Table of Contents

1.0 Introduction............................................................................................................................ 4
2.0 Scope...................................................................................................................................... 4
3.0 Departmental Quality Objective............................................................................................4
4.0 Internal Communication Method...........................................................................................5
5.0 Departmental Meetings.......................................................................................................... 5
6.0 Departmental Organogram....................................................................................................6
7.0 Roles and Responsibilities....................................................................................................6
8.0 Infrastructure Needed............................................................................................................6
9.0 Work Environment Needed (Safety and Health)..................................................................7
10.0 Interface Management With Other Departments/Units......................................................9
11.0 On the Job Training............................................................................................................ 10
12.0 Description of Function......................................................................................................11
12.1
Resources planning budgeting, resource need identification.............................................11
12.2
General Ledger Maintenance............................................................................................11
12.3
Management Accounts......................................................................................................11
12.4
Reconciliation.................................................................................................................... 11
12.5
Salary and Wages............................................................................................................. 11
12.6
Improvement Methods:......................................................................................................12
12.7
Corrective Actions:............................................................................................................ 12
12.8
Preventive Actions:............................................................................................................ 12
13.0 List of Records/Documents Maintained Within The Department....................................13
14.0 Appendices......................................................................................................................... 13
15.

16.0 Process Flow Chart............................................................................................................ 13

1.0

Introduction

It is of paramount importance for every organization to have a well-structured and functional

finance department that provides information to managers in making strategic and timely
decisions. The department is also to ensure accurate accounts are maintained and prepared in line
with the applicable laws while ensuring appropriate cost controls are in place for maximum profit
realization.
This document serves as a guide to the process and procedures of the finance department. It will
help provide direction on the execution of various roles and responsibilities while ensuring proper
controls are maintained for effective and efficient delivery of service.

2.0

Scope

This SOP documents the finance policies and procedures to be employed in the oversight of the
finance function of OOOOOOOOOOOOOOOOOOO.
The document has been prepared to assist management and staff, who are responsible for the
tasks of managing the Authoritys assets and liabilities and implementing general control guidelines
which would improve the accuracy of financial information.
This SOP is not meant to be all-inclusive but represents the minimum mandatory requirements.
The manual is designed to be revised and updated as changes occur. The responsibility for
reviewing this manual and updating when necessary rests with the HOD/Supervisor.

3.0

Departmental Quality Objective

The finance department is in charge of ensuring the smooth running of all daily transactional
accounting of the company
The overall objective of the finance department is to ensure it assists the company in making
optimal use of its limited financial resources.
Salaries
preparation
ranges
between
and it is disbursed to all staff within 24hours.

4.0

26th

28th

of

every

month,

Internal Communication Method

This consists of mail communications and verbal communication within the department and other
Departments. We ensure adequate communication and information flow between Management
and staff through various means such as
emails,
notice boards,
memos
Telephones discussions
and other communication means as applicable and as approved by the management.

The dialogic process between employer and employees (top-down), and employees and
employees (side-to-side) are done through the use of the following:
o One-on-one meetings
o Staff/team meetings
o Emails
o Staff-to-staff newsletters (for specific projects)
o Annual Reports
o Monthly Reports

5.0

Departmental Meetings

The departmental meetings are held on Bi-Monthly basis. The highlights of the meetings include;
Updates from individual members of the department
Job challenges
Suggested solutions to job challenges
Briefing on recent developments within the Department and the company
Re-affirmation of departmental objectives and how to achieve set targets.
The minutes of the meeting is maintained for reference purpose.

6.0

Departmental Organogram

-----------

7.0
Roles and Responsibilities:

Providing information to assisting management in making strategic decisions.

Responsible for all day to day transactions.

Preparation the financial statements with an external auditor engaged for assurance
purposes.

Management of organizational cash flow and ensuring there are enough funds available to
meet day to day office running expenses /payment.

Advising and sourcing longer term financing.

Ability to prepare the

ooooooooooooooooooos.

Valuation reports

document

require

for

the

presentation

with

outside

8.0

Management account ting information that can be useful for monitor the operation of the
company.

Measuring and reporting regularly to the CEO.

Taking care of assets and liability of the company

Infrastructure Needed

For the effective running of the Department and the successful attainment of the set objectives the
following infrastructure is required;

Required stationeries needed to assist administrative aspect of HR

Dedicated Telephone to back ground check confirmation, absent staff, recruitment and
research/enquiry

Cabinets for files to separate documents for easy retrieval

Photocopy machine

Paper shredder/shredding machine

Desktop computer

Printer

Internet Access

9.0

Work Environment Needed (Safety and Health)

Health and safety in a work environment are pivotal issues in an organisation in which employers
must educate employees on occurrence of hazards such as accidents and injuries. Its the
responsibility of supervisors, departmental heads and Human resource Manager to protect the
health and safety of employees by providing appropriate training on dangerous
equipment/materials, informing employees on possible workplace dangers and setting up
practicable safety work measures.
Guidelines for Health and Safety in Human Resource Management Include:
Encouraging staff to report any faulty equipment or unsafe condition of material to supervisors
and department heads without fear of being sanctioned.
Informing Staff on Emergency Procedures, in the case of fire.
Use of first aid skill requirement.
Informing and enlightening the maintenance officer to switch off all electrical appliances after
work.
Monitoring cleanliness of welfare facilities such as toilet and kitchenette.
A conducive, noiseless, well ventilated work environment with a safe system is required for optimal
performance. The health of all members of staff is paramount as well as their safety and to
enhance this we have the HSE Coordinator who is in charge of the safety management system

and the overall implementation of the organization safety policies. Muster points have been
identified as a gathering point in case of Emergencies, fire extinguishers are available at strategic
locations within the office environment in case of fire emergencies; a first-aid box is also available
for the administration of basic first in case of injuries within the office environment.

10.0 Interface Management with Other Departments/Units

The department interfaces with the various department within the organization. The essence for such interface in required to enabled
us carry other processes along in the implantation of projects. The diagram in appendices II explains the interface with other
departments.

11.0 On The Job Training

Employees play a crucial role in the existence of any business entity. Training and development
help to boost the morale of employees and increase productivity to achieve the organisation goals
and objectives.
On the job training will help employees acquire more skills in relation to their jobs especially for
Admin Staff (customer service).
On-the-job training focuses on the acquisition of skills and competences within the department
generally under normal working conditions. Usually a senior or more experienced member of the
department is assigned to pass the knowledge and skills on to a new staff.
The junior staff is made to undergo on-the-job training under a senior staff, while the senior staff
goes through on-the-job training under the guide of the Head of Department. This will assist to
prepare the staff ahead when he or she is posed with challenges at work or when he or she
eventually assumes a position of higher responsibilities.

Procedure:
This training is done during the course of carrying out the day to day activities within the
department. First the training needs of the staff that requires the training is first identified by the
head of the department after a competency gap has been done, the manager or the direct
supervisor then takes the staff through on the job training for a defined period. The employee
learns the job while doing the job and using the actual tools, equipment, documents or materials
with the supervision of the HOD or direct Supervisor.
The supervisor or HOD monitors the staff performance, attitude to work and the ability to learn and
multitask during this period after which an evaluation of the training is done to determine the
training effectiveness. If the training was seen as not effective the staff will then be sent for further
training or any other appropriate action is taken to fill the identified gaps. Records of the on the job
training and evaluation carried out are maintained in the staff training forms.

12.0 Description of Function

It is the responsibility of the head of finance or finance supervisor to ensure the procedures stated
below are adhered to.
Financial duties and responsibilities must be separated so that no one employee has sole control
over cash receipts; disbursements; payroll; reconciliation of bank accounts; etc.

HEAD OF DEPERTMENT FUNCTION

 Providing information to assisting management in making strategic decisions.

Responsible for all day to day transactions.
Preparation the financial statements with an external auditor engaged for
assurance purposes.
Management of organizational cash flow and ensuring there are enough funds
available to meet day to day office running expenses /payment.
Advising and sourcing longer term financing.
Ability to prepare the document require for the presentation with outside
ooooooooooooooooooos.
Banking function
Salary preparation & processing
Checking impress book

ASSISTANT ACCOUNTANT FUNCTION

Raising of Cheques
Daily Cash disbursement

ACCOUNT SUPERVISOR

Supervision all work done in Account department

Checking book of records and filling

SENOIR ACCOUNT CLERK FUNCTION

Overhead clerical work
Raising of Cheques
Daily Cash disbursement

CLERK FUNCTION

Reporting to Senior Account Clerk, to Account Supervisor, to Assistant Accountant, to HOD

Finance/Admin to M.D
o

Petty cash work

Impress disbursement

Cash Banking/Teller

12.1 Budgeting
These procedures cover all activities involved in planning, development, and implementation and
monitoring of the capital and operating budget of OOOOOOOOOOOOOOOOOOO.
The Budgeting process specifically addresses the following areas:
a Budget Preparation
b Budget Monitoring

12.1.1 Budget Preparation

These policies are designed to govern the following:

Establishment of standardized procedures for budget preparation

Ensuring that budgets are duly approved and authorized in line with pre-defined levels

Ensuring budgets are realistic and prepared on a timely basis

Ensure alignment of budget to the objectives of the OOOOOOOOOOOOOOOOOOO

Control Procedure
No.

Tasks

The Managing Partner and the Management team shall arrange for the preparation of
the Annual Budget for the forth coming year from the first week of October each year
The Budget shall be reviewed at mid-year.

No.

Tasks
The Annual Budget shall contain an itemized estimate of the expenditures to be made
during the applicable Calendar Year and shall, inter alia:

Identify CAPEX and operating costs in sufficient detail;

Identify each capital activity in sufficient detail to afford ready identification of the
nature, scope, duration, and impact of the activity in question together with
appropriate justification;

Include such reasonable information regarding personnel and estimated manpower

costs;

Contain an estimate of expenditure by calendar month;

Include projected cash flows and net profit projections by month; and

Be accompanied by other information as is necessary for an informed Board

decision.

Budget premises, timetables and guidelines shall be prepared by the Finance

Manager/Supervisor, encompassing requirements of current project teams and in liaison
with the Managing Partner and circulated to all HODs prior to the budget preparation
period.

HODs shall be responsible for the preparation of the budget of their department.

All unit budgets shall be collated and consolidated into a functional budget, hence HODs
are to be forward departmental budgets to Finance Department Unit. The Finance
Manager/Supervisor shall conduct joint budget review sessions with HODs to challenge
and agree on the departmental budget estimates and assumptions

The authority to approve the annual budget shall rest solely on the Managing Partner.

12.1.2 Budget Monitoring

These procedures are designed to govern the following:

Establishment of standardized procedures for monitoring adherence to the approved budget

Ensuring budget overruns are detected and managed on a timely basis

Control Procedure
No.

Tasks

An analysis of actual to budgeted spend shall be prepared by the Finance

Manager/Supervisor and reviewed by the Managing Partner on a monthly basis

The Finance Manager/Supervisor shall reappraise budget estimate for the period, in
view of current realities and establish justification for budget revision if need be, based
on the analysis of the actual to budgeted spend for the period

All budget revisions shall be approved by the Managing Partner and must be ratified by
the Board of Directors where the variations are greater than N500,000.

12.2 Short Term Forecast

This is to help ensure a realistic projection of the firms future cash inflows and outflows and
proactively determining the periods in the future when the firm will have surplus or insufficient
funds to meet its future obligations. This process will proactively arrange an efficient means of
funding anticipated future cash deficits and plan for optimal investment of surplus funds.
Control Procedure
No.

Tasks

The Finance Manager/Supervisor shall be responsible for the preparation of cash

forecasts with inputs from all key personnel (HODs)

All cash forecasts shall be approved by the Financial Manager/Supervisor and the
Managing Partner

Cash forecast assumptions shall be clearly defined and documented.

Cash forecast should be submitted to the Managing Partner on the 1st day of every
month

12.3 Short Term Investments

This process covers activities involved in investing excess liquidity in order to maximize the
returns on the firms assets. Idle funds should be proactively identified and invested in interestbearing instruments at the most attractive rates in approved financial institutions.
Funds should be invested in instruments with sufficient flexibility to accommodate contingencies
and changes underlying planning/forecasting assumptions.
Control Procedure
No.

Tasks

The finance manager/supervisor shall proactively ascertain the firms liquidity position in
order to identify any excess/idle funds for investment on a timely basis

The decision of which bank to invest the idle funds shall be determined by the Managing
Partner.

The health of the selected bank shall be reviewed by the finance officer/supervisor
quarterly throughout the year with recommendations made to the Managing Partner in
the event that adverse conditions persist at the institution

The Managing Partner must approve all changes to investment portfolio.

A report on the status of investments must be submitted to the Managing Partner every
quarter. This report shall clearly show investment amount, investee institution, profit/loss

made, disposals, average interest rate (as applicable), etc.

12.4 Property and Equipment

The finance department must maintain a record of all fixed assets of the company by department
and location. A quarterly inspection of all fixed assets of the company must be carried quarterly.
Missing assets should be checked and investigated. Worn out or damaged fixtures must be
reported and documented. Damaged fixtures should be repaired when needed.
Any asset that is to be transferred between departments must receive approval from the Managing
Partner. An asset movement register must be signed off in the finance department if any asset of
the company is to be moved from one department to another or from one location to another.
Once, the asset is returned, the register should be signed. This will help track the movement of
assets and make the quarterly inspection easier.
Employees are not permitted to use the asset of the company for personal use.
This process covers activities involved in managing OOOOOOOOOOOOOOOOOOOs fixed
assets. The Fixed Asset Management process comprises the following sub-processes:
a) Acquisition of property and equipment
b) Management/maintenance of property and equipment
c) Property and equipment disposal

12.4.1 Acquisition of Property and Equipment

Control Procedure
No.

Tasks

All property and equipment acquisitions shall be made in accordance with the provisions
of the approved Capital Expenditure (CAPEX) budget for the year. Where property and
equipment requisitions are not provided for in the approved CAPEX budget,
documented justification must be provided by the requisitioner.

Property and equipment requisitions must be reviewed and approved by the relevant
HOD

Property and equipment requisitions that are not provided for in the approved CAPEX
budget must be approved by the Managing Partner

All property and equipment requisitions shall be processed in accordance with approved
contracting and procurement policies and procedures.

Upon delivery, fixed assets shall be jointly inspected by the a representative of the User
Department and a staff of the Internal Audit Unit to ensure goods supplied meet the
quality and quantity specified in the Purchase Order/Contract.

12.4.2 Management/Maintenance of Property and Equipment

Control Procedure

No.

Tasks

The capitalisation threshold of fixed assets shall be N50,000

A fixed assets register shall be maintained for all tangible fixed assets. Key information
to be tracked about each asset include: Serial no., date of purchase, description,
category, department, location and custodian.

Depreciation of an asset begins when it is available for use, i.e. when it is in the location
and condition necessary for it to be capable of operating in the manner intended by
management.
Assets will be depreciated on straight-line basis over a four-year period.

The Finance Manager/Supervisor shall ensure complete, accurate and timely capture
and classification of fixed assets acquired.

The Designated Member of Senior Management shall ensure independent verification of

the Authoritys fixed assets on a periodic basis to confirm accuracy of documented
physical assets.

The Finance Manager/Supervisor shall reconcile the fixed asset balance per GL to the
Fixed Asset Register on a quarterly basis to ensure that movements (i.e. acquisitions,
disposals and reclassifications) of the fixed assets accounts are accurately recorded and
classified.

12.4.3 Disposal of Property and Equipment

Control Procedure
No.

Tasks

The Administrative unit shall be responsible for the fixed asset disposal process in line
with established policies, procedures and guidelines.

Value of asset to be disposed must be determined by the Managing Partner

All fixed asset disposals must be duly approved and authorized by the Management
team before the assets are sold/disposed.

Fixed assets shall be proposed for disposal based on whether they have been fully
depreciated or whether they have been recommended for replacement by the User
Department through the Administrative Unit.

Recommendations for replacement of assets, which have not been fully depreciated,
shall originate from validated user complaints and approved by the Managing Partner

Fixed asset disposal shall be by secret balloting

Finance shall receive payment for fixed assets, all payment must be made in cheque or
bank draft. A copy of the cheque or bank draft shall be forwarded to the Administrative
Unit and the cheque or bank draft of the payment on the asset will form the basis for
removing the asset from the fixed assets register and for treating the disposal in the
books of OOOOOOOOOOOOOOOOOOO.

The Administrative Unit shall only release fixed assets to the buyer after receiving the
acknowledged copy of the cheque or bank draft from Finance Unit

The Finance Manager /Supervisor shall review the books/accounts impacted by the
disposal to ensure that asset disposals have been properly accounted for

12.5 Payment Processing

These procedures are designed to ensure:

All payments made by the firm to contractors/suppliers are for valid transactions only

All payments made to contractors/suppliers are made on a timely basis

All payments made are properly supported and are accurate

Control Procedure
No.

Tasks
Payment Processing
All payments to contractors/suppliers shall be processed and disbursed by the Finance
Department. All invoices should then be immediately forwarded to the finance officer
who will review all invoices for mathematical accuracy, validity, conformity to the budget
(or other authorization).
Payment Terms
The standard payment terms of the Authority shall be upon occurrence or when the
related bills are received.
Discounts and interest charges
Payments to suppliers shall be made to the best possible benefit to take advantage of
any account discounts and interest charge clauses in the supplier contracts, e.g. early
payment discount.
Payment mode
Local and foreign contractors/suppliers shall be paid through bank transfer or cheque.
Blank cheques shall not be pre-signed. Unused, blank and voided cheques shall be
stored in the Authoritys safe, in the custody of the FC.

Records of all cheque transactions shall be maintained on the Cheque Register and the
cheque register shall be duly endorsed by beneficiaries to evidence cheque collection.
Confirmation of cheques shall be by the means agreed with the financial institution. The
firm can use letters for confirmation duly signed by the Managing Partner, telephone or
text.
Approval of payments

Cheques and Transfer Instructions for payments shall be approved by the Managing
Partner

Advance payments to suppliers

Advance payments to contractors/suppliers shall be granted only under the following

conditions:
-

The contractors/suppliers is to provide specialized or proprietary goods or

services and requests an advance payment to be made; and

The advance payment would expedite the delivery of goods or services critical to
the firms operation.

Typically, advance payments shall only be granted to suppliers who have been
consistent in transacting business with the firm for not less than a period of six (6)
months.

Advance payments shall only be granted to suppliers based on an approved PO, and
the advance payment shall not exceed 50% of the contract value (it could be less)

Only the Managing Partner may approve advance payments.

Change to payment details
7

Changes to supplier payment details shall be honoured only if communicated on the

suppliers letterhead and duly signed by its authorized signatories.

12.6 Cash Advances

Business advances are advance payments to staff for business related expenses. This process
covers the activities involved in the processing, tracking and retirement of business advances.
These procedures are designed to ensure:

Advance requisitions are only made for bonafide OOOOOOOOOOOOOOOOOOO expenditure

and are approved by authorized personnel

All business advances are accurately processed and recorded on a timely basis

All advances are properly and promptly retired

Control Procedure
No.

Tasks

The finance department shall keep a detailed record (name, amount, purpose of
advance, date etc) of all employee advances.

A new advance shall not be approved for a staff if there is any outstanding unretired
advance against him.

All advance requisitions shall first be endorsed by the Head of User Department to
ensure and confirm that the requisitions are for bonafide Authority expenditure.

As a second level approval, advance requisitions must be authorized/approved by the

Managing Partner before payment processing and cash disbursement.

Contract Staff can be given a maximum of N20,000 cash advance, Junior employees

can be given a maximum of N30,000 while senior staff can get a maximum of N50,000.
Amounts outside this for each category of staff must be approved by the Managing
Partner.
6

All business advances shall be initiated via Advance Request Form.

All advances must be retired within two (2) weeks of taking the advance.

The Finance Manager/Supervisor shall review the advance balances of all staff and
advice the head of HR to deduct overdue balances (balances above 1-month) from the
employees salary.

Any outstanding advance balance is deducted lump sum from employee salary after due
notification to the employee involved but which the employee has refused to retire.

10

Expense Retirement Forms (ERFs) shall be approved by the relevant Head Of

Department, who shall ensure that the advance was utilised in line with approved
expenditure.

12.7 Staff Claims

This process outlines the activities involved in reimbursing an employee for bonafide expenses on
behalf of the Firm.
These policies are designed to ensure:

Staff claims are only made for bonafide OOOOOOOOOOOOOOOOOOO expenditure and are
approved by authorized personnel

All staff claims are accurately processed and recorded on a timely basis

Control Procedure
No.

Tasks

Staff shall be reimbursed only for valid expenses. Usually expenses on official duty
which the employee has sought approval for. Hence, employees must submit a staff
claim form along with an approval to proceed to make such an expense from the
Managing Partner.

Staff claims shall not be approved for a staff if there is any outstanding unretired
advance against him.

All staff claims shall be endorsed by the Head of User Department to ensure and
confirm that the requisitions are for bonafide OOOOOOOOOOOOOOOOOOO
expenditure.

The final approval for payment lies with the Managing Partner

12.8 Receipt of Cheque/Bank Draft

This process is to ensure:

All funds received are properly accounted for and accurately captured

Complete, accurate and timely recording of cheques and bank draft receipts

Compliance with established finance policies and procedures in order to safe guard cheques
and bank draft receipts from theft and misappropriation.

Timely and complete lodgment of fund into the appropriate bank accounts

Control Procedure
No.

Tasks

All cheques and bank draft received must be recorded in a designated register to keep a
detailed record of all receipts.

All cheques and bank draft receipts must be securely kept in the safe (fire proof)
pending their lodgment into the bank account.

All cheques and bank draft receipts shall be lodged in the appropriate bank account on
the day of receipt or unfailingly by the next working day by the finance officer/supervisor

12.9 Petty Cash

This process is designed to ensure:

Petty cash imprest is properly controlled and maintained within a set limit

Petty cash replenishments are processed accurately and on a timely basis to meet the firms
obligations and needs

Control Procedure
No.

Tasks

Petty cash float of N100,000 shall be maintained in the Finance Department every
month

Cash levels shall be monitored by the Finance Manager/Supervisor on a daily basis to

ensure adequacy of the cash for operational purposes of the firm.

Amount requested for fund replenishment shall not exceed the established imprest limits
when added to the cash on hand. Where the need to exceed the imprest limit arises, a
waiver approval must be obtained from the Managing Partner.

All replenishment requests shall be reviewed and approved by a Designated Member of

Senior Management. The Designated Member of Senior Management shall from time to
time confirm unspent portion of the float in the safe before the approval for
replenishment.

The Designated Member of Senior Management shall also carry out random cash count
on a monthly basis to ascertain the completeness and accuracy of the imprest cash
balances and prompt detection of losses: theft and misappropriation

The Designated Member of Senior Management shall reconcile the physical cash
counted to the petty cash register general ledger records and also review all relevant
cash request forms and supporting documentation to validate the propriety of the
transactions.

On completion of the monthly cash count, a cash count report shall be prepared by the
Senior Management staff and submitted to the Managing Partner to determine
necessary action steps (where required).

12.10 Staff Advance

These procedures govern the administration of staff advances and are designed to achieve the
following:

Ensure employee loans and salary advances are made in accordance with the firms policy

Ensure employee loans and advances are duly authorized

Ensure loan and advance repayments comply with the firms policy

Ensure accurate deductions from staff salaries are made on a regular basis

Control Procedure
No.

Tasks

Employee loan requests shall not exceed 30% of the requesting employees yearly
basic salary.

All loan and salary advance requests shall be documented and approved by the Head
Human Resources

The Head of Human Resources and the Finance Manager shall be responsible for
ensuring periodic loan deductions are made as stipulated in the loan agreement.

12.11 Bank Reconciliation

This process covers activities aimed at ensuring the completeness, accuracy and timely capture of
the firms banks position or records at any point in time. It will also ensure errors and exceptions in
firms bank accounts are promptly detected and resolved on a timely basis. This will help confirm
that bank balances presented by the firms financial records are accurate and reflect its bank
account position
Control Procedure
No.

Tasks

All requests for bank statements must be signed off by the Managing Partner

All bank statements must be opened by the Managing Partner or Finance

Manager/Supervisor

All the firms bank accounts shall be reconciled on a monthly basis by the Finance
Manager/Supervisor and exceptional items identified and investigated.

All bank accounts must be reconciled no later than the 10th day of the following month
and submitted to the Managing partner.

All reconciling items shall be duly investigated and reported to the responsible banking
officials for prompt resolution. The Finance Manager/Supervisor shall ensure timely and
satisfactory disposal of reconciling items.

The Manager Partner shall review and approve all bank reconciliation statements

12.12 Payroll
The Payroll procedures cover activities involved in the maintenance of compensation records and
the processing of salaries and other entitlements of OOOOOOOOOOOOOOOOOOOs employees
and contract staff. The policies consist of the following sub-sections:

Maintenance of Payroll (Personnel) Records

Payroll disbursements

12.12.1 Maintenance of Payroll (Personnel) Records

The policies objectives are:

To ensure that a complete and accurate database of all XXX employees and contract staff is
maintained for payroll purposes

To ensure that the payroll database is updated on a timely basis to reflect personnel changes

To prevent unauthorized additions or changes to the payroll

To ensure employee compensation is accurately computed and is in compliance with the

employment terms and conditions of service

Control Procedure
No.

Tasks

The Human Resources Department shall maintain complete and accurate records of all
OOOOOOOOOOOOOOOOOOOs personnel and ensure regular updates of such
records.

Access to personnel records (manual or otherwise) shall be restricted to authorized

persons only

All letters of appointment and promotion shall be approved (signed) by the Managing
Partner and authorized for update in the Personnel database by the Head Human
Resources.

The computation of payroll elements shall be based on approved employment,

promotion, movement, retirement, etc. of staff.

The Human Resources Department shall notify the Finance Unit within 48 hours of any
changes in personnel profile.

The Finance Manager/Supervisor shall ensure that all notifications of personnel

movement, promotions, retirement, etc, emanating from the Human Resources
Department are duly authorised by the Managing Partner before they are processed
with the payroll processing cycle.

12.12.2 Payroll Disbursement

This process is to ensure:

employee/contract staff compensation is based on records maintained in the staff database

payroll processing and disbursements are processed accurately and on a timely basis

payments are made only to real and actual employees of OOOOOOOOOOOOOOOOOOO

personnel (payroll) costs are accurately captured and reported in the firms accounts

employee compensation is accurately computed based on approved input documents and in

compliance with employment terms and conditions of service

Control Procedure
No.

Tasks

The Head Human Resources shall be responsible for complete and accurate capture
and processing of all relevant payroll inputs/data.

On a monthly basis, the FC shall ensure that all payroll changes advised by HR are
supported by valid and authorized payroll input documents (e.g. appointment letters,
loan forms, overtime sheets, advance deductions, etc)

Staff payroll entitlements shall be disbursed or transferred directly to employee salary

accounts to ensure secure, timely, and effective disbursement of staff salaries and
entitlements.

New employees shall be given a grace period of 1 months to open their salary accounts
and advise HR of their account numbers. During this grace period, new employees shall
be paid by cheque.

Temporary staff such as NYSC, IT etc shall not be included on the firms payroll. HR
shall prepare a separate schedule for such staff.

Changes to payroll must be submitted to HR at least one (1) week before pay day. HR
must in turn inform Finance of any changes at least four (4) days before pay day.

Finance shall then start the approval process at least three (3) days before pay day to
allow for the checks and approval below.
Before payment, the Finance Manager/Supervisor must carry out a variance check
(number of staff, total cost per payroll item) for payroll and submit a detailed analysis to
Human Resources for the first level approval.
Once HR approves, the payroll is forwarded to a Senior Management Staff who checks
for variances and then approves.
Once approved by the Senior Management Staff, the payroll is forwarded to the
Managing Partner for final approval for payment
7

Employees are paid twice a month, hence, the Finance Manager/Supervisor shall
ensure that salaries are disbursed to staff salary accounts on or before the 15 th and 31st
day of every month.
Employees are paid twice a month (mid-month and end-of-month), hence, staff payroll
entitlements and statutory deductions shall be processed twice a month.

The Finance Manager/Supervisor must ensure that Pension from payroll is remitted
within five (5) days from the payment of salary. The pension act stipulates all pension
deducted from payroll be remitted within seven (7) days of salary payment to staff.
Employees contribute 8% and employer contributes 10%.
The Finance Manager/Supervisor must ensure that tax from payroll is remitted within
one (1) week from the payment of salary.
Human Resources must follow up with finance to ensure the various deductions are
made within the statutory timelines.

Employees may request for a payslip from the HR department to verify the breakdown
of their salaries.

12.13 Financial Reporting

These guidelines cover the various activities involved in the recording, classification and analysis
of financial transactions, including the preparation, generation and presentation of key
management and financial reports. It comprises the following sub-areas:
a.
b.
c.
d.

Month-end Closing and Reporting

Accrual Processing
Prepayment Processing
Amendment to the Chart of Account

12.13.1 Month-end Closing and Reporting

The policies in this segment cover the activities involved in preparing month-end financial reports
and statements. This is to ensure:

Complete, accurate and timely capture, recording and classification of the firms financial
activities
Simple, standardized and efficient close-the-book processes to facilitate timely
preparation/generation of management, statutory and financial reports
Compliance with statutory and other relevant reporting guidelines and with respect to financial
and management reporting

Control Techniques
No.

Tasks

Cut-off date for recording of financial transactions into the register/accounting system
shall be 25th day of the month

The period-end closing process shall be completed and reports generated by the 5 th
work-day of the following month

4
5

All period-end financial accounting and management reports shall be reviewed and
approved by the Financial Manager/Supervisor. The Financial Manager/Supervisor shall
ensure that the approved monthly financial statements are forwarded to the Managing
Partner by the 7th workday of the following month.
All external reports shall be approved by the Financial Manager/Supervisor and the
Managing Partner
All journal vouchers and entries shall be supported by duly authorized documents and
must be reviewed and approved by the FC, prior to posting to the general ledger.

12.13.2 Accrual Processing

These procedure guides the activities involved in ensuring that period-end financial statements
capture and reflect all expenses incurred by OOOOOOOOOOOOOOOOOOO during the reporting
period, including expenses which are yet to be paid.
Control Techniques
No.

Tasks

All expenses shall be recognised in the period incurred or when the services are
received, irrespective of when the payment is made.
Expenses that have been incurred or services received, which have not been
invoiced by the supplier, shall be accrued against the relevant period. Accruals shall
not be made for services that are yet to be contracted or received at period end.
Where the actual data for the services received are not available from the supplier,
reasonable estimates based on historical data and current business realities shall be
made and provided for in the books.
Expenses shall be recognized in the period in which they are incurred, irrespective of

when payment is made

3
4

Transactions
in
which
goods/
services
have
been
received
by
OOOOOOOOOOOOOOOOOOO but are yet to be paid for shall be accrued for in the
firms books on a monthly basis
The FC shall review and approve all accrual entries to ensure:
Accrual computations are correct
Accrued expenses are relevant to the reporting period
Accruals are complete

12.13.3 Prepayment Processing

This process objective is to ensure complete and accurate capture, recording and amortization of
prepaid expenses.
Control Techniques
No.

Tasks

3
4

Prepayments for which the benefits are to be derived in the future are classified as
other assets in the financial statements.
Prepayments not exceeding the approved fixed asset capitalization threshold shall
be expensed immediately.
Prepayments relating to specific periods shall be recognized as an expense in such
periods.
Prepayments amortization shall be on a straight-line basis, and in line with the
contract/agreement.
The Finance Manager/Supervisor shall ensure timely, complete and accurate
recognition and registering of prepayments and subsequent amortizing items in order to
ensure prepaid expenses are amortized over the life of the benefit enjoyed.
All entries raised for prepayments must be reviewed and approved by the FC.
The Finance Manager/Supervisor shall ensure that a detailed Prepayment Amortization
Schedule is maintained for all prepayments to:
o Ensure accuracy of amortizing entries
o Facilitate monitoring of prepayments
Any proposed adjustments to the Prepayment accounts must be reviewed and approved
by the Managing Partner

12.14 TRAVEL
A travel authorization form must be completed for every travel for and on behalf of the company.
The forms must state the purpose of the trip, estimated total cost of the trip showing breakdown,
cash advance required

12.15

Resources
Planning
Budgeting,
Resource
Need
Identification

12.16

General
Ledger
Maintenance

12.17

Managemen
t Accounts

Reviewing and reporting on systems and operations ( internal audit, management audit).
Acquisition and uses of finance (Financial Management and recording of transactions.

12.18 Improvement Methods

Improvements methods are discussed during departmental meetings and are communicated via
email to members of staff. When management approval is required for implementation of the
improvement, the Head of Admin sends a request to either the MD or the Operations Manager
depending on the level of approval required. After approvals are received, members of staff are
informed via email.

12.19 Corrective Actions

Corrective action methods are treated the same way as improvement methods

12.20 Preventive Actions

Preventive action methods are treated the same way as improvement methods