Good financial management
All projects and programmes require a sound financial management system to ensure they are implemented efficiently and successfully. There are five key components:
- Planning and budgeting system: This enables managers to plan and forecast expenditure on all elements of a programme. Plans should include all proposed activities and items associated with the programme. The budget sets out how much each item is expected to cost and is therefore a forecast of the amount of money required. Plans and budgets are usually prepared annually to include details of programme activities in the year ahead, and often also quarterly or monthly, giving a more detailed breakdown of forthcoming activities.
- Book-keeping and accounting: Accurate and complete records of all expenditure e.g. what was bought, when, by whom and for what purpose.
- Internal control: This means having procedures in place that provide checks and balances within the financial management system. For example, ensuring that all purchases are properly authorised and checking regularly on accurate record keeping.
- Financial reporting: Regular reports that allow comparison of actual expenditure with the forecast amounts included in the budget. Reports may be required on a monthly, quarterly or annual basis, depending on the programme.
- Auditing: Independent external review by a suitably qualified professional who examines financial records to ensure that proper procedures have been followed.
These five principles are reflected in the processes of the OWNP. The financial management system is governed by policies, strategies, manuals and guidelines designed by the Federal Ministry of Finance and Economic Development (MoFED). Before we discuss the responsibilities for financial management at different levels of government, we will look at the sources and channelling of funds for the OWNP.