1.      Introduction

A 7-day workshop was held from 4 – 10 September 2000, for practical training of NGO Treasurers and Coordinators in bookkeeping and financial management  The aim of the workshop was to increase the capacity of leaders of local NGOs (involved in operating grain mills) in financial administration and financial management. 

The workshop was conducted by Business Economist Fedde Renkema.

The expected outcome of the workshop was that participants would have sufficient skills to keep NGO books properly and act adequately in financial management and control of the assets of the NGO.  After the workshop this is to be shown in practice.

2.      Participation 

The workshop was attended by the following persons:

  • ·        Maria Brashi, UMG

  • ·        Joseph Bura, SADA

  • ·        Marta Gabriel, BUDEA

  • ·        Lawrence Ledio, BUDEA

  • ·        Mokora Makutian, NGOPADEO

  • ·        Kaigil Ngukuo, LADO

  • ·        Benedicto Njemu, UMG

  • ·        Ngakenya Ole Njorio, NGOPADEO

  • ·        Michael Ole Tipap, LADO

The second SADA participant could not attend.  In addition 3 of LADO’s staff members utilised the opportunity of the workshop being held at LADO’s office and participated also in the workshop. 

The interest and commitment of all participants was impressive.  There was a clear desire to learn as much as possible. 

A substantial difficulty was formed by the differences in level of the participants.  About half of them classified themselves as “beginners” while some of the others had already reached more or less advanced levels in financial administration.  Most of the “beginners” were double handicapped, as their command of English was not high and as a result they had no easy access to the written materials and were dependent on translation of everything said (others could understand everything twice, once in English and then in Kiswahili).

Naturally it is highly desirable to have a more uniform level, but in the existing circumstances some degree of differences is unavoidable.  The more advanced participants were very cooperative in helping beginners, and also two of them did a splendid job in translating from English in Kiswahili.

3.      Method and materials 

During the workshop there was a mix of lecturing, discussion and practical exercises on topics of relevance for the participants.  The aim was that both beginners as well as more experienced participants would optimally increase their knowledge and skills, which would be tested at the end of the training.

The instructor had brought for each participant (NGO) copies of the following materials:

  • ·        Practical Financial Management for NGOs Course Handbook (recently developed by Springfield Centre for Business in Development, UK, in cooperation with Tanzanian partners).  While this handbook is not on the market, the editor allowed me to make photocopies for our workshop.

  • ·        Financial Management for Self-Reliance (a manual for managing the finances of a non-profit organisation, by Janet Shapiro, available in South Africa).

  • ·        Selected photo stated chapters of other books, particularly on keeping of cash analysis books.

As the Course Handbook is in my opinion excellent, the programme of the week followed most of the chapters and appendices of this Handbook, with the aim that by the end of the week participants would have learned as much as possible of the contents of this book.  In addition we spent time on other materials about the keeping and reconciliation of cash analysis books, because this topic is not well covered in the Handbook while it is of crucial importance for the participants (until now most of the NGOs fail to keep a cash book properly, while none of the NGOs is carrying out regular cash book reconciliation's).  Further, in addition, we covered some management issues and the financial administration of a grain store project.  

4.  Training programme contents

The main topics which received attention during the workshop were the following:

  •  ·        Governance and management of NGOs

  • ·        Principles and tools of financial management

  • ·        Design of the accounting system, single and double entry system

  • ·        Chart of accounts, Trial balance, Income and expenditure account, Balance sheet

  • ·        Source documents, Cash books and Journal books, General ledger

  • ·        Cash analysis books (layout, keeping and closing), reconciliation of petty cash book with cash box, reconciliation of cash book with bank statement 

  • ·        Budgeting and budget monitoring (budget compared to actual report)

  • ·        Control of assets (cash, vehicles, stocks)

  • ·        Depreciation (calculations and depreciation fund)

  • ·        Financial reporting (monthly financial report of a grain mill, quarterly financial report of an NGO, quarterly report NMA Treasurer)

  • ·        Grain store management (dangers of credit sales, stores control, stock reconciliation)

  • ·        Grain store administration (cash book, purchase book, sales book, stores book)

5.       Results of the workshop 

At the end of the workshop the “advanced” participants completed a test (see annex).  Four out of five of these participants (representing all the 5 NGOs except Ngopadeo) scored more than 55 out of 100 points.

The “beginners” got the test with some of the questions left out, and this was done in Kiswahili under guidance of the 2 participants who had achieved the highest score.  Their results were -not surprisingly- considerably lower than in the “advanced” group.   

While increased knowledge and skills is an outcome of the workshop which was achieved, the impact of the workshop is at this moment still uncertain.  The impact will be shown in terms of actual improvements in the bookkeeping, financial reporting and financial management and control of the grain mills and the NGOs.  Whereas increased knowledge and skills is a necessary condition for such improvements, they are in themselves not yet sufficient for improvements.  They need to be backed by crucial features like the will, the commitment  and the organisational capacity to do a good job.  In my opinion it is now up to the leaders of the NGOs which have formed the NMA to show results, as at least LADO, BUDEA and SADA do have at least one person with sufficient knowledge of financial administration.  In this respect it would also be helpful if the NGOs would read again my consultancy report on financial management and accountancy system from September 1999, because it seems that the implementation of most of the recommendations is generally lacking.    

6.      Grain storage projects

During the workshop we discussed some issues of management and the design of a simple administration system for a grain storage project (see above).

A major policy issue is whether to allow sale on credit or not.  About half of the participants argued against selling on credit due to the risk of not getting payment (defaulting on loans).  In addition to losing money due to defaulting, there is another disadvantage of sale on credit:  your debtors are sitting on your working capital, and even if they eventually pay back their debt you don’t have that money to operate your business which is to buy new maize.  Therefore, there is a risk that an ever growing percentage of your capital is being absorbed by debtors and bad debtors, and that your business operations gradually come to a standstill due to lack of cash to buy new maize.

In my opinion, in the NMA context, there is reason to be cautious to start grain storage projects.  Such projects can easily fail due to weak management (particularly control of cash and stock) and poor financial administration.  In my opinion it would be wise for donor agencies only to start such a project with NGOs which have a good proven track record as regards financial administration and management.  An NGO would in my opinion not qualify if for example they do not have the habit to regularly carry out cash reconciliation's. 

The combination of a grain mill with a grain store is in principle a very good combination.  Very positive is the possibility that the depreciation fund of the mill can be used to provide working capital for the grain store.  When after some time depreciation funds are needed for major repairs, you can sell maize and have less working capital for the maize purchases (but build it up again through the monthly allocation of depreciation costs). 

In my opinion a good start of a grain storage project could be made by a successful grain mill project which has every month a cash flow surplus as the result of depreciation of machinery.  Some of the NMA grain mill projects do have such a comfortable cash flow surplus, but they have no good purpose for investing this temporary cash surplus (and in practice this money is then easily misused for other unclear purposes).

Given this situation, in my opinion, donors should take the back seat with starting a grain storage project.  If a grain mill project takes the initiative to invest depreciation funds in maize, and if it successfully is controlling the cash and stocks, then the time could be ripe for a donor to enlarge the working capital or provide funds for other needs of the storage project. 

7.      Conclusion 

While the workshop in itself was successful, I am looking forward to see the impact which can be shown by the NGOs through improving various areas of financial management, including financial control and financial reporting.

Cape Town, 27 September 2000

Fedde Renkema, Development Consultant


NMA Accounting Workshop, Loliondo September 2000
End of Workshop Test

Name Participant :                                                                                    points

1.  Which 4 main types of accounts are found on the Chart of Accounts?          4

2.  What is the double entry system in bookkeeping?                                      6

3.  What is a Trial Balance?                                                                         6

 4.  Which ones of the following accounts are not found on the Balance Sheet: Cash, Debtors, Sales Income, Depreciation costs, Equipment, Accruals, Vehicle maintenance costs.                                    6

5.  Which columns would you include in a “Budget Compared to Actual Report” (give a layout of a table with the headings of the columns).                                                                                                6

6.  What are indirect costs and what is apportionment of indirect costs?         6

7.  Fill in:
Total Assets = Accumulated Funds (Equity) plus …………………….
Net Current Assets (Working Capital) = Current Assets minus ………………………
Net book value = Cost of a fixed asset minus ……………………..   

8.  What is a Journal Book used for?                                                              4

9.  Which one of the following is the most important tool in financial management of NGOs:  Cash Analysis Book or Constitution or Budget or Balance Sheet?                                                        5

10.  What is the imprest system?                                                                    5

11.  What is the principle of “separation of duties” in finance procedures and why is it important?

12.  In a normal situation, when may signatories sign blank cheques? (explain)    4

13.  An NGO receives from donors a diesel engine plus grain mill worth TSH 10 mln and it pays from own accumulated funds for a new building TSH 8 mln.
How would you calculate the depreciation?  
Give your calculations for the first year.

What should happen with the funds calculated for depreciation?


14.  Which measures of productivity would you recommend for checking efficiency of a grain mill?

15.  Explain shortly how in your view a cash/bank reconciliation should be done (including what should be calculated and /or compared, when, by whom and who should sign for correctness).                          8

16.  Describe what in your view should be written in a monthly financial report of a grain mill project (pls give an outline of the contents of the report by mentioning the main headings which you would recommend).

I ALT..........................................................................................................................................100


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Opdateret af Webmaster, 11. januar 2006

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