J.7_MOH_Public_Financial_Manual.pdf

i

THE MINISTRY OF HEALTH

FINANCIAL MANAGEMENT POLICIES

AND PROCEDURES MANUAL

SEPTEMBER 2015

ii

CONTENTS

LIST OF ABBREVIATIONS AND ACRONYMS ................................................................................................. vii

Section 1.0 INTRODUCTION

1.1 Background

1.2 Vision and Mission

1.3 Financial Policies and Procedures Manual

1.3.1 Purpose of the Manual

1.3.2 Primary Users of the Manual

1.3.3 Changes to the Manual

1.3.4 Function and Structure of the OFM of the MOH

1.3.5 MOH’s Financial Management Accounting and Reporting System

1.3.6 Summary of Roles and Responsibilities of the OFM

SECTION 2.0 ACCOUNTING STANDARDS AND POLICIES

2.1 Accounting Standards and Policies

2.2 Basis for Preparation of Financial Statement

2.3 Chart of Accounts

2.4 Qualities of the MOH Accounting and Reporting System

2.5 Accounting Recording System

2.5.1 Book of Accounts

2.6 Currency of Account

2.7 Fiscal Year

2.8 Record Maintenance and Retention

2.9 Application of Accounting Policies

2.10 Payment Policies

2.11 Approval of Funds and Signing of Internal Payment Vouchers

2.12 Types of Fund Flows

2.13 Overview of County Health Teams, Hospitals, and other MOH-Sponsored Institutions

2.14 Basis of Accounting for Funds for County Health Teams, Hospitals, and MOH-Sponsored

Institutions

SECTION 3.0 BUDGETING AND PLANNING

iii

3.1 Policy

3.1.2 General

3.2 Overview of the Budget Process

3.3 Budget Preparation Stage

3.3.1 Planning

3.3.2 Overall Responsibility for the Preparation of the Budget

3.4 Budget Execution Stage

3.5 Budget Reporting and Accountability Stage

3.6 MOH’s Detailed Annual Budgeting Process

3.7 Changes to the Approved Budget

3.7.1 MOH’s Budget Revision Process

3.8 Monthly/Quarterly Allotments

3.9 General Overview of County Budgeting and Monitoring

3.10 General Overview of Budget Implementation at the County Level

SECTION 4.0 CASH AND BANK MANAGEMENT

4.1 Bank Accounts

4.1.1 General

4.1.2 Central Office

4.1.3 Program Level

4.1.4 General Overview of County Level Bank Accounts

4.2 Procurement and Cash Plans

4.2.1 Procurement Plans

4.2.2 Cash Plans

4.3 Cash Books

4.4 Bank Reconciliation

4.4.1 Outstanding Checks and Stop Payment

4.4.2 Replacement of Lost Checks

4.5 General Overview of Bank Reconciliation at the County Level

SECTION 5 PETTY CASH IMPREST

5.1 Petty Cash Fund Procedures at the OFM

5.2 General Overview of Petty Cash Procedures at the County Level

SECTION 6.0 REVENUES

iv

6.1 Overview

6.2 Receipt of Funds

6.2.1 Receipt of Funds by the OFM

6.2.2 General Overview of Receipts of Funds by Counties and Programs

SECTION 7 EXPENDITURES

7.1 Objectives of the MOH’s Payment Procedures

7.2 Payment Procedures of MOH

7.2.1 General Overview of Payment Procedures at the County Level

7.3 Petty Cash Advances

SECTION 8.0 PROCUREMENT

8.1 Procurement Procedures

8.1.1 Procurement Committee

8.1.2 Procurement Unit

8.1.3 Bid Evaluation Panel

8.1.4 Procurement Limits per the Procurement Manual

SECTION 9.0 PAYROLL

9.1 GOL Basic Salaries

9.2 Donor-Funded Salaries and Allowances

9.3 Staff Allowances

SECTION 10 FIXED ASSETS

10.1 Overview

10.2 Fixed Assets Register

10.3 Disposal of assets

10.4 Theft and Loss of Assets

10.5 Vehicle Maintenance

10.6 Asset Management Procedures

SECTION 11 STOCK

11.1 Objectives of the MOH’s Stock System

11.2 Procedures for Ordering, Receiving, and Issuing Stock

SECTION 12 FINANCIAL REPORTING

12.1 Reporting Policy

12.2 Reporting Objectives

v

12.3 Monthly Accounts Closing

12.4 Quarterly Accounts Closing

12.5 Annual Accounts Closing

12.6 Mid-Term Plan Reports

12.7 General Purpose Financial Statements

12.8 Accounting Policies and Explanatory Notes

12.9 Reporting Procedures

SECTION 13 BILATERAL AND MULTILATERAL FUNDS

13.1 Overview

SECTION 14.0 INTERNAL CONTROLS AND AUDIT

14.1 Definition of Internal Control

14.2 Roles and Responsibilities

14.3 Objectives of Internal Controls

14.4 MOH’s Internal Control System

14.5 Audit Committee

14.6 Internal Audit

14.6.1 Responsibilities of the Internal Auditors

14.7 External Audit

SECTION 15 MONITORING AND EVALUATION OF INTERNAL CONTROLS AND COUNTy OFFICES

15.1 Internal Controls

15.2 County Health Teams and Hospitals Monitoring Visits

15.3 Performance Indicators

15.4 Non-Negotiable Criteria

SECTION 16 ANNEX FORMS

Annex 16.1 Official Receipt

Annex 16.2 Local Purchase Order

Annex 16.3 Goods Received Note

Annex 16.4 Goods Issue Note

Annex 16.5 Payment Voucher (PV)

Annex 16.6 Petty Cash Voucher

Annex 16.7 General Journal Voucher

Annex 16.8 Report Form A vi

Annex 16.9 Report Form B

Annex 16.10 Description of the GOL Chart of Accounts

Annex 16.11 Sample Chart of Accounts

Annex 16.12 Format for Accounting Transactions Processing and Reporting

Annex 16.13 Specific Controls and Control Activities over Expenditure and Assets

Annex 16.14 Internal Budget Guidelines

Annex 16.15 Organization Chart of Finance Sections

Annex 16.16 Surprise Cash Count

Annex 16.17 Surprise Cash Count

Annex 16.18 Bank Reconciliation

Annex 16.19 Bank Reconciliation Summary vii

LIST OF ABBREVIATIONS AND ACRONYMS

AO accounts officer

AMA

BCC

assistant minister for administration

Budget Circular Call

BO

BPN

CAG

CBC

budget officer budget policy note comptroller and accountant general county budget committee

CFO county finance officer

CHO county health officer

CHSA county health services administrator

CHT county health team

CSA Civil Service Agency

DA donor accountant

DMA deputy minister for administration

DOB

EV

Department of Budget expense voucher

FA financial accountant (central office)

FO finance officer

GAAP generally accepted accounting principles

GAC General Audit Commission

GDN goods delivery note

GOL Government of Liberia

GRN goods received note

GSA General Services Agency viii

HA hospital administrator

HFO health finance officer

IAGB internal audit governance board

IPSAS International Public Sector Accounting Standard

IAU Internal Audit Unit of the MOH

LD Liberian dollar

LPO

M&A local purchase order ministry and agency

MD medical director

MOFDP Ministry of Finance and Development Planning

MOH Ministry of Health

OFM Office of Financial Management

PO purchase order

PFM Public Financial Management

PPA

PPCA

PPCC

payroll and procurement accountant

Public Procurement and Concessions Act

Public Procurement and Concessions Commission

PV payment voucher

SOPs Standard Operating Procedures

USD United States Dollar ix

Foreword

On this day I present my compliments and wish to assert that the Ministry of Health (MOH) Financial Management Policies and Procedures Manual, like other manuals such as the Human Recourses Policy Manual, is inter alia, aimed at ensuring compliance with the Public Financial Management Act of 2009 and other relevant regulatory pronouncements. All spending entities in government have responsibilities with respect to the management and accountability of public resources. In many cases institutions, which do not have the right authoritative guidance for reference, make procedural or conceptual errors in their financial transactions.

It must be clear that the Government of Liberia has put in place financial control systems and procedures that encapsulate the Integrated Financial Management Information System, the Public Procurement and Concessions Act, and Public Financial Management Act to ensure that public financial transactions are executed efficiently, prudently, and accurately, and reflect fiscal probity and transparency. Each ministry or agency of government is expected to translate or customize these policies for its own operational purpose, including bank transactions, petty cash management, payment policies and procedures, budgeting, financial reporting requirements, assets management, payroll management, etc.

The development of this customized MOH Financial Management Policies and Procedures Manual is another plus that needs to be celebrated because it is intended to improve the MOH’s financial management and guide the users to make sound decisions. It will further enhance internal controls, strengthen the reporting system, and guide financial management within the MOH.

Finally, we acknowledge the tireless efforts of the United States Agency for International Development (USAID) Governance and Economic Management Support Program and the USAID Collaborative Support for Health program, Liberia partners, as well as members of the Office of Financial Management of the MOH. It is this collaboration that has resulted in the development of this manual. Deep appreciation goes to the hard work and long hours spent in working sessions that have led to production of this professional document.

Hon. Edward B. Tolbert, MBA, CPA Deputy Minister for Administration

SECTION 1.0 INTRODUCTION

1.1 Background

1.1.1 Mandate Source

The Ministry of Health (MOH) derives its mandate from the proposed act to establish the MOH (2015), following the amended New Executive Law of 1972.

1.1.2 Mandate of the MOH

The MOH shall be responsible for the formulation, implementation, monitoring, and evaluation of health polices, plans, and standards; deliver and coordinate the delivery of decentralized medical care in public facilities; develop health manpower; undertake preventive health services and promote health services, including specific interventions.

1.1.3 MOH Core Functions and Responsibilities

The MOH is responsible for the following broad functions:

Policy and planning

Service delivery

Regulation

Coordination, monitoring, and evaluation

The MOH’s core functions shall be to:

develop and coordinate the development of sector policies, plans, standards, and regulations;

maintain a national health information system that includes data relating to births, deaths, and burials;

coordinate and promote health and health-related research;

provide medical care and treatment through public health facilities and decentralize such medical care and treatment;

deliver preventive services and promote family, environmental, and occupational health services through county health systems;

coordinate with health care institutions, stakeholders and/or the donor community to formulate and support health care interventions;

pursue decentralization of the health sector within the limit of the National De-centralization Agenda;

conduct fiscal management and enhance support systems; and administer laws or regulations and all of the provisions contained herein as well as perform such other powers and functions as may be provided by law.

1.1.4 MOH Organization and Structure

The health minister leads the MOH and is responsible for its operations.

Each MOH department shall be composed of divisions, sections, units, and other structures dedicated to implementing the MOH’s mandate and core functions as established by law and/or policy. The MOH also has decentralized management structures at the county and district levels.

The MOH is hereby structurally organized to include the following:

a) Office of the Minister

b) Department of Policy Planning and Monitoring and Evaluation

c) Department of Health Services

d) Department for Public Health Emergency

e) Department of Administration

1.2 Vision and Mission

1.2.1 Vision Statement

The former Ministry of Health and Social Welfare’s vision as written in the 2011-2021

National Health and Social Welfare Policy and Plan is for “a healthy population with social protection for all.”

1.2.2 Mission Statement

The MOH’s mission as written in the 2011- 2021 National Health and Social Welfare

Policy and Plan is “to reform and manage the sector to effectively and efficiently deliver comprehensive, quality health and social welfare services that are equitable, accessible, and sustainable for all the people in Liberia.”

1.3 Financial Policies and Procedures Manual

Pursuant to the Public Financial Management (PFM) Act 2009 and the PFM Regulations

2009, the MOH has taken steps to enhance its financial management operations, to ensure compliance with the PFM Act 2009, the PFM Regulations 2009, and other applicable Government of Liberia (GOL) rules and regulations.

1.3.1 Purpose of the Manual

As required by the PFM Regulations [PFM Regulations A.5 (1) (2)], the head of a government agency shall, with the approval of the minister of finance and development planning, issue an accounting manual to suit its operations and regulate the financial matters of the government agency.

The manual shall contain relevant procedures for keeping accounts, preparing and formatting financial statements, charting accounts, and all administrative issues relating to keeping and preparing government accounts.

In the area of financial management, the MOH must be able to demonstrate that from an organizational perspective its policies, procedures, various levels of management and authority, and roles and responsibilities are well-documented, clearly communicated, and well-understood.

The MOH is responsible for establishing and maintaining a system of internal controls to ensure effectiveness and efficiency of its operations, reliability of its financial reporting, and compliance with applicable law and regulations. The MOH shall adhere to management policies, conduct business in an orderly and efficient manner, and properly record and safeguard its assets and resources.

The purpose of this manual is to:

a) document the financial management and reporting policies and procedures of the MOH;

b) provide a comprehensive and practical guide, incorporating effective internal controls necessary for the management of MOH funds;

c) provide step-by-step instructions in collecting, analyzing, recording, processing, disbursing, and reporting all financial transactions of the MOH;

d) provide safeguards for its assets;

e) ensure conformity of financial reporting with Cash Basis International Public

Sector Accounting Standards (IPSAS); and

f) ensure compliance with relevant GOL rules and regulations, including the

PFM Act and Regulations and the Public Procurement and Concessions (PPC)

Act and Regulations.

This manual does not replace but supplements the GOL Financial Management Manual.

All other financial manuals in the MOH are deemed supplementary to this manual. If any other supplementary manual conflicts with this, this manual shall prevail.

Other reference materials that complement the use of this manual:

The PFM Act 2009 - Provides governance authority over all matters related to the management of the public finances of the GOL

The PFM Regulations 2009 - Specifies the procedures for the governance authority over all matters related to the management of the public finances of

GOL

PPC Act 2005 (amended 2010) - Provides governance authority over all matters related to procurement for all ministries and agencies

PPC Regulations 2009 - Specifies the procedures for the governance authority over all matters related to procurement for all ministries and agencies

The Cash Basis IPSAS - Prescribes and guides the accounting treatment of all

GOL financial transactions

The GOL Chart of Account - Provides structured guidance for classifying, analyzing, and reporting all GOL financial transactions

The Integrated Financial Management Information System - Provides a customized and integrated tool for recording and reporting on all GOL financial transactions

1.3.2 Primary Users of the Manual

The primary users of this manual include all officers of the MOH responsible for finance and accounting [PFM Regulations Section C.8], including:

1. MOH Office of Financial Management (OFM), including:

a) Comptroller

b) Chief accountant

2. MOH senior managers, including:

a) The minister

b) Deputy ministers

c) Assistant ministers

3. The Internal Audit Unit (IAU), Compliance Unit, and the Internal Audit

Committee

4. The Budget Committee

5. County health teams (CHTs)

6. Donors and partners

1.3.3 Changes to the Manual

This manual is subject to periodic review to reflect the changing financial management environment as well as changes in the financial management and reporting needs of the

MOH and the GOL.

The comptroller or his/her designee will facilitate the introduction of new instructions to reflect the changing financial management environment as well as changes in the financial management and reporting needs of the MOH, and will propose revisions to the manual to the minister or his/her designee.

The minister, in consultation with the IAU, shall approve all revisions to this manual.

This current revision to the manual in January is the result of the finalization of the

GOL Financial Management Manual on July 31, 2013, in order to ensure that the MOH’s financial management system is compatible and consistent with the GOL treasury management system.

1.3.4 Function and Structure of the OFM of the MOH

An OFM was established in the MOH in 2007, with support from the British

Department of International Development.

The de-concentration of management support systems policy in Liberia is a well-established vision of the GOL and the MOH. The mandate for this vision is clearly defined in the National Health Policy 2007-2011: “The Government of Liberia is committed to decentralization. Within the health sector, decentralization will include de-concentration of management responsibilities at the county level and effective support systems at the central level. The local level shall be responsible for primary health services, while the central level will focus on policies, aggregate planning, and standard settings. The ministry will assign responsibilities to county.” [p9]

The extent to which the MOH can decentralize depends on the progress made by the

Ministry of Finance and Development Planning (MOFDP) in devolving its powers;

therefore, this manual is constrained in ensuring adherence to the rules and regulations of the PFM Act and of the MOFDP.

The various processes and related activities of the financial management function within the MOH are performed under the direction of a financial comptroller.

As delegated by the minister of health, the functions of the OFM [Government of

Liberia Financial Management Manual, Section 2.5] include the following:

a) Managing and operating the accounting systems of the MOH so as to ensure the accountability of all staff transacting business and facilitating the efficient discharge of such business

b) Ensuring that the MOH financial management system is compatible and consistent with the GOL treasury financial management system

c) Securing the efficient and effective use of appropriations under the control of the MOH in compliance with any enactment, regulations, or instructions issued under the authority of any enactment

d) Securing the due and proper collection of government revenues collectable by the MOH within the terms of any enactment or of instructions issued or approved by the minister of finance and development planning

e) Ensuring that all books of accounts under the control of the MOH are correctly posted and kept up to date

f) Producing, when required by the minister of finance and development planning, the comptroller and accountant general (CAG), head of the IAU, or auditor general, or by other authorized officers, all cash, books, records, vouchers, or other items of value in the charge of the MOH

g) Ensuring that staff who contravene the law are disciplined

h) Managing and reconciling the bank accounts authorized for the MOH

i) Exercising oversight over donor-funded project accounts operated by program management units and/or project implementation units under the MOH

j) Preserving, in good order, and securing the economical use of all equipment and inventories used by the MOH

k) Establishing systematic mechanism to follow up on audit recommendations and address audit queries raised by the auditor general in respect of the financial transactions and accounts of the MOH

l) Appearing before the Ways, Means, and Finance Committee of the National

Legislature to give any explanations required by the committee regarding the

MOH’s annual accounts

m) Compiling and maintaining assets register of the MOH, in collaboration with the General Services Agency (GSA), as determined by the CAG

n) Preparing the general purpose financial statement at the end of each fiscal year;

o) Signing the special purpose financial statements by the minister and the comptroller

p) Submitting the MOH financial statements to the CAG and minister of finance within two months of the end of each fiscal year [PFM Regulations: I.11]

q) Managing the treasury of the MOH base on allocation

As delegated by the minister of health, the OFM has custodial responsibility of public resources from the time when:

a) appropriations are lodged into the bank accounts of the MOH until the funds have been fully utilized for the purposes for which they were appropriated.

The MOH will account for the utilization of the funds to the CAG; and

b) an advance payment has been issued to an officer of the MOH until it has been duly retired in accordance with the relevant parts of the PFM regulations and this manual.

1.3.5 MOH’s Financial Management Accounting and Reporting System

The MOH uses the Integrated Financial Management Information System for recording and reporting its financial transactions. The MOH also uses manual and automated accounting books (ledger books, Excel worksheets, Microsoft Access, and other similar manual and automated systems, including ACCPAC) for recording its financial and budgetary transactions until the MOH has access to all relevant modules of IFMIS.

1.3.6 Summary of Roles and Responsibilities of the OFM

The decentralization of management support systems in Liberia is a well-established vision of the GOL and the MOH and is clearly defined in the Public Health Law of 1976 following an amendment of Chapter 30 of the Executive Order 1976. This manual covers in detail the financial management procedures and processes for the MOH’s central office, and only a general overview of the functions of the CHTs and county hospitals. Detailed financial management procedures and processes for the CHTs and county hospitals are not covered in this manual.

Below is a general overview of the roles and responsibilities of the OFM, the CHTs, and county hospitals.

Function OFM CHTs Hospital (Health

Facility)

Cash and Bank

Maintain cash books for all cash transactions

Maintain bank accounts

Prepare bank reconciliations for all bank accounts each month

Maintain cash books for all cash transactions

Maintain bank accounts reconciliations for all bank accounts each month

Maintain cash books for all cash transactions

Maintain bank accounts reconciliations for all bank accounts each month

Petty Cash

Maintain petty cash books

Responsible for the safekeeping of petty cash funds

Maintain petty cash ceiling in accordance with the GOL’s and MOH’s petty cash policy.

Maintain petty cash ceiling per individual petty cash disbursement in accordance with MOH’s petty cash policy

Perform petty cash reconciliations

Maintain petty cash books safekeeping of petty cash funds

Maintain petty cash ceiling in accordance with MOH’s petty cash policy books safekeeping of petty cash funds ceiling in accordance with MOH’s petty cash policy

Fixed assets

Maintain fixed assets register

Verify fixed assets

Stock

Maintain stock register

Undertake stock counts

Maintain stock register

Undertake stock counts

Maintain stock regularly

Reconcile the physical stock with accounting records regularly

Reconcile the physical stock with accounting

Undertake stock count regularly

Reconcile the physical stock with accounting records

Revenue

Record all funds received from all sources in cash books and other accounting books of

Appropriately account for all funds received

Ensure all funds are banked promptly

Record all funds received from all sources in cash books and other accounting books of

Appropriately account for all funds received

Record all funds received from all sources in cash books and other accounting books of records

Appropriately account for all funds received

Expenditure

Ensure adherence to MOH’s policies and procedures and PFM regulations over expenditures

Disburse funds to CHTs and hospitals based on approved budgets

Record all expenditures in the accounting books of record

Ensure adherence to MOH’s policies and procedures over expenditures

Record all expenditures in the accounting books of record

Ensure adherence to MOH’s policies and procedures over

Record all expenditures in the accounting books of record

Payroll

Manage incentive allowance payments according to MOH’s policies and procedures and PFM regulations

Maintain up-to-date staff registers

Maintain up-to-date staff registers

Budgeting

Manage medium-term expenditure framework budget process for the MOH, ensuring compliance with relevant

Develop budget for CHTs

Review budgets of the hospitals

Develop budgets for hospitals regulations

Liaise with budget holders, budget committees, and senior management of MOH on budget issues

Liaise with the Department of Budget (DOB) in the

MOFDP

Consolidate budgets from CHTs and hospitals

Submit MTEF budget to

Submit budgets to OFM at the central office

Accounting Ledgers

Keep current and accurate accounting ledgers on all sources and uses of funds

Keep current and accurate accounting ledgers on all sources and uses of funds

Keep current and accurate accounting ledgers on all sources and uses of funds

Financial Reporting

Prepare monthly, quarterly, and annual financial reports for the MOH and for submission to the MOFDP, in compliance with the PFM regulations and MOH’s policies and procedures.

Consolidate financial reports, including CHT and hospital reports

Generate or prepare donor reports, in formats specified by donors

Prepare monthly, quarterly and annual financial reports for CHTs

Review financial reports from hospitals

Submit monthly, quarterly, and annual financial reports to OFM, and as required

Prepare monthly, quarterly and annual financial reports for all sources and uses of funds using appropriate reports formats/forms

Monitoring

Undertake field visits to CHTs and hospitals to ensure compliance with the MOH’s and donors’ policies and procedures

Monitor CHTs and hospitals to ensure they comply with GOL’s, MOH’s and donors’ policies and procedures

Monitor hospitals to ensure compliance with GOL’s, MOH’s and donors’ policies and procedures

Medical director

(MD) to monitor financial process of hospital

Audit

Provide documents, reports, accounts, records, information, etc. to internal and external auditors, as required

Respond to audit queries reports, and accounting record, etc. to internal and external auditors as required

Respond to audit queries reports, and accounting records, information, etc. to internal and external auditors as required

Respond to audit queries

SECTION 2.0 ACCOUNTING STANDARDS AND

POLICIES

2.1 Accounting Standards and Policies

The MOH is required to follow the accounting policies of the GOL, which is currently the Cash Basis IPSAS issued by the IPSAS Board.

The MOH shall observe accounting practices that are consistent with international accounting standards and generally accepted accounting principles (GAAP).

MOH accounts shall be maintained using double entry accounting concepts, on cash basis of accounting. The cash basis of accounting recognizes transactions and events only when cash (including cash equivalents) is received or paid by the MOH. The

MOH will recognize receipts as follows:

a) Authorized allocations: The MOH will recognize authorized allocations when they are received and under the control of the MOH.

b) Grants and borrowings: The MOH will recognize grants and borrowings when received. Grants and borrowings transferred to other ministries and agencies

(M&As) by the MOH are recognized when the disbursement is made.

c) Other receipts: Other receipts by the MOH are recognized when received and under the control of the MOH.

The MOH will recognize expenses as follows:

a) All expenses are recognized in the statement of cash receipts and payments when paid by the MOH. However, in the statement of financial performance, the MOH will recognize expenses when incurred. Expenses incurred but not paid are recognized in the statement of financial position as a liability.

Standard books of accounts (cash books, journals, ledgers, etc.) shall be maintained in accordance with the accounting policies in this manual.

2.2 Basis for Preparation of Financial Statement

The Cash Basis IPSAS, the accounting standard adopted by the GOL, requires the MOH to:

a) prepare general purpose financial statements;

b) disclose relevant information in the financial statements and provide supporting notes; and

c) specify other reporting issues underlying the financial statements.

The financial statements shall be prepared on a cash basis with adoption of an accrual principle where possible and in accordance with IPSAS. According to the GOL PFM regulations, statements based on modified accrual basis are to show amounts due the

MOH and liabilities of the MOH at the end of the cut-off period.

2.3 Chart of Accounts

The MOH shall use the GOL Chart of Account, which complies with the Government

Finance Statistic 2001, as issued by the International Monetary Fund; the PFM Act and the PFM Regulations.

2.4 Qualities of the MOH Accounting and Reporting System

The MOH will ensure that its accounting and reporting system has the following essential qualities:

a) Accuracy: The information in its accounts and accounting books of records should be accurate, representing its actual financial transactions, without undue errors and omissions, and correct classification and timing of events.

b) Completeness: The MOH’s accounts shall be the true and complete representation of all transactions that took place during the accounting period.

c) Prevention of risk of fraud and corruption: The MOH’s accounting system should include controls to prevent the risk of fraud and corruption and adequate segregation of duties to prevent/mitigate it.

d) Relevance: The MOH’s financial information should be relevant and understandable to the users of the information.

e) Timeliness: Financial management reporting should be done in a timely matter.

2.5 Accounting Recording System

The OFM of the MOH, headed by the financial comptroller shall record all of its financial transactions. Through timely recording of financial transactions, accurate and reliable financial reports can be generated to provide the MOH’s management with information to assist in decision-making, as well as generate reports required by the

PFM.

The OFM of the MOH shall use accounting vouchers to record and post financial transactions. These accounting vouchers shall be consecutively pre-numbered, and have signing evidence of preparer, authorization, review, verification, and approval. [See

Annex 16.11, Format for Accounting Transactions Processing and Reporting.]1

See accounting vouchers authorization levels in Section 2.11.

2.5.1 Book of Accounts

The following minimum books of accounts will be maintained by the OFM of the MOH:

Book of Account OFM CHT and Hospital Journal vouchers General ledger

Cash book

Donor cash book

Petty cash book Advances ledger

Checkbook register Check payment log

Fixed assets register Stock register

Monthly bank reconciliation Monthly, quarterly, and annual financial reports

Journal vouchers: A journal voucher is used to evidence the nature of a transaction and serves as a basis to record the transaction into the accounting system. They may be used as postings of original transactions, adjustments, reversals, or corrections. They may also be used to transfer amounts between budget items, different accounts, projects, and cost codes. Journal vouchers are to be maintained in a sequential order.

General ledger: The MOH’s general ledger shall be maintained in a logical manner, according to the GOL chart of account categorization.

Cash books: The MOH shall maintain separate cash books for each of its funds: GOL, bilateral and multilateral funds, program funds, etc. All cash transactions shall be recorded in the cash books as soon as funds are received or payments are made to

Table 10 in the GOL Financial Management Manual ensure that the MOH captures all payments and receipts for an accounting period. The cash books will also be used to reconcile the MOH’s bank statements.

Petty cash books: The MOH shall operate a petty cash system to take care of day-to-day operational transactions. All payments made from petty cash shall be entered into the petty cash book using the accounting code structure, as soon as payments are made and petty cash refunds received. [See Petty cash ceiling approvals in Section 5.1.]

Advances ledger: The MOH will maintain an advances ledger to record, track, and monitor all advances given. Liquidations must be entered against each advance in the advances ledger. The advances ledger shall be updated promptly and the balances shall be reviewed weekly to avoid the accumulation of long outstanding advances.

Stocks: All issues and receipts of stock shall be recorded in the stock ledger and reconciled periodically with the physical stock.

Fixed assets register: All assets purchased, received as donations, or acquired from the GSA shall be recorded in the asset register as soon as they are owned or considered to be owned by the MOH. The fixed asset register shall be promptly updated to reflect acquisitions, disposals, losses, write-offs, and handovers. [Minimum value for an item to be considered as fixed asset is established in Section 10.1]

2.6 Currency of Account

The monetary unit for all government agency accounting and financial reporting shall be the Liberian dollar (LD). United States dollars (USD) may also be used for financial reporting purposes, but the LD is the base currency. [PFM Regulations A.2 (b)]

2.7 Fiscal Year

The MOH’s fiscal year is the same as that of GOL, which is from the July 1 to the June

30 the following year [PFM Regulations I.18]

2.8 Record Maintenance and Retention

The MOH will store and maintain all of its records in an organized and secure manner, which facilitates timely retrieval of such records (for example, in files, filing cabinets, etc.). Per the Liberia revenue code of 2000 as amended 2011 section 55, 4(b) all financial documents shall be kept for a minimum of seven years.

All electronic files are to be saved to the server and backed up per the OFM backup policy.

2.9 Application of Accounting Policies

The MOH shall use the same accounting policies consistently and apply them from year to year.

2.10 Payment Policies

All payments made by the MOH within Liberia, above $500, shall be made by check. A direct bank transfer through the banking system shall be used to make payments to recipients outside Liberia to the recipient’s bank account. To avoid transporting cash, payments made in the counties under specific conditions, either to staff, for goods or services, are also to be transferred through the banking system. [Checks signatories are described in Section 4.1.]

2.11 Approval of Funds and Signing of Internal Payment Vouchers

The health minister or his/her four deputy ministers will approve all payment authorizations at the central ministry level. Where this authority is delegated, for example, in the absence of the minister or deputy ministers, it shall comply with relevant GOL rules and regulations and shall be abided by accordingly. At the CHT and hospital level, the county health officer (CHO) or the MD will authorize all payment vouchers (PVs) respectively.

2.12 Types of Fund Flows

There are four main types of fund flows of the MOH. These are:

1. Wages, salaries, and employee benefits

2. Supplies and consumables (goods and services)

3. Transfers and subsidies

4. Capital

2.13 Overview of County Health Teams, Hospitals, and other MOH-

Sponsored Institutions

Funds given by the MOH and donors shall be treated as income by the CHTs, hospitals, and MOH-sponsored institutions. As these funds are disbursed, they will be recorded to the appropriate budget line item.

Funds released to a CHT, hospital, and other MOH-sponsored institutions by the MOH will be based on these institutions’ budgets and expenditure plans.

Budgets are to be approved as indicated in Section 3.9

In-kind support received by these institutions from the MOH, such as drugs, test kits, and equipment, are not to be recorded and accounted for in the accounting books of record as income or fixed assets. These institutions and the MOH’s central office, however, will maintain physical control and accountability of in-kind support through a fixed asset register or inventory register. Such fixed assets must be marked in order to identify the assets.

2.14 Basis of Accounting for Funds for County Health Teams, Hospitals, and MOH-Sponsored Institutions

Under the cash basis of accounting, GOL funds transferred to the county offices shall be accounted for as expenditure in the accounts of the MOH immediately the transfer is made. This complies with the Public Finance Management Act of 2009.

Donor funds transferred to programs, CHTs, hospitals, or any other MOH-sponsored institutions, shall be accounted for as an asset - advances disbursed. On consolidation of financial reports from programs, CHTs, hospitals, or any other MOH-sponsored institutions, expenditures incurred by the programs, CHTs, hospitals, or any other

MOH-sponsored institutions shall be offset against the advances received by these programs/institutions. MOH’s “advances disbursed” accounts shall be cleared as institutions report their expenditures against the advances they received.

Staff receivable accounts shall be established for advances taken by staff for program implementation.

All funds disbursed will be considered an advance until accounting for such funds has been completed.

Upon receiving the funds, either through petty cash or by check, the receivable account of the staff taking the advance will be debited.

This receivable account will be cleared upon submission of an expenditure report by the recipient of the advance.

Advances taken to implement programs in Montserrado County shall have a period of two days for the settlement of such advances. For staff whose programs are implemented out of Montserrado County, such staff shall have three days after returning from the field to settle such advances.

Any advance that is not settled after three weeks shall be cleared against the monthly allowance of the staff who received the advance.

SECTION 3.0 BUDGETING AND PLANNING

3.1 Policy

The MOH must prepare its budget in the context of a medium-term fiscal framework to achieve its objectives over a multiyear period. [PFM Act 2009, Section 8 (1)]

The preparation of the MOH’s budget must conform to the budget preparation calendar set forth by the minister of finance and development planning. [PFM Act 2009, Section

11 (2)]

3.1.2 General

The central ministry, CHTs, hospitals, and programs shall prepare budgets based on the

MOH’s plans, priorities, goals, and objectives, ensuring that all activities, projects, and programs are within the mandate of the MOH.

The central ministry, CHTs, hospitals, and programs shall prepare budgets in accordance with the budget guidelines of the minister of finance and development planning.

The comptroller shall be responsible for keeping the budgets in line with the multiyear plan.

Budget holders, and relevant stakeholders shall be responsible for ensuring the timely preparation, endorsement, and submission of their budget estimates to the comptroller.

3.2 Overview of the Budget Process

The GOL has adopted a three-year MTEF. The MTEF provides a link between the GOL five-year national development plan, the agenda for transformation, and the annual budgeting cycle.

There are three major objectives of an MTEF:

a) Ensuring fiscal discipline by spending what the public sector can afford

b) Allocating resources in line with national priorities

c) Ensuring resources are used as efficiently as possible

There are three stages to the budget process:

a) Budget preparation

b) Budget execution

c) Budget reporting and accountability

3.3 Budget Preparation Stage

The budget preparation process begins as soon as the DOB at the MOFDP begins the annual budget process and ends when the legislature approves the budget.

Preparation of the budget conforms to a Budget Preparation Calendar set forth by the

MOFDP [PFM Act 2009, Section 11 (2)].

The preparation of the budget consists of two phases:

a) Strategic Phase – The strategic phase provides an opportunity for the MOH to review its priorities and strategies before it undertakes the detailed allocation of its resources.

b) Operational Phase – During this stage, the MOH will develop its detailed budget based on agreed priorities established during the strategic phase.

The MOH is to carry out the following activities during the Strategic Phase. The MOH will establish a budget committee whose responsibilities include the following: [PFM

Regulations D.16]:

a) Reviewing and formulating MOH’s strategic plans based on the policies of the

GOL

b) Reviewing the MOHs revenue collecting activities, if any

c) Allocating the MOH’s resources based on objectives, outputs, and activities

d) Coordinating and consolidating the MOH’s budget

e) Monitoring and evaluating the MOH’s budget performance

f) Reporting in accordance with the GOL’s instructions and regulations

MOH’s budget committee will include the:

(a) Minister Chairman

(b) Deputy minister Member

(c) Assistant minister Member

(d) Heads of units Member

(e) Comptroller Member and secretary

3.3.1 Planning

The MOH must prepare mid-term plans that:

a) are consistent with the GOL’s overall strategic plan;

b) describe the MOH’s core business goals, objectives, strategies, performance measures, and targets;

c) cost the MOH’s strategic plan;

d) consider projects and recurrent costs together;

e) take into consideration a comprehensive approach to planning GOL expenditure, as this is done alongside donor-funded projects and other revenue streams;

f) address the upcoming fiscal year and the following two fiscal years;

g) include a statement that the MOH is accountable for the plan and for achieving the specific objectives in the plan; and

h) establish performance measures that are results-oriented.

The MOH’s Department of Planning, Research, and Development and the OFM will play key roles in the budget preparation process, ensuring that the MOH’s budget and operational policies are fully implemented. The OFM will also provide periodic variance reports of actual and budgeted amounts to be used in making informed decision and analysis.

All other departments and divisions of the MOH are encouraged to develop realistic financial plans that will facilitate allocation of resources according to the MOH’s priorities.

Planning in the MOH is to ensure that the MOH performs its key functions according to its mandate.

Planning, budgeting, and reporting are all elements of performance management and accountability.

The MOH’s planning should be closely tied to its budget process and the accounting and reporting system of the GOL. Budget transparency and accountability requires the

MOH to produce a strategic plan and three-year mid-term plans.

The MOH’s human, financial, and capital resources required to achieve its goals and objectives need to be set out in the budget. The budget is developed based on forecasts, key assumptions, and risk assessments, which are integral to the planning process.

The MTEF budget process involves the planning recurrent (ongoing costs) and capital

(development related expenditures) resources together. During the planning stage, the

MOH needs to consider whether it is more effective to spend limited resources on the operation of existing facilities, or on new investments. The integrated approach also ensures that the MOH plans for operational costs that will arise from new investments.

The integrated budget approach involves the MOH taking into consideration all resources available: GOL funds, internally generated funds, if any, and donor support, and for the MOH to allocate these resources in line with its priorities, which should be linked to the agenda for transformation.

The MTEF approach provides more information on objectives and services delivered by the MOH, and the related costs. The MOH can be held accountable by the National

Legislature, Cabinet, the MOFDP, and the citizens of Liberia for the achievement of its objectives, the delivery of its services, and the efficiency of these efforts.

3.3.2 Overall Responsibility for the Preparation of the Budget

The responsibility for preparing budget cost estimates lies with the budget holders, program managers, and the counties and operating units under their control. However, the OFM has the overall responsibility for the budget preparation process.

The responsibilities of the OFM in the budget preparation process include the following:

a) Preparing and distributing internal budget guidelines upon receipt of the

Budget Circular Call (BCC) from the MOFDP

b) Coordinating the budget preparation process

c) Providing technical assistance to budget holders in preparing their budgets

d) Ensuring that all information related to the budget process is properly communicated within the MOH and to relevant stakeholders outside of the

MOH (i.e. MOFDP)

e) Consolidating the cost estimates of the budget submitted by budget holders and submitting the consolidated budget to the minister, deputy minister for administration (DMA), and budget committee for review

f) Recording the minutes of the budget committee meetings

g) Submitting the consolidated budget to the MOFDP

h) Administering control over the approved budget

i) Preparing budget performance reports and analyzing actual performance against budget

j) Submitting budget performance reports to budget holders, management, and the MOFDP

The following summarizes the responsibilities of the MOH during the budget preparation stage [detailed processes are in section 3.6 of this manual]:

Prepare its budget policy note (BPN) with support from the DOB within the

Submit its BPN to the MOFDP to include in the Budget Framework Paper

Produce and present final project proposals to the DOB for review

Prepare its detail program and project budgets

Attend sectoral budget hearings

Revise its detail budget based on legislative feedback

Make re-adjustments to its budget

3.4 Budget Execution Stage

The following summarizes the responsibility of the OFM of the MOH during the budget execution stage [Detailed processes are in section 3.6 of this manual]:

Distribute copies of the approved budget to all members of the budget committee, senior management, and budget holders

Enter approved budget in IFMIS (the approved budget and allotments are currently entered into IFMIS by the MOFDP)

Resubmit cash plan based on the adjusted and approved budget if budget appropriations were adjusted at the approval of the budget

Revise spending plans based on quarterly allotments

Record breakdown of allotments to appropriate budget line items in the budget ledger

3.5 Budget Reporting and Accountability Stage

The following summarizes the responsibilities of the MOH during the budget reporting and accountability stage [detailed processes are in section 3.6 of this manual]:

Prepare budget performance reports each month, no later than the close of business on the fifteenth working day of the subsequent month. Reports are to include explanations about significant deviations, if any.

Submit quarterly report within 45 days after the end of each quarter

Submit quarterly progress reports in a timely manner in order to access next quarter’s allotment

Prepare midterm plan report in the second week of January of each year (the

MOH’s Department of Planning will play an active role as it is the main custodian of the MOH’s plans).

Prepare general purpose financial statements within two months of the end of each fiscal year

3.6 MOH’s Detailed Annual Budgeting Process

The following outlines detailed steps of the annual budgeting process. The time frame in this process may be changed by the minister of MOFDP.

Stage Process Responsibility Approx. Timing

Budget Preparation Stage

1.

Upon receipt of the BCC, the comptroller informs the MOH’s senior management, the budget committee, and all budget holders that the budget process is to begin.

Comptroller 2nd week in

November

2.

Circulates the BCC to the minister, deputy ministers, budget holders, and budget committee

Comptroller 2nd week in

November

3.

The BPN is then prepared with support from relevant stakeholders within the

MOH and the MOFDP.

Comptroller/BO/ senior management/budget holders/budget committee/MOFDP

Start 2nd week in

November

4.

Submit sector BPN for inclusion in the

Budget Framework Paper

Comptroller 1st week in

December

5.

Produce and submit final project proposals to MOFDP for review

Comptroller 1st week in January

6.

Issue internal budget guidelines to

MOH’s Head of Units to begin preparing the detailed budget. The guidelines will include:

Budget preparation timetable

Standard rates to be used for various items, e.g. per diems, miles per gallon of fuel, unit price, Comptroller 3rd week in

January measurement units, exchange rate, etc.

Budget format (which includes expenditure requirements and cash plan)

7.

OFM informs budget holders of their new budget totals, decided by budget committee, based on MOH’s budget ceiling from MOFDP, and gives them a copy of current budget

Budget committee 3rd week in

January

8.

OFM holds a budget preparation workshop to discuss the budget process

Comptroller 3rd week in

January

9.

Budget holders prepare budgets for their respective units (with guidance from the comptroller/chief accountant/budget officer (BO) and submit budgets to comptroller:

Budget holders develop their respective budgets using the formats provided to them by the comptroller

All budget holders develop their respective budgets based on the ceiling provided by the budget committee in the internal budget guidelines

Budget holders should prepare corresponding work plans, categorized by month.

Budget holders 4th week in

10.

Hold budget discussions during Step 9 above

Budget holders/budget committee/BO/comp troller

4th week in

January

11.

Budget holders submit their draft budgets to the comptroller for first review

Budget holders/BO 4th week in

12.

The BO reviews and ensures accuracy and completeness of each unit’s budget, and submits budget to the comptroller

BO 4th week in

January

13.

Reviews and consolidates all units’ budgets and prepares the MOH’s consolidated budget. Submits consolidated budget to the DMA for review

Comptroller 4th week in

Budget Approval Stage (MOH and MOFDP)

14.

The DMA reviews the…