1.1.1        Financial structure of Chem-Cleaner

Chem-Cleaner operates as a Company. All the income and property used across the entire entity belong to Chem-Cleaner and all its income and expenses must be reported through the Director of Chem-Cleaner.

1.1.2        Financial methodology

This Financial policies and guidelines manual prescribes the Chem-Cleaner methodology of record keeping, systems and tools which must be used at all levels of the entity. Records must be maintained in an accurate manner. There must be no material omissions or misleading representations of facts that would lead to an intentional false impression or misunderstanding.

1.1.3        Timely completion of required Financial Activities

In the accrual based system, revenue and expenses must be accurately allocated to the correct month. The handler of finances; the Accountant, should provide financial reports including but not limited to Statement of profit and loss, Balance sheet and Budget comparisons to the Director. Files and data accompanying the financial report must be used to reconcile the system used for record keeping.

1.1.4        Separation of duties

At all organisational levels, duties must be assigned to separate individuals- one to handle funds and another to account for funds and reconcile banking. The segregation of duties is fundamental to methods and practices of the financial aspect of the entity and good accounting practice.

1.1.5        Management of Chem-Cleaner’s expenses

Controlling and accounting for the Chem-Cleaner’s related costs are elementary principles of good financial management. Tracking expenses keeps the entity fiscally accountable to its stakeholders.

Chem-Cleaners’ expenses are to be recorded and allocated in the company’s chart of accounts by the Accountant who must at all times provide full disclosure of expenses along with itemised receipts of all expenses.

1.1.6        Annual Budget

A Budget provides a blueprint and a method of measuring results.

The Financial Accountant will prepare a proposed annual budget which will be validated and approved by the Director.

The Director must ensure that the budgeted expenditure is not in excess of the expected income and also that all the entity’s activities are in line with the projected income.

1.1.7        Reimbursable and non-reimbursable Expenses

It is expected that the financial controller of Chem-Cleaner uses sound judgement and gives proper accounting of what is spent while remaining aware of the budget in place.

Any expenditure incurred on behalf of the entity or reimbursed by Chem-Cleaner that is above at least M5,000.00 must be approved by the higher authority in structure; The Director.

1.1.8        Digital financial Solution

Chem-Cleaner uses technology that is standard in financial practices. The Financial Controller, Accountants and bookkeepers at Chem-Cleaner are expected to have working knowledge of computers and have internet access to make use of the tools in the field. The entity may use generally accepted digital and online banking systems in the course of administering their duties, including:

• Electronic funds transfers, debit transfers, e-checks and e-deposits
• Merchant accounts or third party pay services such as Eco cash, Mpesa
• Secure online banking services provided by a bank in which Chem-Cleaner has an account

1.1.9        Retention of Records

Proper maintenance of documents and records in the finance department is very crucial from the regulatory, management and legal perspective. Stakeholders such as investors and the government can only receive proper documentation from Chem-Cleaner if the documents have been properly protected, maintained and retained. Such documents are inclusive of banking statements, tax records, expense records, reimbursements and receipt logs. The retention period of the documents and mode of storage may be determined by the Director.

Recommended Terms of Retention

1. Documents to be retained permanently
2. Governance records – Amendments, governing board and committee minutes
3. Tax records – filed state and Government of Lesotho tax returns, files related to tax audits

• Intellectual property records – copyrights and trademark registrations

1. Financial Records – Audited Financial statements

2. Documents to be retained for four years (retain during the term of the agreement and four years after termination)
3. Lease, insurance and contract/license records – vendor agreements, service agreements, Independent contractor agreements, employment agreements and all other types of agreements.

Documents and records maintenance, retention, storage and destruction should remain the responsibility of the Director of Chem-Cleaner.

1.1.1        Introduction

The policies section gave an overview of the guiding principles which are followed at Chem-Cleaner. This section explains the financial work done at Chem-Cleaner. Those charged with governance regarding finances at Chem-Cleaner must ensure proper management of record keeping, expenses, banking, budgeting and compliance.

1.1.2        Financial Segregation of Duties

In the management of finances, it is highly recommended that one individual should not have control over an entire accounting transaction in order to limit or eliminate fraud. As a measure of control over this, it would be required that an organisation should segregate duties that relate to financial management. The following duties can be segregated to the appropriate positions in order to prevent theft:

• Collecting cash
• Posting receipts to the appropriate books
• Preparing bank deposits
• Reconciling bank statement

1.2            FINANCIAL PRACTICES AT CHEM-CLEANER

1.2.1        Budgeting

The budgeting process is one of the most key considerations to be made in an organisation as it gives guidance and limits on finances. Chem-Cleaner’s Accountant is to consider the clientele base including their requirements in order to make sales projections and possible expenditure. Also, prior years’ finances are to be taken into consideration in order to measure financial performance. The budget is to be drawn yearly and reviewed quarterly in order to measure progress towards the set goal. The review and approval of the budget Is to be done by the Director of Chem-Cleaner.

1.2.2        Cash Collection

There is cash to be received from clients for cash sales at the store and cash to be received from outstanding clients’ payments which must be recorded in the cash receipt book and posted to the appropriate ledgers. The cash received in the store must be kept in the Petty cash Box (Safe box) while awaiting deposit.

In the event whereby the payments received electronically, appropriate procedures must be followed:

• The payments received via M-Pesa or Eco-cash must be made through the registered business account (Merchant account). No other account may be used to receive payments from clients. Clients’ receipts must be generated and captured accordingly.
• Clients that use EFT must provide Proof of Payments (POP) before they are receipted.

1.2.3        Expenditure management

In order to maintain control over the office expenditure, it is highly advisable to operate on a monthly expenditure budget which is in line with the quarterly and yearly budget.

At the beginning of each month, the accountant must draw up the expected expenditure budget which will be matched with the expected income in that period.

No expenditure must be incurred in excess of the available funds.

Only authorised and necessary expenses must be incurred.

1.2.4        Banking and accounts management

The Director of the Chem-Cleaner is the sole controller of bank accounts that are owned by the company. The Company’s accountant has access to the accounts of the business, i.e. he/she has the passwords and pins. There are limitations to the access granted; only the Director has the right to review and authorise transactions.

1.2.5        Reconciliation

Reconciling helps the accountant to check on accuracy of their capturing. Reconciliation can be done on the cash and bank statements, receipt book and cash ledger. The key reason in reconciling is to ensure that cash collected was banked, cheques received were deposited, and clients’ payments at the bank have been captured.