As NGOs manage expenditures through staff members, it is important to adopt a process to ensure that all expenses are valid and strict accounting procedures are adopted to check them. Such a process helps in maintaining a control on the expenditures and also ensuring the quality of your accounts management system. Here is how you need to set up your process for validating bills, invoices, receipts & vouchers and you can integrate the same in your financial management policy:
Invoice Validation
Essentials of a Voucher
- Project name – in order to identify that the voucher belongs to a particular project, the project name needs to be stamped / marked on the voucher.
- Voucher number – the voucher should be numbered and these voucher numbers should be pre-printed. The voucher book should be officially issued to the person responsible for preparation of vouchers. Any vouchers wrongly written should be marked `CANCELLED’ across the face of the voucher and left in the book itself. Hence, either the vouchers would have been used and taken into the cash book or be left as cancelled or accounted for as balance remaining. This is a good practice in accounting and can be introduced over a period of time.
- Date and the serial number of the voucher used.
- Classification – The cost centers and line items are clearly specified in the proposal. On the basis of the nature of expenses, it is verified that the expense is correctly classified into the various line items as appearing in the proposal.
- Narration – there should be a detailed narration in support of the classification showing the description of the transactions.
- Amount – it is verified that the amount on the voucher is equal to the amount reflected by the supporting documents, or matches any adjustments effected (e.g.: advance payments adjusted)
- Supporting documents – these are in the form of original bills, which are\ the real proof of transactions based on which payment is affected. The classification of the expense is based on the nature of expense reflected by these documents and the amount on the voucher should be the amount reflected by these documents.
- Signature of the person preparing the voucher
- Signature of the person authorizing payment (To verify with the delegation of powers of each member authorized within the organization to approve payments)
- Signature of the person receiving payment
- Defacing of vouchers and supporting documents by a `PAID’ stamp, subsequent to payment to avoid duplication of payments, and providing reference numbers of vouchers and check number if relevant.