How to improve your financial management and reporting
Written by Zia ur Rehman, AwazCDS-Pakistan
Please describe a real-life problem your organisation has faced on this ‘How To’ subject.
When we started in August 1995, one of the strengths of AwazCDS-Pakistan was our effective and efficient utilisation of available financial resources. However, our system was centralised and every project manager had to get approvals from two tiers of management, i.e. project manager and finance manager, for every transaction and spend, even if the budget has already been approved.
Furthermore, at the time of reporting there were always some differences between project managers and finance managers due to, for example, overspending of project budgets or moving financial resources between projects, rather than keeping them solely for the project they had been allocated to. Thus, as a result of inefficient system and processes, our financial reporting was not streamlined and donors received different reports on project spend depending on who was submitting the report.
How did you work on and try to overcome this problem?
In order to address this inefficiency and the discrepancies in project spending, we revised our financial policies and practices by decentralising the financial approvals.
Now the project lead is responsible for the preparation, utilisation and reporting of their respective project budgets. If a project manager needs finances on temporarily basis, he/she should make a request to the other project manager instead of the central finance manager.
The project managers also approve the financial report to be submitted to respective donor and respond to the queries from the donor.
What did you achieve and what changes were made?
We achieved more transparency and accountability. Now the leadership sits with project team members instead of the operation or finance team members. Every project manager is responsible to use his/her project resources in effective and efficient manner. The practice of moving financial resources between projects has been stopped. As result, we now receive less audit and donor inquiries regarding the use of their resources.
What did you learn from this experience?
One of the most important things we have learnt is to always allocate leadership to the project teams instead of operational and financial teams. The final decision about use of finances should be with a project manager or team lead. Operational and financial advisers and managers may have better understanding of the technicalities of budgeting and financial reporting, but they do not have an overview of the appropriate budgeting as per the needs of targeted communities and real beneficiaries of the project.
What are your tips for someone facing the same or a similar issue to the one you describe above?
- Show trust in your colleagues by decentralising the financial powers down to project managers and team leads
- Do not use funds allocated to one project on a different project without involved the relevant project managers beforehand
- Always get the financial report approved by the relevant project manager before submitting it to the donors.
Zia ur Rehman, AwazCDS-Pakistan
Zia ur Rehman founded AwazCDS-Pakistan in 1995 and has been central to the success of their Ujala movement, centred around building support for sexual and reproductive health and rights (SRHR) in Pakistan. He is a well-known development advocate and lobbyist, community-level civil and political rights activist, writer and poet. He led the Leave No One Behind Campaign for the implementation of the Sustainable Development Goals (SDGs) in Pakistan, and was among the finalists for the SDG Actions Award in 2018. He has represented Pakistan and spoken on behalf Pakistani and Asian CSOs at various local, national, regional and global conferences, including at the United Nations.
