CMDS Financial Health Checklist

How financially fit is your non-profit organisation? Are its financial resources well managed? How healthy are your financial control systems? This checklist will assess your grasp of the key financial issues confronting non-profit financial managers.

At the end of the questionnaire we'll give your score and our diagnosis. There are four possible categories:

1. 115 – 130 points
Well done! Your organisation belongs to a small number of NPOs in South Africa with sound financial systems of control. Our diagnosis – financial fitness!

2. 95 – 115 points
Pretty good! But the warning signs are evident – there is still room to improve your financial fitness. Our prescription: Some remedial action may be required.

3. 65 – 95 points
Looking pretty flabby! We detect a few significant problems and suggest you seek professional advice to understand and improve your systems. Diagnosis: not terminal but not too good either.

4. Below 65 points
Emergency treatment required! Your financial health could imperil the life of your organisation. You may have a terminal case on your hands unless radical surgery is performed urgently. Obtain expert advice as a priority – before it’s too late to resuscitate your organisation.

And now for the questionnaire! Some questions may require a little thought, but it shouldn't take more than 5-10 minutes to complete:

The governing body of our organisation (board, management committee, etc.) carefully reviews the financial status of our organisation when it meets by reviewing financial reports.

Never / Not sure

Seldom (reports are often late or inaccurate)

Briefly or uncertainly (needs improvement)

Regularly at most meetings

In detail at every quarterly meeting

Programme managers or project coordinators of the organisation receive and review monthly reports showing income and expenditure against budget and other key financial information for their area of work.

Never / Not sure

Seldom (reports are often late or inaccurate)

Briefly / Uncertainly (needs improvement)

Carefully most months

Confidently every month

When problems are identified through the financial reports, corrective action is taken by the appropriate persons to institute better controls or reduce costs. Show level of confidence:

The organisation relies on the external auditors to detect errors or fraud. (Choose the extent on which you rely on the audit to detect error or fraud.)

The organisation has the support of a person (other than staff members) who possesses qualifications and experience in accounting or financial management and who takes an active role in the organisation.

An independent person in our organisation (not the administrator or bookkeeper) reviews the bank reconciliations on a monthly basis and monitors all outstanding items.

We issue receipts for all money we receive from grants, donations, gifts and other forms of income.

All money received is banked in full as soon as possible. (No cash received is spent)

We spend the money / Not sure

We spend the money, but we do record it

We sometimes bank the money

Money is regularly banked in full

Money is always banked in full, ASAP and linked to receipts.

Two signatories or password holders are required to authorise ALL cheques and payment instructions.

Staff MAY NOT make financial commitments on behalf of the organisation (place orders or incur costs) WITHOUT prior approval or authorisation. Choose level of confidence:

We feel confident that the South African Revenue Services would be completely happy with our employee’s tax and/or VAT accounting. Choose level of confidence:

The organisation has effective procedures in place to ensure that all income due to the organisation is received in full and on time. Choose level of confidence:

Staff members are prevented from receiving remuneration and/or honoraria from outside the organisation, which may be seen as “double” or inappropriate payment. Choose level of confidence:

The organisation has projected cash flow and prepares forecasts at least one year in advance. Choose frequency of this exercise:

We keep a register of all our capital items (computers, furniture, vehicles, etc.) and have effective control mechanisms in place to ensure proper use of these items. Choose level of confidence:

We use donor funds strictly according to the contracts and only for the purposes for which the money was given and are able to clearly demonstrate this. Choose level of confidence:

All funders receive narrative and financial reports or audited statements on a timely basis, when due.

Never / not sure

Sporadically - when they demand them

Almost on time, usually in a panic

Usually, but it is stressful or difficult for us

Always

We rate our ability to prepare realistic budgets based on the cost of future activities planned (considering our record of the past) as:

The program managers and other program staff participate fully in development of budgets.

The use of cash (including cash or uncrossed cheques) to pay costs is limited and controlled. Indicate what describes your organisation best:

Not sure

Most of our payments are in cash

It's very difficult to control

We are aware of the risks and use cash seldom

We make very occasional cash payments under strict control

Original vouchers and or documents support all payments and clearly show the purpose for the payment and that goods and services were received by the organisation and/or organisational purposes.

Not at all

Uncertain - we aren't sure about what to keep

Hopeful - we sometimes struggle to get originals

Most of the time - some documents need to be chased

Always - everything is checked when the payment is made

If all donor funding stopped today, how long would your organisation be able to survive on its current resources?

The director and project managers make important decisions with financial implications based on accurate financial reports and forecasts. Choose the level of confidence:

The funding base of the organisation is diversified and we are not dependent on one major fund source.

Financial and administrative staff have opportunities to acquire additional skills and to receive ongoing support in their work.

Bank balances and balance of all amounts owing to or by the organisation are formally reviewed and explained to senior management.

* Indicates Response Required