAM, and one for the procurement files. The contract is completed in duplicate, one copy for the supplier, and the second one for the procurement files. The LPO/contract should be signed by persons authorized to commit the UCSCU into binding financial obligations. For the vendor/supplier, the LPO/contract should also be signed by a person with authority to commit the organization to perform the services or deliver the goods described in the LPO/contract. The delivery clock begins to run once the vendor/supplier has received a duly signed copy of the LPO/contract.
Admin. & Finance Manual UCSCU 2009 Page 19 of 29

VI. Receipt of the Goods/Services a) For Goods: The PO should inspect the goods delivered against the specifications set forth in the LPO/contract, and verify quality, make, quantity, as well as the condition of the goods. If the goods are satisfactory, generate a Goods Received Note GRN (Appendix 5). The completed GRN should then be submitted to the FAM for approval and update of the Bin Cards. If the goods are not satisfactory, the PA should advise both the FAM and CEO, and take appropriate action as spelt out in the LPO/contract. b) For Services: The PO, in conjunction with the requestor and other technically competent personnel, should monitor progress against set targets/milestones. Once the services have been satisfactorily rendered, a Contract Completion Form CCF (Appendix 6) should be completed by the supervisor of the services or a duly designated representative. For services not satisfactorily rendered, appropriate remedies, in line with the terms set forth in the contract, should be pursued. VII. Payment for goods/service: Payment for goods/services should be done in conformity with the terms and conditions set out in the LPO/contract, and will take one of the following forms: a) Advance Payment: For LPOs/Contracts which stipulate that the vendor/supplier is to be given an advance payment, such payment should be provided as stipulated in the agreement. However, advance payments should only be made in those instances where it is not possible for the vendor to supply without the advance payment, and such advance payment is restricted to a ceiling of 25% of the total cost of the goods/services. The supplier/vendor should formally request for the advance payment by issuing an invoice for the amount required. The PO shall attach copies of the sections of the LPO/contract which indicate the total price, and the nature and amount of the advance payment being sought. The PO then raises a Payment Requisition Form PRF (Appendix 7), attaches the invoice and relevant copies of the contract, and forwards to the FAM. The FAM reviews the request, and approves the requisition. The Assistant Finance Officer then prepares a cheque and a Payment Voucher PV (appendix 8). The FAM will approve the Payment Voucher and the cheque. Will be signed as provided in the byelaws.

b) Progress Payment: For contracts which stipulate payment upon attainment of certain indicators or elapsing of time, the progress payment should be processed in accordance with the terms of the agreement. This is especially true of construction and other works contracts. The requestor/supervisor of the contract should certify in writing that the supplier/vendor/contractor has attained the agreed upon progress, and that payment should be processed. The vendor/contractor submits an invoice.
Page 20 of 29

Admin. & Finance Manual UCSCU 2009

The PO then raises a Payment Requisition Form PRF (Appendix 7), attaches the invoice and relevant copies of the contract, and forwards to the FAM. The FAM reviews the request, and approves the requisition. The AFO then prepares a cheque and a Payment Voucher PV (appendix 8). The FAM approves the Payment Voucher and the cheque will be signed as provided in the byelaws.

c) Full/Final Payment: For full payment after all goods have been supplied or all services have been rendered, or where the supplier/contractor is requesting for their last installment payment. Vendor/Contractor issues invoice for total contract or balance remaining on the contract PO ascertains that the goods have been satisfactorily delivered, or services have been satisfactorily rendered, attaches relevant pages of the contract/LPO to invoice, prepares Payment Requisition, forwards to FAM The FAM reviews the request, and approves the requisition. The AFO then prepares a cheque and a Payment Voucher PV (appendix 8). The FAM approves the Payment Voucher and signs the cheque VIII. Indefinite Quantity Contracts For procurement of routine items like stationery, printing, and other office supplies, invitation for quotations/bids are not a suitable means of procurement, as this would unnecessarily prolong the process. For procurement of such items, Indefinite Quantity Contracts (IQCs) shall be awarded to suppliers of such items on an annual basis using the following procedures: a. The PO shall compile a list of all items routinely used by project staff, with advice of the AA and FAM b. The PO shall invite eligible suppliers to submit bids for supply of such items. c. The bids contain technical aspects of the supplier, their reputation, financial soundness, and experience, as well as compliance with statutory and legal requirements. d. Upon receipt of the submitted bids, the PO summarizes them using the Summary Bid Analysis form, providing details of each supplier as contained in their submitted bid e. The Procurement Committee shall sit and evaluate firms on agreed upon parameters, and select the three winning firms for each category of goods/services. f. The selected firms shall be pre-qualified to supply goods or provide services on a competitive basis, and shall be awarded Indefinite Quantity Contracts for 1 year. g. For each specific procurement of the goods/services under this category, the PO shall invite quotes from the pre-qualified firms, and the contract shall be awarded to the winning quote in terms of price, delivery period, etc.

Admin. & Finance Manual UCSCU 2009

Page 21 of 29

Admin. & Finance Manual UCSCU 2009

Page 22 of 29

8.0

STORES AND INVENTORY MANAGEMENT

This section deals with the acquisition, receipt, storage, and record keeping for inventory items of the Fund. I. Overview of Inventory Management a) Inventory stock represents those items purchased for use in normal operations. These items are usually procured in bulk for use over a period of time. They include paper, pens, file folders, etc. b) Stock items must be kept in an appropriately controlled store, and their use restricted to official use in pursuit of organizational objectives. The inventory store must be kept tidy and orderly for ease of access, identification of items, and stock taking. c) Optimum levels of inventory stock should be defined and maintained, to ensure UCSCU activities are not hampered. However, such stock levels should not unnecessarily tie up excessive resources. d) The Administrative Assistant is responsible for ensuring there are adequate quantities of inventory stock for use in operations II. Procurement of Inventory Items a) The Administrative Assistant in conjunction with the Finance & Administration Manager identifies those inventory stock items that are needed. Other staff members may also articulate their needs b) The AA prepares a General Purchase Request form, indicating the description, nature, and quantity of the various inventory items required and submit to the FAM c) The FAM approves the GPR and submits to the PO who will proceed with the procurement in accordance with applicable policies and procedures. III. Receipt of Inventory into the Stores a) As with any other procurement, a Goods Received Note (GRN) should be prepared for all items received into the stores. The GRN should be prepared in triplicate one copy for the person delivering the goods, another copy should be attached to the General Purchase Request, and the third copy should be kept in the book. The GRN should provide the following details: The date on which the inventory items are received Name of person delivering the items, and vehicle registration if applicable Description, specification, and quantity of each item received Signature of store keeper (AA), as well as person delivering

b) The AA should check the delivery note against the LPO/contract and the physically delivered goods to ensure they agree, or exceptions are noted and approved
Admin. & Finance Manual UCSCU 2009 Page 23 of 29

c) For goods that require standard or technical specifications, the AA should obtain such certification from either the requestor or other technical person d) Both the person delivering and the person receiving the goods should sign the GRN IV. Recording of Received Items onto the Stock Cards The AA is responsible for ensuring that all items received are recorded onto appropriate stock cards I. II. III. IV. There must be a Stock Card (Appendix 9) for each item of inventory in the store. All receipts of inventory should be recorded on the stock card as additions All issues of inventory should be recorded as reductions Stock cards should be updated each time of receipt/issue of stock, and should reflect the physical count of stock held at any one time V. The stock card should contain the following details: Name of inventory item Stock Card Number Reference number to GRN Date of receipt/issue Quantity received, issued, on hand Reorder level for that item

V. Issuing of Inventory Items from the Stores a) Any staff member in need of items from the store should complete a Stores Requisition Note SRN (Appendix 10) and submit to the FAM for approval. b) The FAM approves the SRN and submits to the AA for issuance of the items requested. c) The AA issues the items to the requestor and signs the SRN d) The requestor receives the items and also signs the SRN e) The AA updates the appropriate store cards for the items issued f) The SRN should contain the following details: Date Name of requestor Description and specification of items required Quantities requested Signature of requestor Signature of issuer (AA) Signature of recipient (requestor) VI. Monthly Stores Reports

a) On a monthly basis, the AA should prepare a Stores Report (Appendix 11). b) The purpose of this report is to inform management of stock levels, utilization trends, and cost implications, to facilitate decision-making. c) The report should contain the following information: Month of reporting Detailed listing of each stock item
Admin. & Finance Manual UCSCU 2009 Page 24 of 29

 VII. Stock Taking a) b)

Opening balance for each item Quantity received during the month Quantity issued during the month Balance on hand at end of month Signature of person preparing the report Signature of person reviewing/approving the report Date the report is prepared

The IA should carry out spot inventory audits/inspections on a quarterly basis. Such inspection should be evidenced by signing on the stock card Twice a year (in June and December), comprehensive stock counts should be done for all inventory items in the stores. The following procedures should be followed in the course of stock taking: The AA should update all inventory cards prior to stock taking Stock stores should be neatly arranged prior to stock taking AA should be present to assist in identification of records and items, but should not participate in the stock taking itself IA is in charge of stock taking exercise and should ensure adherence to set policies and procedures All items of stock should be counted and recorded Damaged/obsolete items should be identified and reported No stock should be issued during stock taking, except in documented emergency situations The stock taking team should prepare a report detailing the recorded and physical balances of each item of stock, and variances The AA should give an explanation of the variances, which becomes part of the report. The IA should review and sign the report, and investigate variances identified. Adjustments to stock cards should be made after approval for adjustments by the CEO.

c)

8.0

FIXED ASSETS

I. Fixed Assets defined Fixed assets are tangible movable and immovable items used in the operations of an Organization. These items have a useful life exceeding one year. Examples include land and buildings, vehicles, computers, furniture, office equipment, etc. II. Capitalization Policy a) A tangible item of value shall be capitalized and considered a fixed asset when the expected benefits of the item exceed one year, and the value of the item is 250,000/= or more.
Admin. & Finance Manual UCSCU 2009 Page 25 of 29

b) c)

Assets valued at less than 250,000/= should not be capitalized, but are expensed on acquisition. They are, however, recorded as inventory for control purposes The amount to be recorded for any fixed asset is the total cost of bringing the asset to the intended condition and location of use. Costs such as transportation, clearing charges, taxes, installation costs, etc become part of the value of the asset Donated assets are capitalized at their fair market value if, at the time of donation, their market value is 250,000/= or more, and their lifespan exceeds 2 years. Assets not meeting this criteria should be expensed Assets acquired as a group, where the value of the group of such assets meets the fixed asset threshold, but the value of the individual assets is below the threshold, should be capitalized All major assets like buildings, vehicles, computers, etc, should be comprehensively insured All fixed assets should be marked/engraved for identification purposes. Such marking/engraving should clearly identify the type of asset and the number within the type as follows: FF Furniture & Fittings LB Land & Buildings EQ Equipment MV Motor vehicles CO Computers OA Other assets

d)

e)

f) g)

III. Fixed Asset Register a) b) c) The Administrative Officer shall maintain a Register of all the fixed assets of UCSCU The Register shall contain the following information about each fixed asset, organized by type Date of purchase/acquisition Description of the asset, including condition as to new/used Serial number of the asset, where applicable Cost of the asset (to bring it to use) Asset Identification Number Location of the asset

The IA shall inspect the fixed asset register once a year to: Confirm the existence, condition, usefulness and location of each asset Identify assets which cannot be located to the CEO and recommend write-off Identify assets no longer needed for use in UCSCU and recommend to the FM for disposal
Admin. & Finance Manual UCSCU 2009 Page 26 of 29

d)

The Administrative Assistant shall reconcile the fixed asset register to the nominal (accounting) ledger on a quarterly basis, and report any discrepancies to the IA

IV. Transfer of Assets a) b) Transfer of assets, whether permanently between locations, or temporarily for repair, should be documented using an Asset Movement Form (Appendix 15) The movement form should be completed in triplicate, and should contain the following details: Description of the asset Serial number and Asset Identification Number of the asset Condition of the asset at time of transfer Reason for transfer Permanent or Temporary Date of Transfer Signature and name of person authorizing transfer Signature and name of recipient Where the transfer is permanent, due to reallocation or disposal, the item should be removed from both the fixed asset register and the nominal ledger. Where the transfer is temporary, such as interoffice loan or repair, the item is left on the register and nominal ledger

c) d)

V. Acquisition of Fixed Assets a) b) c) The acquisition of fixed assets should be incorporated into the annual budgeting process. Major asset acquisitions should be articulated in the annual budget Purchase of assets shall follow the normal procurement procedures Acquired assets are assigned unique asset identification numbers, which are physically engraved on the asset, and included in the fixed asset register for identification purposes

VI. Disposal of Fixed Assets a) b) c) d) Major disposals of fixed assets should also be articulated in the annual budgeting process, where possible. Assets may be disposed of for one or more of these reasons: Items may no longer be needed in the operations of UCSCU Items are in poor condition and repair costs are prohibitive Assets with high running and maintenance costs Assets which are fully depreciated All assets disposal must be approved by the AGM

Admin. & Finance Manual UCSCU 2009

Page 27 of 29

e)

In case of donated assets, contractual obligations and conditions should be considered prior to disposal of assets. Express written consent should be obtained from the funding source prior to disposal of assets. Such conditions include the following: Donor policy on asset disposal for donor funded assets GOU policy for GOU purchased assets

VII. Depreciation of Fixed Assets a) Depreciation is defined as the decrease in value of a fixed asset associated with wear and tear of the asset resulting from normal use. It is a charge to the income and expenditure account. Depreciation of fixed assets begins in the month the asset is placed into service. UCSCU fixed assets and/or RFSP/IFAD/GOU funded fixed assets are depreciated on a Straight Line basis The following depreciation rates apply to the various asset types: Asset Furniture & Fittings Equipment Computers Motor Vehicles Buildings Other Assets VII. Accounting for Fixed Assets d) On acquisition of a fixed asset By Purchase Debit the Fixed Asset Credit Cash/Accounts Payable By Donation Debit the Fixed Asset Credit Donation Income Recording of Depreciation Debit Depreciation Expense Credit Accumulated Depreciation for the class of assets f) Disposal of an Asset Asset disposed at carrying value, or written off Debit Accumulated Depreciation Debit Cash/Donations/Obsolescence Credit Fixed Assets Asset Disposed of at less than carrying value Debit Accumulated Depreciation
Page 28 of 29

b) c) d)

Useful Life 3 Years 3 Years 3 Years 3 Years 25 Years 5 Years

Depreciation Rate 33% 33% 33% 33% 4% 20%

e)

Admin. & Finance Manual UCSCU 2009

Debit Loss on Disposal of Assets Debit Cash Credit Fixed Assets Asset Disposed of at more than carrying value Debit Accumulated Depreciation Debit Cash Credit Gain on Disposal of Assets Credit Fixed Assets

VIII. Use, Maintenance, and Custody of Fixed Assets a) Fixed assets form an important component of UCSCU activities. They should be properly handled and maintained, and their use restricted to activities in support of UCSCU. Misuse, abuse, and misappropriation are prohibited. The Administrative Officer, in collaboration with the Procurement Officer, should set up maintenance schedules for computers, photocopiers, vehicles, equipment, and other assets The FAM, with delegated authority to the Administrative Officer, is responsible for the safe custody and proper use of all UCSCU assets. However, individual staff members with assets allocated to them as part of their job responsibilities are responsible for their safe use and custody. Removal and use of fixed assets away from the UCSCU premises should be authorized by the CEO or his representative.

b)

c)

d)

Admin. & Finance Manual UCSCU 2009

Page 29 of 29