Contents

1. Accounting concept:............................................................................................................................2
2. Accounting Policies:.................................................................................................................................2
i. Unrestricted reserves/fund:............................................................................................................3
ii. Restricted fund:...............................................................................................................................3
iii. Endowment Reserves/Funds:..........................................................................................................3
3. Plant and Equipment:..........................................................................................................................4
4. Depreciation:.......................................................................................................................................4
5. Management Account Reporting:

Quaterly
financial
ED or report
Finance
Treasurer of within 10
Depart.
Board days of each
reporting
period.

.........5
6. General Financial Control:...................................................................................................................5
7. Petty Cash:...........................................................................................................................................6
8. Payments:............................................................................................................................................6
9. Work Advances:...................................................................................................................................6
10.Travel Advance:......................................................................................................................................7
10.Salary Advance:......................................................................................................................................7
10. Advance to Suppliers:......................................................................................................................7
11.other matters related to Advance:.........................................................................................................7
12.Related to PPE:.......................................................................................................................................8
13.Physical Verification:..............................................................................................................................8
14.Vehicle Management:............................................................................................................................8
15.Risk Management:..................................................................................................................................8
16.Authority Matrix:....................................................................................................................................9

Financial policy summary

1. Accounting concept:
 Expenses are recognized in accrual basis.
 Interest earned on bank account, all
contributions, donations, Grants, project income
are recognized in cash basis.
2. Accounting Policies:
Fund Accounting

Unrestricted
reserves/fund

Restricted Fund

Endowment
Reserves/ fund
i. Unrestricted reserves/fund:
 Available for general purposes of
the organization.
 Income earned by unrestricted
asset will be unrestricted income.
 When there is surplus remain
after the project completion,
permitted by contract or
agreement, may be transferred
to this fund subject to donor
consent.
ii. Restricted fund:
 Funds held for specific usage or
purpose shall be held separately.
 Income earned on restricted
asset shall be also restricted
 income unless terms says
otherwise.
 Such fund may include condition
to refund when project ends.
iii. Endowment Reserves/Funds:
 Type of restricted fund which is
held on trust to be retained for
the benefits of organization as
capital fund.
 Income earned is utilized for
restricted or other purposes.
3. Plant and Equipment:

Plant and equipment

20,000 or more having

less than 20,000
life more than 1 year.

recognize as office
consumables.
recognize as PPE ( low value items are
written off against
income immediately)
 4. Depreciation:
Asset Types Useful Life Depreciation Rate
RCC Frame Building 40 2.5%
Other Building 20 5%
Vehicle 5 20%
Computer 4 25%
Other equipment and 5 20%
furniture
Leasehold property Lower of 5 years or Up to 20 %
term of lease

5. Management Account Reporting:

Quaterly
financial
ED or report
Finance
Treasurer of within 10
Depart.
Board days of each
reporting
period.
6. General Financial Control:

 Authorization and verification of expenditures to agreed limits by

delegated post holders.
 Document should be supported by authorization and payment.
Cheque should be evidence with signature and date.
 Expenditures should be monitored quarterly/monthly against
approved budget.
 BRS monthly preparation.
 Cheques must be signed by 2 signatories.

7. Petty Cash:
 Imprest: 125,000
 Sub- Imprest: 25,000 (Biratnagar), 50,000 ( Dhangadi).
 Each transaction from petty cash should not exceed 10,000.
 Petty cash operator shall submit statement of expenditure when
petty cash is lower than 10,000.
 Cash count shall be done by separate person other than the petty
cash holder.

8. Payments:
 Payments exceeds 10,000 should be done through account
payee cheque except for reimbursement of petty cash and
on advance for staff for travel and program in rural areas
where there is no banking services.
 Payment shall be done within approved budget limit.
 Payments above 200,000 should be reviewed by operation
manager, verified by ED and approved by treasurer.
9. Work Advances:
 All program advances shall be approved by ED.
 Program Advance Form shall be prepared with details like project
code, program activity description, budget line item, duration of
program and amount of advance with detailed breakdown.

10.Travel Advance:
 Approved by ED
 Travel requisition form with details like project code, purpose of
advance, place of visit, duration of travel, advance amount with
detail breakdown and mode of travel.
 Travel advance shall be settled within 15 days of completion of
travel.
 If not settled, can be deducted from staff but should not exceed
deduction 25% of basic salary. If leaves NLR, full deduction from
salary or benefits.
 If over or under utilized by 20%, appropriate reason shall be seek.

10.Salary Advance:
 Should be requested through written application with appropriate
reason.
 ED should approve.
 Provided if not donor restriction or available office fund in NLR.
 Recover through subsequent monthly salary but should not
exceed 25% of monthly basic salary.
 If leave, full deduction from salary or benefits.
 10. Advance to Suppliers:
 Provided as per the contract, otherwise no advance to
suppliers.

11.other matters related to Advance:

 If irrecoverable, in spite of all attempts, can be written off.
If more than 20,000, write off should be done through only
after board approval.

12.Related to PPE:
 If assets are broken during handover, this should be
mentioned in handover form.
 If lost or broken due to staff negligence, recover it from
staff.
 On giving movable property like mobile, laptop, hard drives
and cameras, handover form shall be filled.
 PPE can be sell, dispose and write off only through written
approval from board.
 While selling; physical condition, cost price, no of year’s
used and fair market value shall be considered.
 If realizable value of sold assets or pool is more than
500,000, public notice shall be issued. If less than 500,000
done through market research.

13.Physical Verification:
 Verification shall be done of assets at end of project as per donor
requirement.
 Physical verification shall be done by management at mid-July
( Ashadh end).
14.Vehicle Management:
 Log book shall be maintained by driver mentioning details like
date, name and signature of driver, purpose of trip, staff carried
by vehicle, time of departure and return, starting and ending KM,
total KM driven, destination, signature of user, fuel etc.

15.Risk Management:
 ED should prepare and maintain risk register in consultation and
support of Deputy directors and Supervisors,
 Risk shall be reviewed at least on six monthly basis and should be
present to board meeting by ED.

16.Authority Matrix:
 Advance salary up to 1 month after approval from ED.
 For goods and service procurement, ED shall do procurement up
to 500,000. For more than 500,000, ED on recommendation of
procurement committee.
 For Advance payment to boundary partner, ED shall approve.
 For Lease and rental agreement, ED should entered into
agreement. For lease agreement, shall be cancellable on notice
and lease agreement should be maximum for 3 years.
 For Employee travel, 100% can be given after ED approval.
 For vendor payment, ED should approve in line of PO or
Procurement contract.
 For grant contracts with donor and its amendment, ED can do
with prior approval from board.
 Payment, Receipt and Journal Voucher by Treasurer.