Procurement policy:-

A) Purchasing-

The purchasing function involves:

• Identification of needs for goods and services.
• Quotations to be called for purchases above Rs. 1,000/-.
• Identification of costs to cover the needs for those goods and services.
• Identifying suppliers, procuring estimates or quotations (at least three).
• Negotiating favorable trading terms with them if necessary. Approve lowest rates showing quality. No compromise with the quality of products or services.
• Authority i.e. Secretary will approve it.
• Placing an order.
• The payment has been properly authorized.
• Receiving the goods and/or services and paying for them.
• Preparation of accounting and archiving expenditures.

B) Identifying the supplier:-

• Credibility of the supplier in terms of being able to supply requirements in time.
• Cost-effectiveness of the goods supplied.
• Quality of goods supplied.
• Supplier should meet all necessary formalities in connection with its status as per Government rules and regulations.
• Supplier must be able to supply all goods in the requisition or of the specifications prescribed in the purchase order.
• Must be local, reliable, and known.
• Must be able to supply large quantities if necessary.
• Past performance.
• Availability of supplier.

C) Control objectives:-

The control objectives here will be to ensure that:

• All purchases are duly authorized and approved before goods and services are ordered by the Secretary.
• All goods received or services rendered are according to specification and in quantities requested for.
• Liability for all purchases is accurately reflected in the books of account and suppliers are paid only in accordance with agreed terms.
• Goods ordered are actually received into stores as appropriate and relevant accounting records are updated accordingly.

D) General Procedures:-

For all purchases of capital goods, and goods purchased in bulk like stationery and other supplies, three quotations should be obtained. In case the lowest quote is not selected, justification must be given. Quotations should be attached with the relevant vouchers while submitting for checking.

E) Maintaining a stock register:-

• This is to be maintained at the office where goods are purchased or stored centrally. The stock register is kept with the accountant.
• This register shall be updated in the receipts column as and when fresh stocks arrive. It is important that the person responsible for the stock initials the quantity in the stock book.
• All requisitions must be numbered and in duplicate. One copy has to be maintained at the central store and the duplicate given to accounts.
• All issues shall be recorded immediately in the stock register and updated daily.

Personnel Cost

It includes the salary of staff members recruited for project purposes as per sanction.
Allowable expenses: It includes salaries of staff involved in the project.
Supporting Documents: Approved payroll record, note by accountant.
Mode of payment: By A/C payee cheque or bank transfer to individual account.

Travel policy:

Staff and project director or trustees need to travel in the field for supervision & monitoring. They also need to travel for meetings, workshops, training & other project purposes locally & outstation. NGO adopts the following policy:

1) Project Director and trustees

Are allowed to travel for project purposes locally or outstation by their own vehicle or rented vehicle. If using their own vehicle, per kilometer charges will be Rs. 6/km. For rented vehicles, charges will be according to market rates but within NRHM limits.

2) Other Staff

They can claim travel charges according to project norms & observe monthly limits allowed.
Local travel can be paid in cash for auto or bus. If travelled by own two-wheeler, Rs. 4/km is allowed.
Outstation travel including transport, boarding & lodging expenses requires bus/taxi tickets, railway tickets, or lodging bills. Supervisors are allowed to use their motorbikes and claim petrol bills.
If travelling charges exceed the slab ceiling, bills will be sanctioned within the slab limit. Authorities may decide to pay a fixed allowance if satisfied with the situation.

Cash:-

A) Cash Account and transactions-

Cash transactions are to be resorted to only for petty expenses and where banking facilities are not available. As per Income Tax Rules, no claim exceeding Rs. 20,000/- should be settled through cash payments. These should invariably be by account payee cheques only. The NGO will observe that no amount of more than Rs. 1,000/- will be paid in cash. In exceptional situations like training, DA, honorarium, or village-level expenses, payments may be made in cash.

B) Daily Cash Balance:-

The denomination of the closing balance of cash should be entered and signed by the Accountant. This register is to be maintained from the beginning of every financial year.
Maximum and minimum cash limits have been fixed (Maximum Rs. 10,000/- and minimum Rs. 2,000/-).

C) Withdrawal of cash from bank-

• Authorized persons must verify requirements before signing cheques for cash withdrawal.
• A Cash Receipt (Contra) Voucher is to be prepared and accounted for by the accountant on the same day.

D) Cash Payment-

• Cash payments will be made only after preparing the payment voucher.
• All vouchers should be pre-printed with machine-made serial numbers.
• The payee must sign the voucher upon receiving payment.
• As per Income Tax Rules, no cash payment over Rs. 20,000/- is permitted. Internally, we shall maintain this limit to Rs. 2,000/-.

E) Cash Verification

• The Secretary should physically verify the cash balance occasionally and compulsorily at the end of the month.

F) Controls to be exercised

• Cash is handled by only one designated person who is responsible for it.
• Maximum and minimum cash limits are to be strictly observed.
• Accounting of cash receipts/payments is done on a daily basis.

Advances

Staff can obtain advances mainly for the following expenses:

• Travel and Subsistence.
• Purchase of goods from the market.
• Conferences and Workshops.
• Day-to-day expenses.

All such requests should be made in writing and duly approved by the project manager as per delegated authority limits.

A) Controls to be exercised:

1. Requests submitted should be complete in all respects and purpose clearly mentioned. For staff travel, period, dates, and purpose should be specified.
2. Outstanding amounts against staff should be settled within the month advance is taken, unless traveling on the last days of the month.
3. It is compulsory that no advances are outstanding as of 31st March (end of financial year).

B) Cash Advances:-

1. Small cash advances given for routine expenditure are essential and unavoidable. However, strict control must be exercised.
2. All advances must be entered in the cash book and adjusted when expenses are booked.
3. The IOU system is not foolproof; keeping track through the cash book is advised.

Settling of advances:-

Advances have to be settled either in receipts or cash. When advances given exceed funds needed, receipts and remaining funds should be returned to accounts.

Obtaining a refund from Accounts:-

When the advance given falls short of required funds, and staff contribute to the payment, Accounts will reimburse the additional expenditure.

Interest Income:-

All interest income accruing from funds must be reflected in quarterly financial reports. For multi-donor partners, proportionate interest should be calculated and shown in project accounts.

Audit

Audit is to be conducted every year by an authorized Chartered Accountant. Reports are to be prepared and submitted to various authorities. Separate audits for each project must be conducted and submitted in time for discussion and sanction in the AGM.