FAS is responsible for reconciling and closing of the monthly accounts and year-end accounts. Accounts are any financial data appropriately approved for entry into the Center’s overall accounts and recorded in the Center’s financial system.
Financial statements shall be prepared in accordance with the modified cash basis of accounting. Under the modified cash basis of accounting, income is recognized when cash is received rather than when earned and expenses are recognized when paid rather than when incurred. Cash advances paid are recognized as assets. The cost of property and equipment acquired is also recognized as an asset and depreciated over its estimated useful economic life.
The functional currency of the Center shall be determined based on the currency of its primary economic environment or the currency of the environment which the Center primarily generates and expends cash.
The Center’s transactions will be recorded in their original currency and translated into US Dollars (USD) and Philippine Pesos for reporting purposes.
To comply with local taxation requirements, The Center shall also maintain its books of accounts in Philippine Pesos.
In the closing of accounts and preparation of financial reports, FAS must comply with both Internal Reporting Standards and International Accounting and Reporting Standards.
Books are closed no later than five (5) days from the close of the present month. After the cutoff, FAS shall cease to enter any transaction for the preceding month and prepare the monthly trial balance, bank reconciliations, financial and other reports for the approval of the Head of FAS. Following approval, the monthly reports are filed together with other relevant month-end documentation.
Hard copies of the month-end reports must be certified by the Head of FAS and filed.
When need arises, quarterly reports will be done to compile the quarter's operating statistics and results.
The Center’s accounts are closed annually and income and expenditure must be reported as accurately as possible.
Before the end of each year, FAS will issue an instruction on the closing procedures and deadlines to be achieved. These instructions must be strictly adhered to.
Due care must be taken in relation to unliquidated obligations ensuring that the expenditures for the calendar year that has passed are not under or overstated. It is the responsibility of the project staff to review the November fund status report and report to FAS, before 15 December, any outstanding obligation recorded incorrectly, to ensure accuracy in the final yearly account.
Outstanding obligations may include salaries for consultants, outstanding payments for contracts and purchase orders, rent, utilities and communication charges, and outstanding entitlements to staff.
Every effort must be made to clear all outstanding commitments and advances. Commitments that cannot be liquidated before 31 December must be justified to FAS and carried forward to the following year after having been checked of correctness and validity.
A list of all outstanding obligations must be produced and certified as part of the yearend documentation. In addition to the above, the following reports must be produced, certified and filed as hardcopies, at the end of each year.
As a minimum, the following reports shall form part of the financial reporting requirements of the Center on monthly and annual basis.
· Project Fund Status Report
· Income Statement
· Balance Sheet
· Statement of Cash Flows
· Specific Project Progress Report
· Specific Project Completion Report
The Project Fund Status Report (PFSR) (see Annex 41) shall be issued per month, per quarter and/or per year. It gives the complete summary of all transactions registered on the particular project. Definition of the report sections are as follows:
Approved Budget
The approved budget is indicated in its original currency and the equivalent in USD. Whilst the amounts for each budget line may vary because of budget revisions, the total is a fixed amount and will not normally vary through the lifetime of the project, unless additional funding is approved, or if the donor conditions change. However in the case where there are significant fluctuations between the currency in the agreement and USD, resulting in less available USD, the approved budget in USD must be adjusted accordingly to avoid funding gap at the end of the project.
Obligations
Obligations are contracts for committed expenditures entered into by the Center. Their value is recorded in the system in the currency of obligation. However for reporting purposes the amount of the obligation is converted to USD on the day of the report. Therefore, the amount of the obligation may vary from report to report. Project Officers can check the value and currency of obligations, the relevant exchange rates and the USD equivalent values on the system as any time.
Disbursement Month-to-Date
The amount disbursed in the month of the report.
Disbursement Project-to-Date
Cumulative during the life of the project
Undisbursed Commitments
This column shows the commitments made but not disbursed yet. Some of these commitments may be multi-year and should be reviewed every year-end to establish their validity for the coming years.
Total Expenditure
Covers both disbursement to date and unliquidated commitments. The amount of the disbursement is the USD value on the date of payment. Therefore, if the disbursement relates to obligations in a foreign currency, the amount may differ from the dollar amount shown for the unliquidated commitments at an earlier date.
Balance
This column represents the difference between the total expenditure and the total budget. None of the individual budget lines should be in the negative and care should be taken that expenditures have not been allocated to budget lines without a budget. In those cases, FAS should be alerted and a budget revision should be initiated by the Project Officer.
Cash Advances
This column provides information about outstanding advances such as an imprest account, travel advances and other eligible advances. Care should be taken to monitor this amount to ensure that it does not continue to grow, and that outstanding advances are cleared within the stipulated time frames.
Cash Balance
The total budget must be viewed in relation to the total funds received. The total amount received should never be less than the total expenditures.
The Income Statement (see Annex 42) is a statement of the results of operations of the Center for a certain period. It measures the progress of the Center in carrying out its objectives. The Income Statement shall be issued monthly, quarterly and annually. It shall give the complete summary of all revenues and expenses for each project and aggregate totals.
The Balance Sheet (see Annex 39) is a statement of the financial position or condition of the Center and specific grant funds as of a given date. It shows the assets of the Center, together with the fund balance or equity and interest of creditors. The balance sheet shall be prepared as of each end of the month and year.
The Cash Flow Statement (See Annex 44) shows the sources and applications of cash for a certain period, as well as the cash balance as of the end of such period. Like the income statement, Statement of Cash Flows shall be issued monthly, quarterly and annually. It shall give the complete summary of the sources and uses of funds for a given period.
The Specific Project Progress Report is a narrative and quantitative report on the detailed progress status of the project that shall be issued monthly, quarterly and annually.
The Specific Project Completion Report is a narrative report on the detailed completion status of the project that shall be issued upon completion of the project.
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