REPORT OF ORGANIZATION UNDERSTANDING COMPONENT OF

ORGANIZATION TRAINEESHIP SEGMENT

Submitted by

Dr Ravi Chandra (25089)

ORGANISATIONAL TRAINEESHIP SEGMENT

PRM 2004-2006

HOST ORGANISATION

FINANCIAL MANAGEMENT SERVICES FOUNDATION

ACCOUNTABILITY HOUSE, A-5, SECTOR 26
NOIDA, UTTAR PRADESH

FACULTY GUIDE:

PROF. RAKESH SAXENA

INSTITUTE OF RURAL MANAGEMENT, ANAND

2005
 ACKNOWLEDGEMENT

I am highly thankful to our host organization “Financial Management Services Foundation”

for giving me a valuable insight into its functioning, structure and dynamics and extending all

cooperation and help, which allo1d me to have a better understanding of the organization.

I am especially grateful to Mr. Sanjay Patra, Executive Director who despite having hectic

schedule took pains to sit with me and discuss his organizational matters. The other people of

considerable help to me were Ms. S.P.Selvi, programme coordinator and all other staff

members who were always very prompt to provide me all the documents and printouts, which

I required.

The suggestions given by our faculty guide Prof. Rakesh Saxena before the beginning of the

assignment were extremely useful for undertaking this project.

Above all thanks to IRMA which provided me this opportunity to observe the organization

from such close proximity and equipping me with all the knowledge and learning which

helped me to learn and understand the organization in a holistic way.

Dr Ravi Chandra (25089)

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INTRODUCTION

The

1.1 Name: financial management services foundation

Address: accountability house, A-5, SECTOR 26, NOIDA, UTTAR PRADESH

Telephone Number: 91 120 2546732,2546733,2546745,2546746

FAX-91 120 2546731

Email Address: fmsfindia@vsnl.com,fmsf@vsnl.com,fmsf@fmsfindia.org

Website: www.fmsfindia.org , www.legalissuesforngos.org , www.incometaxforngos.com,

www.fcraforngos.org , www.socialaccountability.net

1.2 Type of Organisation (Constitution)

The organisation is a registered trust under Indian society act 1860.

1.3 Sector in Which the Organisation Works

FMSF is a resource organisation which specializes in Financial Management, Legal Issues

and Governance in Development Organisations.
The organisation is a facilitating agency for monitoring various projects funded by donor like
Evangelischer Entwicklungsdientst or EED, Bread for the World (BFTW) ICCO, TEAR
FUND etc in India. It’s a resource organisation providing support to Indian Ngos to fulfill the
requirement of funding agencies mentioned above. It does the monitoring of the projects for
funding organisation across the India and processes the fund request of various Ngos of India.

1.4 GOVERNING BODY

The organisation is governed by the board of trustee. All the board members are reputed

persons in the social sector. The chairman Mr K P Phillip was associated as a director of St.

2
Stephen’s College which is the most prestigious college of Delhi University. He was also

superintendent of YMCA for more than 10 years. After retirement he is active in social

development field.

TABLE 1 Board of Trustees

S No. Name Occupation Office Held

1. Mr.K. P. Philip Social worker Chairman
2 Mr. J. B. Singh Social worker Managing Trustee

3. Ms.Rosemary Viswanath Management consultant Trustee

(organizational development

specialist)
4. Bishop Christopher Social worker Trustee

Furtado
5. Dr. Nalini Abraham Consultant Trustee

6. Dr. C. S. Walters CEO ,Leprosy mission of Trustee

India
7. Mr. Gerhard Mohr Head, South and middle Nominee By EED

Asia desk
8. Mr. Sanjay Patra Executive Director, FMSF Ex Officio

Secretary

1.5 Profile of Chief functionary Mr. Sanjay Patra, Executive Director

Mr. Sanjay Patra is finance professional with C A as an academic background. He worked in

churches of north India for few years as admin and finance coordinator .he joined financial

management services foundation in 1999 as executive director. He can be considered as the

pivot around which the whole functioning of the organisation revolves. The organisation is

resource and support organisation in the field of monitoring, financial management legal

regulations and related governance for the Indian non government organisation.

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He is very active and has a very charming personality. He has a very good networking ability.

He has great understanding of Ngos sector and financial health of the sector due to long

association in this sector. He is one of the vocal supporters of social accountability in the non

government organisation sector. He is a very able resource person and coauthored books

related to finance and accounting in ngo sector. His compensation package is around Rs

60000 per month.

1.6 Organizational affiliation

FMSF is not affiliated with any other organisation or association and is totally independent.

Its role is of an intermediary facilitating the interaction between the donor agencies and

recipient Indian Ngos.

1.7 Size

Employees

The organisation is very lean organisation. The number of employees in the organisation is

14. The organisation works with around 120 Indian Ngos across India working in all field of

development.

Financial condition

The organisation is in good financial health .it received an amount worth 3 crores for the

financial year 2003-2004 for its working. Major part was for acquiring a state of art building

in NOIDA for working efficiently. It has almost secured funding from the funding

organisation for next 5 years.

Table 1 List of employees working at financial management services foundation

S. No Name of the Staff Designation Educational Qualification and

Specialization

4
1. Mr. Sanjay Patra Executive C.A,
Director
2 Ms S P Selvi Programme B.COM.,MBA (FINANCE)
Coordinator
3 Ms Anuradha Resource B.A.,
Singh Coordinator Advance PG diploma in Russian
Language, JNU
PG Diploma In German Language From
Max Muller Institute
PG Diploma In HRD
PG Diploma From NIIT
4. Ms Lorraine Project M COM,PGDBM(FINANCE),
Mathias Monitoring 3yr programming course from NIIT
Officer
5. Ms Pooja Bagga Project M COM,C.A
Monitoring
Officer
6. Ms Purnima Jolly Project B COM Hons ,CA
Monitoring
Officer
7. Mr Rahul Khanna Project B Com Hons, Cost Accountancy ,
Monitoring C.A.
Officer
8. Ms Renu Relan Communication M COM, MCA,
Associate Diploma in website management
9. Ms Madhu Mishra Resource And M.A. in Sociology ,DU
Communication
Associate
10. Mr Jacob John Research M.S. in Economics from LSE,
Associate London
11. Mr Prashant Resource and B COM,M COM
Kumar Sahoo Accounts
Associate
11. Mr Rajman Yadav Driver 8TH PASS
12. Mr Ram Bahadur Office Support 8TH PASS
Staff

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13. Mr Dharmendra Driver 8TH PASS
Singh Rawat
14. Mr Anil Sharma Office Support 8TH PASS
Staff

1.8 Vision, Mission and Core Values

Organization’s vision

We aspire for a reality in development co-operation where there will be overall and wholistic

accountability among all the constituencies

Mission:

We, the Financial Management Service Foundation, seek to serve the partner organisations of
EZE / EED and other like- minded agencies in the Indian subcontinent to promote
accountability by monitoring their projects / programmes and capacitating the partners in
financial management and reporting systems.

Core Values
Accountability - our accountability to the constituency we seek to serve.
Transparency - to be transparent in our actions.
Humaneness - accounting practices with a human touch.
Sensitivity - sensitive to development issues and programmes.

2 HISTORY

2.1 Background of the Organisation

The Financial Management Service Foundation (FMSF) is an offshoot of the Financial

Management Service (FMS), a unit set up by the Evangelischer Entwicklungsdientst or EED
(formerly known as Evangelische Zentralstelle fuer Entwicklungshilfe or EZE) in the year
1995.
FMS was established in India to ensure that partners in India, Bangladesh and Nepal were
able to fulfill their obligations to EED and enhance their capacity in financial management
reporting systems.

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2.2 Key Developmental Phase
2.2.1 Backdrop for Evolution of FMSF
1980s and early 1990s saw the emergence of voluntary organizations as key actors in the
development scenario in South Asia. More so, the liberalization and globalization process
initiated in India resulted in increasing privatization of social welfare sector and response
from the voluntary organizations was loud and clear. Voluntary organizations took up more
and more responsibilities in development process. Along with these also came a plethora of
activities, new projects, programmes and need to respond to new challenges. As more
resources started coming in, there emerged a need to develop adequate financial management
and related governance systems to ensure accountability and transparency in dealing with
such resources. Unfortunately in India and other parts of South Asia, the accounting/ financial
management practices were basically developed for corporate/for profit sectors. Therefore,
the voluntary sector had to borrow certain practices and try to make it work in their context.
In some cases it worked and in many others it did not. Closely linked to the financial
management practices are generating of financial reports. The financial reports thus generated
could not in some cases fulfill the required reporting requirements at various levels. Coupled
with this was also a need to build capacities on understanding legal framework, addressing
legal issues and its compliances in the voluntary sector.

2.2.2. Programme for Strengthening Accountability of NGOs in India”

At this juncture, it needs specific mention regarding the “Programme for Strengthening
Accountability of NGOs in India” initiated by EED (known as EZE then) and ICCO (Inter
Church Organisation for Development Cooperation) during the year 1986, with a
primary objective to strengthen the financial management and accountability of its
supported partner organisations in India.

The long-term aim of this programme was to improve the accountability and financial
management of their supported partner organisations in India.

Subsequently EZE (EED now) was also faced with the problem of not being able to close
the files of various projects even after the project period was over as certain reporting
requirements could not be complied with.

Following two partner consultations in Chennai during the years 1993 and 1994, EZE

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(EED now) decided to establish this service unit in the name of Financial Management
Service of EZE (EED now).

This initiative of EZE in more ways than one synchronized with the overall need of the
voluntary sector in South Asia (India, Bangladesh, Nepal and Sri Lanka) to:

 Have a facilitating body which can assist the voluntary organisations to improve their
accounting and reporting requirements.

 Have a resource organisation which can help in capacity building, sharing information
and involved in research to develop Financial Management and related governance
systems specifically for NGOs.

2.2.3Establishment of Financial Management Services

In the above scenario, FMS was established and started functioning since 1st January, 1995 as
an EZE (EED now) representative office. During the initial years the functions of FMSF were
oriented towards fulfillment of the requirements as per the mandate from the two partner
consultations.
2.2.4 Establishment of Financial Management Services Foundation

From an EZE representative office, FMS became Financial Management Service Foundation
(FMSF), in the year 2000.
Since then, Financial Management Service Foundation (FMSF) has been involved in
providing support to NGOs in the Indian subcontinent as well as overseas resource agencies
in the field of Monitoring, Financial Management, Legal Regulations and Related
Governance.
2.2.5. Major crises

The organisation has no major crises. It has smooth sailing during all these years due to

secure funding from EED and other organisation.

3.0 ORGANISATION STRUCTURE

3.1. Organisation set up

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The organisation has a relatively flat structure.

GOVERNING BODY

EXECUTIVE DIRECTOR

PROGRAMME COORDINATOR RESOURCE COORDINATOR

COMMUNICA COMMUNICA RESOURCE

PROJECT RESEARCH
TION TION AND AND
MONITORING ASSOCIATE
ASSOCIATE RESEARCH ACCOUNT
OFFICER (4)
ASSOCIATE ASSCOAITE

OFFICE CARE TAKER, DRIVER (2),

WATCHMAN

Figure 1: Organization structure of Financial Management services foundation

3.2. Dimensions of Organization Structure

3.2.1 (A) COMPLEXITY

Complexity refers to the degree of differentiation that exists within an organization. It can be

classified under horizontal, vertical and spatial differentiation.

1. Horizontal Differentiation

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This refers to the degree of differentiation between units based on the orientation of the

members, nature of the task they perform and their education and training.

FMSF has a moderate degree of horizontal differentiation because the managerial staff can be

divided into three categories based on education and training as well as nature of task they

perform

a) CAs & MBAs- project monitoring and administration

b) MBAs & MCAs or employee with programming training- communication and

website management

c) M.A or M.S in subjects like sociology and economics- research and documentation

education and training training as well as nature of task they perform

CAs & MBAs project monitoring and administration

MBAs & MCAs or employee with communication and website management

programming training-
M.A or M.S in subjects like sociology research and documentation

and economics

No separate divisions or department. Broadly work done by the organisation can be

classified into four categories but there is overlap of responsibilities.

Project monitoring –

This is the major work of the organization. The four project monitoring officers are highly

qualified professions having qualification like CA & MBA and are competent to do financial

monitoring of the projects. The recipient Ngos may be doing all kind of projects from

livelihood, health, education, gender etc but the work done here is the financial monitoring of

the projects and processing fund request and helping the Ngos to meet the reporting demand

of donor organisation. Even the resource coordinator and programme coordinator do the

monitoring of projects. But they also manage the in house administration and documentation.

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Communication management-

Managing communication means different website that the organisation runs and see to it that

it is always updated. The website provided all the information regarding financial reporting,

income tax, legal issues and general knowledge about financial management monitoring and

workshop information and various courses and consultancy being conducted by organisation.

One communication associate manages the website but she is helped by domain experts of

the fields regarding any technical jargons related to financial issues or legal issues.

Research and documentation

There is regular publication like interface which is a quarterly magazine being distributed to

100s of the organisations across India. Each issue deals with separate topic like social

accountability, union budget, and accountancy for Ngos etc. it’s a publication for private

circulation only. There is two staff for research and collating information for in house

publication.

Consultancy

Organisation takes financial consultancy also as it has professionals who can give financial

consultancies

Administration and Finance of the Office.

The administration and finance is seen by both the programme and resource coordinator.

There is an accountant to help the coordinators designated as resource and accounts associate.

There is no departmentalization. Every one is responsible for its own work but helps other.

Like communication associate get helps from project monitoring officials who are expert in

monitoring or taxation or legal issues. Also research associate helps the communication

associate in helping to upload the site and page making etc.

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Specialization

Specialization refers to the particular grouping of activities performed by individuals.

Functional Specialization

Extent to which jobs are broken down into simple and repetitive tasks.

Functional specialization is very low among managerial staff. It’s for office care takers and

drivers for whom the work is very repetitive. Day after day they have to do the same work.

Social Specialization

If individuals are specialized rather than their work then it is called social specialization

FMSF mostly hires only professional in finance like CAs & MBAs especially as their major

work is to do the financial monitoring of the projects of the Ngos. So, social specialization is

quite high. Even for communications, research and documentation it hires people with

masters degree in relevant subject.

Socialization

It refers to an adaptation process by which individuals learn the values, norms, and expected

behaviour patterns for the job and the organisation of which they will be a part.

Professionalization creates internalized behaviour through social specialization. Professionals

are socialized before entering the organisation. The organisation has 4 CAs and equivalent

number of MBAs. As the organisation is staffed by people who have similar background,

skills and trainings, it creates similar outlook for the job and the organisations. The entire

employee has same goal emphasis and work vocabulary. The language that everyone uses is

similar and job profile is same. Everyone understands financial jargons in the organisation.

B. Departmentalization

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There is no departmentalization.

3.2.2. Vertical differentiation

This refers to the depth in the structure of the organization.

Executive director

Programme and Resource Coordinator

Project monitoring officers and other associates

Office care takers and drivers

There is not too much of depth in the organizational structure, with few people between the

chairman and the operatives. This is all but natural as the total number of employees in the

organization itself is very less (14). Also because of this situation span of control does not

hold too much of meaning. Because of the flat structure the communication chain is shorter

and simpler provided all the levels are at a single place, which is explained by the spatial

differentiation.

3.2.3. Spatial Differentiation

It refers to the degree to which the location of an organization’s offices, personnel are

dispersed geographically.

The spatial differentiation is very low as all works happen in office building and project

monitoring officers go on tour as required.

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Thus the complexity in the organization can be said to be medium to high only because of

very high level of social specialization with medium to low levels of vertical and horizontal

differentiation.

Implication of medium to high complexity – The more complex an organization, the

greater the need for effective communication, coordination and control devices. the

organisation has state of art information system with special focus on documentation. Each

activity is backed by documentation for that activity. This explains why the organization is

incurring so high costs of overheads like coordination and administration and communication

expenses. These expenses are besides the potential and existing misuse of resources of the

organization done by employees in the absence of any higher up personnel overseeing them.

The organisation has employed professionals so directions required to do the job is less and

for a simple outsider, the organisation would look very simple but its complex.

3.3. (B) FORMALIZATION

it refers to the degree to which jobs within the organisation are standardized.

The level of formalization is high with high degree of standardization. Each project

monitoring officer gets explicit format and guidelines from donor agencies to monitor the

project financially. There is periodical sending (quarterly) of report about expenditures there

financial monitoring is made a routine task but with high degree of variability. Each project

monitoring officers has to be on toes to solve the unexpected problems occurring in the

recipient Ngos as monitoring requirement are not fulfilled or not properly done.

regarding interface each issue is different from earlier issue. but main job of communication

associate is to compile it and send for publication and circulate it to partner organisations

standardized. There are formal job descriptions and there are defined procedures for covering

work processes in the organization. The employees’ behavior is generally non-programmed,

which offer employees a great deal of freedom to exercise discretion in their works. There is

14
no one to supervise anyone. There is self regulation among employees. This all may be due

to high level of Professionalization existing among employees.

If we go by the approach of measuring formalization by the extent of written rules and

procedures, there is very low degree of formalization in the organization. There are rules and

procedures for the traveling, leaves, training, office arrival and departures. Thus it appears

that the hierarchy in the organization influences the level of formalization.

Implication of medium to high formalization

It is generally said ‘the greater the Professionalization of a job, the less likely it is to be

highly formalized’’. So this reflects on FMSF. The organisation is not highly formalized but

the atmosphere is highly formal due to finance professionals. This implies that there is

uniformity in the ways things are done in the organization resulting in variable results as well.

Formalization is beneficial as it helps in regulating employee’s behaviour. Newcomers in the

organization can benefit from formalization, as they will have to use less of their discretion

and escape from the delay due to it in on-the-job learning. But as the organisation does the

highly specialized job of financial monitoring, it reflects in its selection process, it will hire

only professional who have internalized the expected behaviour patterns for the job. This will

do away with the possibility of over dependence on select few and hence social

specialization.

3.4 (C) CENTRALIZATION

It refers to the degree to which decision making is concentrated at a single point in the

organisation.

The executive director coordinates the activities of the organization from the administrative

office. All the decision making power is centralized in the position of executive director but

current executive director consults the employees on every major decisions. The

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centralization is high in the organisation as decision making power is concentrated in single

point.

Implication of high centralization

Decision making is centralized in the position of executive director. High centralization

decreases the decision making cost if it means quick decisions. But if for every activity

however small the decision is taken by executive director, it will mean higher cost to the

organisation as value of time is very high. High centralization can lead to dissatisfaction

among employees. It may demotivate the employee and promote “yes boss’ culture.

Table 2.4: Measure of the dimensions of organizational structure

a. Complexity Medium to High
• Horizontal differentiation High social specialization
• Vertical differentiation Medium
• Spatial differentiation zero
b. Formalization Medium to high
c. Centralization High

4.0. Human Resources Management Practices

4.1. Recruitment and Selection

Recruitment and selection process is flexible. Upon requirement the organization may select

new staff if the competency for the same is not there in the organization.

There is no formal mechanism for recruitment and selection of employees. Most of the

recruitment happens by internal reference by employees. They are called depending upon

their qualifications, skills and experience and are selected with or without interview.

Besides the above-mentioned attributes, it looks for the commitment from the candidate, the

mechanism for which lies with the chairman. Also hailing from the area and familiarity with

the region offers additional advantage. now the organisation is planning to visit campuses of

few institutes to recruit the professionals required for the organisation.

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 4.2. Training and Capacity Building (Skill Development)

There is no induction or socialization programme for the new staff. Because they are

(generally) selected on the basis on the presupposed assumption of their ability to perform the

task there is no training programme at the beginning. Of course from time to time, for the

skill development and up gradation the staff are encouraged and sent to participate in various

programme held across the country. This training is mostly conducted under the auspices of

the projects so that the project is implemented the way it should be.

While some of the staffs had joined the organization with their respective skills, others have

acquired the skills while working in the project with the organization over a period of time.

Thus, it seems that there is a fair chance for the staffs to hone their existing skills and acquire

new ones while working in the organization.

Table 2.5 List of some of the major skill development programmers attended by the staff of financial

management services foundation during the year 2004-005

S.N Name of Training / workshop / Name of the staff Period Place

exposure visit
1. Workshop on games for training Ms Renu September 2004 New Delhi
2. National conference on graduation Ms Purnima August 2004 New Delhi

of SHG from micro credit to micro

enterprises ; issues and challenges

3. Conference on fund raising Ms s .p Selvi Feb -march 2005 New Delhi

Ms Purnima

4.3. System of Performance Appraisal

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The organisation has 180 degree system of performance appraisal. There are standard format

for performance appraisal. Everyone is appraised by its peer and official above them in

hierarchy.

4.4. Employee Turnover

Turn over of employees is very less. It can be proved by the fact that every employee is here
for at least 4-5 year and none of the newly recruited employee has left. This can be attributed
to excellent professional atmosphere and good compensation packages for the employee.

5.0 Major Thrust Areas & Activities

5.1. Financial Management Consultancy

FMSF aims to provide consultancy and specific services to overseas development agencies as
well as development organisations in Indian subcontinent on financial management and legal
issues.
it also facilitates in developing standard financial and accounting policies in development
organisations.

5.2. Financial Monitoring of Development Projects

It does the basic monitoring of projects in India, Nepal, Bangladesh and Srilanka supported
by resource sharing agencies like EED, few projects of Bread for the World (BftW) and
others

Monitoring includes
 Close interaction with partner organisations
 Ensure regular submission of financial and progress reports.
 Analysis of Financial and Progress Reports
 Facilitate timely and regular transfer of funds to the projects
 Develop systems/procedures to ensure timely closure of projects

5.3. Capacity Building

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FMSF regularly conducts workshops and consultations for partner organisations on Financial
Management and Related Governance, Legal Regulations and reporting requirements of the
funding agencies.
The workshops are generally for two to three days residential or non-residential in nature. It
is generally worked out on certain specific need of a group of organisations or can cover the
topics of interest for voluntary organisations in general. A very useful background material is
also supplied
Some of the key topics taken up in the last few workshops are given below
 Financial Management System of NGOs
 Importance of Budgeting - Guideline, Analysis & Monitoring
 Relationship/ Co-ordination - Programme & Finance
 Planning, Monitoring & Evaluation (PME) Systems
 NGO Governance
 Internal Control Procedures
 Management Information Systems
 Accounting/ Reporting of Own Means of Contribution
 Accounting / Reporting of Specific Funds (Revolving Fund& Matching grant
 Accounting of Micro Credit Programmes
 Legal & Tax matters which include FCRA Regulation& Requirements.
 Ratio Analysis applicable to NGOs
 Preparation & Presentation of Financial Statements
 Fund Accounting
 Monitoring of Development Projects
 Donor Reporting Requirements
 Strategic Planning
 Project Cycle Management
 Governance and Accountability
 Social Audit
FMSF has a highly experienced and qualified resource team which includes experienced
consultants as well as FMSF team. They facilitate the workshops.

5.4. Networking

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FMSF works very closely with other organisations / individuals having similar objectives.
One of the major outcomes have been to evolve a forum of Finance Consultants & Resource
Persons whose expertise and experience is available and shared with the development
organisations. This is known as "Forum for Ethics, Accountability and Transparency
(FEAT)".

5.5. Documentation, Information Dissemination, Study & Action Research

A quarterly newsletter "INTERface" dealing with financial and legal issues is produced
regularly for the last three years. It publishes resource materials, manuals etc., on Financial
Management for development organizations.
In this regard, FMSF has brought out two publications

Manual of Financial Management and Legal Regulations

This Book contains the Basic Accounting Practices, Financial Management and Legal
Framework in which the Voluntary Organisations operate. Some of the aspects covered
in this book are:

Accounting Features
Book Keeping
Budgeting
Accounting Documentation
Internal Control
Audit
FC(R)A Income-Tax

It has been written exclusively for Voluntary Organisations and is an outcome of long
years of study and research. We hope that it will be useful to the readers.

This book also includes the relevant forms under FC(R)A and IT- Act 1961. Also available
is a free CD along with the book which contains the above forms.

Legal and Finance Handbook for Voluntary Organisations

This book provides almost the entire framework for Legal and Accounting aspects of a
voluntary organization. It covers the following aspects:

Societies Registration Act, 1860, Companies Act, 1956 and Public Charitable Trust
Framework of Income Tax Laws for voluntary organizations Registration and Exemption
Procedures Application, Accumulation and Investment of Income Audit and filing of Returns

20
Treatment of Capital Gains and Business Income Permanent Account Number (PAN)Foreign
Contribution (Regulation) Act, 1976Employees Welfare Schemes NGO Governance
Accounting Methods and Concepts Technical Guide for NGOs issued by ICAI Accounting of
own means of contribution Internal Control Procedures Tax Deduction Account Number
Registration and other provisions under Section 80G and 35AC Audit procedures

This book has been written from a layman’s point of view, in a very simple and lucid manner.
We trust that this handbook will be very useful to implementing NGOs in India, Grant-
making Agencies, Consultants and Auditors dealing with NGOs in India.

Documentation / Resource centre is set up for compilation of various materials related to fin
FMSF has also developed a highly interactive web-site with lots of information on financial
and legal aspects of NGOs. It is regularly updated to provide up-to-date information to the
NGOs. You can visit us at www.fmsfindia.org or at www.fmsfindia.org.inancial management
and legal aspects of development organisations.

FMSF has also launched an exclusive web-site for information on legal aspects and on FCRA
laws relevant to NGOs. Visit us at www.legalissuesforngos.org, www.fcraforngos.org and
www.incometaxforngos.org for more information

5.6. FMSF facilitates two networks

5.6.1. Forum for Ethics, Accountability and Transparency (FEAT)

Introduction

Forum for Ethics, Accountability and Transparency (FEAT) is a network of Finance

Consultants engaged in the Voluntary Sector in providing necessary consultancy in the areas
of Financial Management and Related Governance.
There is a great need for the right information and consultancy to various Voluntary
Organisations in the areas of Financial Management and Related Governance. It was felt that
the existing expertise available can be used in a more effective manner through this network.
It is a Forum for mutual learning from one another to be better equipped to respond to issues.
It is also a forum for sensitization about the field realities and ethical accountability.
Process

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FMSF organized two consultations in the year 2001 and 2002 where in a number of issues
were discussed in depth. After the Second Consultation the Forum for Ethics, Accountability
and Transparency (FEAT) was evolved.
Structure

There is a national core group of four persons who are the apex body for decision making.
Then there are three regional representatives (South, East and North Regions) who are
responsible for coordinating FEAT in the respective regions. The core group and regional
representatives are elected in the national level meetings.

Role and Function of FEAT

 To act as a group of resource persons having required skills and expertise.

 To provide consultancy and capacity building to the sector as and when required.
 To do Lobby and advocacy with various financial and legal policy making bodies to
evolve policies which are sensitive to the reality of the sector and also promotes
accountability.
 To evolve procedures and practices which are simple to follow, having taken into
consideration the voluntary sector requirements and enhancing transparency and
accountability of the sector.
 To function within the ethical framework this would ensure credibility.

Membership
The membership is open to professionals providing Financial Management and Governance
support to Voluntary Organisations.The final decision to enroll as member rests with the core
group

5.6.2. NGO Accountants Network – NAN

It has been the experience of FMSF that one of the key components in the chain of
Accountability in Voluntary Organisations is the Accountants. They are responsible for
ensuring accountability at the very first stage. Therefore, FMSF has launched a network of
NGO Accountants who are working in the NGO Sector on full time basis

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Objective

- To provide a forum to the NGO Accountants to mutually learn from each other.
- To capacitate the NGO Accountants on various new methodologies in NGO Financial
Management.
- To Sensitize on the field realities.
- Build a resource pool of expertise.

Who can be part of it If you are an Accountant working fulltime basis in NGOs (in whatever
position), you are welcome to be member of this network.

List of registered members of NGO Accountants

Network - NAN

1. Ms. Poonam Raisinghani Sense International , Ahmedabad

2. Mr. Devesh Kumar Gautam SOS - Kinderdorf International, Haryana
Centre for Bharatiya Marketing
3. Mr. Baudeva Choudhary
Development, New Delhi
4. Mr. Santosh Kumar Emmanuel Hospital Association, Dehradun
5. Mr. Mukesh Vyas Alert Sansthan, Rajasthan
6. Mr. B. Goumang EHA – Project ORCHID
7. Mr. L. F. Khawlum EHA – Project ORCHID
8. Mr. Shantanu Roy Samavesh, Bhopa

6.0 Systems in the organization

6.1. Infrastructure and Use of PCs

FMSF has state of art infrastructural facilities at its resource center. It has got a well

furnished office building with a very good kitchen. It is a three storied building. Ground floor

has the office. 1st floor is the office of the executive director as well as office lunch room and

board room where all presentation and meeting with important person are held. 2nd and 3rd

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floor are residential with 3 fully furnished air conditioned room at each floor. There is a

common room with television fridge and kitchen for the guest.

The organisation mostly functions from this resource center. There are desktop provided to

each staff member in its own wooden cubicle. The office has broadband line as well as ISDN

line as well as dial up connection for the internet. The internet access is very fast with a speed

of 512 kbps. most of the work is conducted through mails and telephone. There is a telephone

at each cubicle. The office has 13 desktop pc and 2 laptops.

The office has multifunctional photocopier and printer attached with fax.

The organisation owns two four wheeler vehicles namely Mahindra Scorpio And Maruti

Baleno with Baleno mostly used by executive director .

The organisation is very advanced and always tries to keep up with latest technology.

Overall it can be said that given the size of the organization and the nature of operations

performed, the existing infrastructure is excellent.

6.2. MIS

The transit of information inside the organization is usually flows from the executive

directors to programme coordinator directly as well as bypassing the programme coordinator

to project monitoring officer as well as other staff members directly. Information flow is quite

smooth as everyone in the office is professional. All the official directives are in written form

and all the internal communication is quite formal related to work. Even outward information

send through mails to partner organisation is documented and all outgoing mail are printed

and store din file for reference. All the mails from EED are sending directly to mails

executive director, programme coordinator and project monitoring officials. There is ample

coordination and ease in exchange of information.

Planning in the organization for future projects is done in a de centralized with the chief

functionary consulting all its coordinators and project monitoring officers. As most of the

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work relates to financial monitoring of Ngos being funded by EED, not much planning is

required as all the staff are professionals in this field. The staff team meets weekly in the

morning every Monday. in this the week work is planned and reviewed. there is mid term

review as well as annual review regularly in the month of July first week and January first

week. The planning is mostly done for touring the project areas of partner organisation,

conducting workshops on monitoring and evaluation as well as other financial issues related

to Ngos.

7.0. ORGANISATIONAL CULTURE

The organisation is very formal at its work place .the atmosphere of office is very cordial and

very fresh. The most important communication place is the office mess where each of the

staff lunches together. Office provides the lunch to its entire employee .the executive director

is trying to change the culture by asking its entire staff to call him by first name but it has

been unsuccessful. the organisation is quite influenced by its previous director Mr MOHR

who was India head when FMSF was representative office of EED. The stories about Mr

Mohr are very common in the office. He is known as a very warm person here in office

despite being a german by native. Almost every staff has visited Germany for some training

or other in previous year.

8.0. FUTURE PLANS

Organisation future plan includes promoting accountability in the non government

organisation. it aims to be to be premier organisation in the field of monitoring of

projects as well as doing more workshops and consultancy on various aspect related to

financial monitoring as well as social accountability

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The organisation is working hard to diversify its source of fund. It is predominantly

dependent on the EED for funds. in past few years it has got donor like BFTW, ICCO ,TEAR

FUND etc. it also plan to get its major funds from conducting workshops and consultancy.

The organisation is well placed to do this as it has large network of partner organisation

across India.

8.1.SWOT analysis

in order to check how well the NGO is placed to carry out the above plans

8.1.1. STRENGTHS

• networking ability of the executive director

• leadership quality of executive director

• Skilled and experienced team in financial monitoring

• highly professional employee

• first mover advantage being one of its own kind

8.1.2. WEAKNESS

• dependence on EED for majority of funds

• dependence on executive director for every decision

• lack of decentralization

8.1.3. OPPORTUNITIES

• grab financial consultancies in non government sector

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 • training and capacity building of non government organisation employee in

financial monitoring and other financial related issues

• provide online training programme in financial monitoring and other issues

through its websites

8.1.4. THREATS

• competition from premier organisation in consultancies and conducting

workshops as its move upwards

• poaching of its experienced employees by other agencies

9.0. FINANCIAL ANALYSIS

The user groups of financial information include

• Government bodies

• Auditing sections, Chartered accountants etc.

• Creditors like banks

• Resource providers like the benefactors and the governing body etc

• Oversight bodies like local intelligence unit etc.

The general information that can be derived is as follows

9.1. BALANCE SHEET STAEMENT

FINANCIAL MANAGEMENT SERVICE FOUNDATION

(A REGD. PUBLIC CHARITABLE TRUST), NEW DELHI
BALANCE SHEET AS AT 31ST MARCH 2004

As at 31.03.04 As at 31.03.03
Amount (Rs.) Amount (Rs.)
SOURCES OF FUNDS
Unutilized Grants 4,567,363 2,575,897
Corpus Fund 7,665 7,406
General Fund 2,118,186 1,089,371

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Assets Fund Account 12,829,190 1,595,446
TOTAL 19,522,404 5,268,120

APPLICATION OF FUNDS
Fixed Assets
Gross Block 15,036,234 3,128,143
Less: Depreciation 2,207,044 1,357,467
Net Block 12,829,190 1,770,676

Current Assets, Loans & Advances

Cash and Bank Balances 6,487,230 3,645,244
Loans and Advances 399,207 417,025
6,886,437 4,062,269

Less: Current Liabilities & Provisions

Expenses Payable 158,950 555787
Other Liabilities 34,273 9,038
Net Current Assets 6,693,214 3,497,444

TOTAL 19,522,404 5,268,120

9.2. INCOME STATEMENT

FINANCIAL MANAGEMENT SERVICE FOUNDATION

(A REGD. PUBLIC CHARITABLE TRUST), NEW DELHI
Foreign Contribution Account
Receipts and Payments Account for the year ended 31st March 2004

RECEIPTS CURRENT YEAR PREVIOUS YEAR

AMOUNT (Rs) AMOUNT (Rs)
Opening balance
- Cash in hand 2,059 4,208
- Cash at Bank 29, 62,914 25, 69,778

Grants Received
- EED 72, 35,605 56, 67,876
- Tear Fund 4, 22,208 23, 38,593
- ICCO - 10, 61,619
- Christian Aid 37, 12,640 2, 28,772
- Bread for the World 3, 13,923 1, 20,000

Other Receipts
- General Fund 5, 46,900 -
- Other Income 5, 48,646 2,
75,036

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TOTAL 1, 57, 44,895 1, 22,
65,882

PAYMENTS
EED
- Programme Costs 20, 13,192 19, 97,518
- Communication Costs 12, 33,318 5, 22,966
- Workshops and Consultations 12, 16,076 8, 23,539
- Networking 3, 27,975 2, 99,116
- Coordination & Administration Costs 27, 78,598 40, 47,675
- Capital Costs 7,33,850 3,92,739
- Advance to staff 1, 19,000 54,000
- Tear Fund - IMOD programme 18,74,146 7,51,072
- ICCO - Need Assessment Programmes 4,04,333 1,39,571
- Christian Aid –
International Trade Campaign 38,57,787 88,858
- BftW - Project Accompaniment Services 2,76,928 1,83,855

Closing Balances
- Cash in Hand 2,077 2,059
- Cash at Bank 9,07,615 29,62,914
TOTAL 1,57,44,895 1,22,65,882

9.3.Funding organizations

Following have been the funding organisations of the various projects carried out by the

NGO.

1. EED- it is the major donor agencies for FMSF and accounts for majority of funds.

2. ICCO

3. CHRISTIAN AID

4. TEAR FUND

5. BREAD FOR THE WORLD

For technological assistance and guidance the organization has partnership with the

following.

9.4.Other Partner Organisations

• CASA

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 • EFICOR,

• CASA

9.5. BREAK UP OF EXPENDITURE IN 2002-03

FMSF spent 100 % of its planned budget in 2003-04. The total budget for the year 2003-2004

was more than double the budget for the year 2002-2003 because of building fund mainly by

EED.

Out of total expenditure of Rs 30 million in 2003-04, the expenditure on building on is

around 33%. The programme expenditure including EED, TEAR FUND, ICCO etc was

around 25%. The organisation spends around 10% as administration and coordination cost.

The organisation spends around 4 % in conducting workshop and consultation and almost

same amount in expenditure related to communication. The coordination and administration

cost had decreased by 30% as compared to year 2002-03. The networking cost has increased

by almost 50% in year 2003-2004. Overall organisation expenditure is similar to last year

except increase in cash by almost 90% over last financial year of 2002-2003.

9.6.ACCOUNTING POLICIES (Source: Annual Financial Report 2002-2003)

• Accounts are prepared following the historical cost convention

• All revenues and expenses are accounted for on actual cash basis.

• Government assistance and grants sanctioned from donor agencies against approved

programmes are accounted in proportion to the expenditure incurred. Liabilities for

employees’ retirement benefits viz. provident fund, gratuity and leave encashment are

accounted for on accrual basis.

• Fixed assets are stated at cost plus all incidental expenditure incurred to bring the

assets to their present condition and location.

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 • Depreciation is provided at the rates prescribed in schedule XIV under the companies

act, 1956 on the written down values of assets at the beginning of the year.

Depreciation on fixed assets added/disposed off during the year has been provided on

pro-rata basis with reference to the period of usage during the year.

• Investments are shown at cost.

10. LEARNINGS IN FMSF

It has been truly an enriching experience to us to understand an organisation, its functioning

and culture from the close quarters. One of the most important aspects that we observed was
the amount of flexibility and freedom given to people to carry out their task in the best
possible manner. The internal environment in FMSF is very much formal in nature. But the
system of informal communication (during lunches and various parties) helps the employees
to release the pressure of the work.
The entire process of working of monitoring as well as documentation and research is very
professional.

One of the major things that I realized is the importance of documentation and presentation of
report. I learnt it is the way of representing the report with proper formatting ensures that t
will be read by decision makers.

The current ED, Mr. SANJAY PATRA believes in participatory management but at the same
time, he ensures the continuous monitoring and evaluation of the programmes. He is a very
humorous person and a good leader.

We also learnt that the emotional bonding with the work, people and self satisfaction can be
the strongest reason for working in a developmental organisation, which does not pay much
compared to a profit making organisation.

We also felt that there is great need in developmental organisation for good professionals,
who could efficiently manage the resources and bring in more effectiveness in the
implementation of the programmes.

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 References:

1. Annual Reports (2000-01, 2001-02, 2002-03) of FMSF

2. Organization Theory, Third Edition, Stephen.P.Robins, Prentice Hall of India.

3. 10TH Anniversary brochure of FMSF

4. Desseler Gary. Human Resource Management”, Ninth Edition, Pearson Education (2005)

5. www.fmsfindia.org

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