This document discusses the importance of financial monitoring for NGOs. It explains that there are four essential building blocks to a strong financial management system: accounting, financial planning, financial monitoring, and risk management. Financial monitoring involves producing regular financial reports to track progress against budgets and plans. These reports are important for both internal stakeholders like managers and trustees as well as external stakeholders like donors and communities to ensure accountability. The document outlines the financial monitoring process and different types of reports used, including budget monitoring reports and annual financial statements.

1. Financial management
for NGOs
Financial
monitoring
www.mango.org.uk

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Did you know that there are
4 essential building blocks
in a strong financial management
system?

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This is about keeping an accurate
and complete record of all financial
transactions – for accountability
and transparency.

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We have to plan ahead to make
sure we have the money we need
to achieve our objectives, now and
in the future.

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This is about keeping track of
progress against our plans and
sharing how we are doing with key
stakeholders.

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We have a duty to protect our
financial resources and staff from
internal risks such as accidents,
theft and fraud.
We do this by implementing a
series of commonsense
controls and checks.

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This slideshow
introduces the
financial monitoring
process

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The building blocks are closely
interlinked. Their systems and
procedures overlap and
complement each other.

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The building blocks are closely
interlinked. Their systems and
procedures overlap and
complement each other.
To do financial monitoring, you
need data from the accounting
records and budgets produced
during the financial planning
process.

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 Financial monitoring systems
produce a range of financial
reports to enable key stakeholders
to scrutinisethe figures, review
progress in programmes, and
decide on follow-up actions as
needed.

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Financial reports
must be timely,
accurate and
relevant

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There are two main
audiences for financial
reports…

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Managers and trustees
need financial information
to track progress in
programmes
1. Internal
stakeholders

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Donors, government
agencies and local
communities need
financial reports for
accountability.
2. External
stakeholders

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Budget monitoring
reports to compare the
budget with actual
spending and income, to
assess progress and
decide what action is
needed
Internal
stakeholders
use…

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Review
Prepare
budgets

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Review
Receive &
spend project
funds
Prepare
budgets

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Review
Receive &
spend project
funds
Prepare
budgets
Compare the
budget with
actual activity

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Review
Receive &
spend project
funds
Prepare
budgets
Compare the
budget with
actual activity
Take action as
needed to get
back on track

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The annual financial
statements which
provide a summary of the
financial results
External
stakeholders
use…

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The annual financial
statements which
provide a summary of the
financial results
Donor reports which
give an update on the use
of project funds
External
stakeholders
use…

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Annual financial statements
Income & Expenditure
statement

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Annual financial statements
Income & Expenditure
statement
Balance sheet


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Annual financial statements
Income & Expenditure
statement
Balance sheet
INCOME – EXPENDITURE = OUTCOME
Surplus or deficit?


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Annual financial statements
Income & Expenditure
statement
Balance sheet
LIABILITIES
Things we OWEASSETS
Things we OWN
INCOME – EXPENDITURE = OUTCOME
Surplus or deficit?


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Annual financial statements
Income & Expenditure
statement
Balance sheet
ASSETS – LIABILITIES = EQUITY
What are we WORTH?
LIABILITIES
Things we OWEASSETS
Things we OWN
INCOME – EXPENDITURE = OUTCOME
Surplus or deficit?


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Financial reporting is
essential for…
Successful
project
management

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Financial reporting is
essential for…
Successful
project
management
Building
credibility and
trust

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Want to lean more about budget monitoring?
Then join us on one of our practical and fun
courses soon.
Budget monitoring essentials
eWorkshop now available!
http://www.mango.org.uk/training
training@mango.org.uk

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Find out more about Mango
and free resources for NGOs
http://www.mango.org.uk/guide