1. INTERNSHIP REPORT
Letter of Transmittal
October 10, 2012.
To
Prof. Dr. Md. Shah Alam
The Head of
The Department of Business Administration
The University of Asia Pacific.
Dhaka
From: Lutfa Khanom, ID : 102036036
Subject: Submission of Internship report on “Financial Management of NGO:
Association for Realizations of Basic Needs (ARBAN) .”
Dear Sir,
I am pleased and happy to submit this dissertation report on ‘ Financial Management of
NGO of Association for Realizations of Basic Needs (ARBAN) ’ which you asked me to prepare.
Endeavors have been made to make it comprehensive as far as possible.
Any shortcoming or mistake in the report is my fault. Please call me any time at your
convenience if there is any point, which needs further clarification.
I would like to request you to accept my report and oblige thereby.
Thanking you,

2. INTERNSHIP REPORT
Student Declaration
I am Md. Mahfuza Akter Mili the student of Mastered of Business Administration (MBA)
Registration ID: 10206038, major in Finance from The University of Asia Pacific would
like to solemnly declare here that an internship report on “ Financial Management of NGO:
Case of Association for Realizations of Basic Needs (ARBAN) ” has been authentically prepared
by me.
While preparing this internship report, I didn’t breach any copyright act intentionally. I
am further declaring that, I did not submit this report anywhere for awarding any
degree, or certificate.
--------------------------------
Mahfuza Akter Mili
MBA (Major in Finance)
The University of Asia Pacific

3. INTERNSHIP REPORT
Supervisor’s Declaration
I
This is to certify that, the thesis on “Banking System Practice in NCC Bank Ltd.” is
prepared by Mahfuza Akter Mili a student of under my supervisor and guidance. I have
gone through the thesis and found his thirst for seeking depth of every aspect of the
research topic is very much enthusiastic and satisfactory.
It is to be noticed that the thesis fulfills the partial requirement of the degree of MBA. It
has not been submitted to any other university or institute for any of the degree or
certificate or for publication.
The report is approved and accepted in quality form.
…………………………………………
Prof. Jesmin Sultana
Associate Professor
Department of Business Administration
The University of Asia Pacific.

4. INTERNSHIP REPORT
ACKNWEDGEMENT
Completion of anything requires supports from various sources. I am very much
fortunate to get the sincere guidance and supervision from a number of persons.
I am deeply indebted to my internal guide teacher Jesmin Sultana, Associate professor of
UAP, for her whole-hearted supervision to me. Her suggestions and comments to make
the report a good one was really a great source of spirit for me.
My heartfelt gratitude goes to Prof. Dr. Shah Alam, Head, Department of Business of
School, UAP for reviewing the whole report so carefully and expertly and for giving me
valuable advices and suggestions to complete the whole thing in a right manner.
It is my pleasure to them and my grateful appreciation goes to ARBAN authority for
rending me their expertise, knowledge and giving me opportunity of having a practical
experience the this internship program.
Lastly, I like to give many special thanks the entire person in ARBAN who help me and
the Department Of Business Administration, suggestion and for inspiring me in some
cases. Thanks for all from the core of my heart.

5. INTERNSHIP REPORT
Introduction
Doing internship is mandatory for the students of Department of Business Administration of The
University of Asia Pacific. Final of MBA program requires internship which involves 3 months
organizational attachment for practical experience and 1 month time for report writing. As per norm
this report is the fulfillment of the mandatory requirement for the evaluation process of the internship
program. This report titled “Financial Management of NGO: Case of Association for Realizations
of Basic Needs (ARBAN) Bangladesh with Comparative Discussions of Practices in Profit
Oriented Firms” is the outcome of 3-months internship in the Finance and Administration Unit at the
Country Office of Association for Realizations of Basic Needs (ARBAN) Bangladesh. The topic is
assigned by Syed Lutfa Khanom, Financial Management of Association for Realizations of Basic
Needs (ARBAN) International and former Head of Finance and Administration of Association for
Realizations of Basic Needs (ARBAN) Bangladesh. During the internship period I was assigned with
the jobs related to the Fund Management of the partners, and Cash Management Section of Finance
Department. I was under the direct supervision of Ms. Jesmin Banu, Head of Finance and
Administration of Association for Realizations of Basic Needs (ARBAN) Bangladesh. I have
prepared this internship report with the mentioned topic, which was supervised by my Professor,
Jesmin Sultana of The University of Asia Pacific.
Objective of the Report
The objective of the report is to know the financial management of NGOs as non-profitable
organization and also to present a comparative scenario of financial management of non-profit and
profit oriented firms.
Scope of the Report
The scope is limited within the Country Office of Association for Realizations of Basic Needs
(ARBAN) Bangladesh and especially within the Finance & Administration Unit of Association for
Realizations of Basic Needs (ARBAN) Bangladesh. Here I mentioned a part of financial works of
Association for Realizations of Basic Needs (ARBAN) Bangladesh giving emphasis on their finance
structure, accounting, auditing, budgeting, taxation, and performance evaluation & controlling of
projects in financial aspect.

6. INTERNSHIP REPORT
Methodology
The method is mainly discussion and sharing of information with staff members of ARBAN and
review of their operational documents and manuals. ARBAN’s publications have used to prepare this
report. I also incorporated with verbal suggestions of the staff members, which helped me a lot to
enhance my knowledge. The secondary sources for data collection were published annual reports,
annual financial reports of ARBAN, electronic publications of ARBAN and their country strategic
paper.
Limitations
Proper guidance from more professionals of similar sector could enrich this report and also could
make it more informative and comparable. But their time constraints could not allow me to do that,
which seemed to me a limitation to prepare this report. Another limitation is that, comparable
information is not available in this report as I was only permitted to complete my internship in a
single organization, i.e. Association for Realizations of Basic Needs (ARBAN) Bangladesh.
Structure of the Report
The report is divided into two main parts:
Part 1: Organizational overview contains snapshot of Association for Realizations of Basic
Needs (ARBAN) Bangladesh, functions of Association for Realizations of Basic
Needs (ARBAN) Bangladesh, overall financial performance of ARBAN (In 2005 and
2006), and ARBAN’s current state of operations and future direction.
Part 2: First portion of the project part is the introduction to the project. Association for
Realizations of Basic Needs (ARBAN) Bangladesh’s Financial Management,
Accounting System, Budgeting, Taxation, Auditing, and Performance Evaluation &
Controlling of Projects are the core chapters of this part. Major findings,
recommendations and lastly conclusion are given to end the project.
.

7. INTERNSHIP REPORT
Snapshot of Association for Realizations of Basic Needs (ARBAN)
Bangladesh
Association for Realizations of Basic Needs (ARBAN) is an international development organization
working over 35 countries, with its head quarter based in the United Kingdom and Secretariat at South
Africa. Association for Realizations of Basic Needs (ARBAN) Bangladesh (ARBAN) is one of the
five country programs in Asia and has been operating in Bangladesh since 1983. Four broad thematic
areas are main program intervention areas of ARBAN e.g. Education, Governance, Livelihood and
Stop Violence against Women & Girls.
Association for Realizations of Basic Needs (ARBAN) Bangladesh (ARBAN) is registered with
NGO Affairs Bureau of Bangladesh Government under the Foreign Donations (Voluntary Activities)
Regulation Rules, 1978 vide registration no. FD/R No-210, Date 27/04/1986.
Location of Association for Realizations of Basic Needs (ARBAN)
The addresses of Association for Realizations of Basic Needs (ARBAN) International and
Association for Realizations of Basic Needs (ARBAN) Bangladesh are as follows:
House # 16 (Ground floor), Road # 9/A, Dhanmondi R/A, Dhaka-1209, Bangladesh.
Phone +880 2 8111321
Fax +880-2-8122250/880-2-9111017
Email
arbn@dhaka.agni.com
Website http://www.arban.org/
Historical background of ARBAN
Association for Realizations of Basic Needs (ARBAN) International
Association for Realizations of Basic Needs (ARBAN) was founded in 1972 by Mr. Cecil Jackson-
Cole, a business man who believed that business people should actively support charities, with the
name Action in distress (Aid) with the objective to provide education, health support, and emergency
relief to the poor children as service oriented activities. In 1979 it changes its name to Association for
Realizations of Basic Needs (ARBAN) and started to work in 20 countries.

8. INTERNSHIP REPORT
Brief history
When Association for Realizations of Basic Needs (ARBAN) was established in 1972, its primary
aim was to assist some of the world’s poorest children, firstly with primary education, and then with
practical skills, which would help them build a more secure future. It soon learnt that providing
primary education and training was not enough. It was only the first step in building a
Program that will reduce poverty and enable children to have a better future. By the end of the decade,
its work had expanded to include long-term health, sanitation and agricultural projects that would
improve living conditions for children and their families. In 1978 it started its first project undertaking
integrated community development.
In 1974 it supplied emergency relief for the first time when Hurricane Fifi struck Honduras - funding
food, clothing, medicines and tools for thousands of homeless people in 250 isolated villages. In the
same year in Bangladesh it also funded provision of 50,000 meals a day, glucose and medicines for
the people of eight towns devastated by floods.
From the mid seventies, the focus of its work started shifting. From solely providing education it
moved on to helping children and their families to become self-supporting. By the start of the1980s,
its focus had shifted again to ensure it was tackling the root causes of poverty, not just the symptoms.
There are many complex and inter-related causes of poverty. High child mortality and malnutrition,
high birth rates, low literacy rates, limited access to clean water and sanitation, health care and
education, insufficient land to grow food and lack of credit to buy seeds and tools - these are just
some of the factors that can contribute to poverty.
It had learned that for its work to be of lasting benefit, it needed to work with whole communities to
boost agricultural production, improve water supplies, gain access to basic healthcare and find new
sources of income. Programs in education, agriculture, health, water, skills training and helping
people to organize and access savings and credit were integrated so that each supported the other. It
also helped communities organize themselves to challenge injustice and ensure they received their
entitlements and as much assistance as they could from their own governments.

9. INTERNSHIP REPORT
Introduction to Association for Realizations of Basic Needs (ARBAN) Bangladesh
Association for Realizations of Basic Needs (ARBAN) Bangladesh (ARBAN) started as a small
operator in the coastal areas of Bangladesh in the district of Bhola in 1983 to manage disaster but over
the years its work shifted more towards a rights-based approach. This was one of the key approach
changes. ARBAN's current strategy is aligned with the poor and excluded people. It emphasizes the
agency and the action of the poor and excluded people as the primary engine of development to
eradicate poverty and injustice from society of Bangladesh.
A rights-based approach to development implies, as mentioned in 1CSP III, recognition of the
Rights of people not only to fulfill their basic needs, but also to treat them with equal dignity
And realize their creative potential and state obligations to create an enabling environment for
Assertion of their fundamental rights. In the promotion of the rights-based approach to end
Poverty and injustice, the concepts of equality, citizenship and justice are critical.
This evolution has been the imperative of the empirical experience that the organization
Gained through its long and deep involvement in combating poverty and knowing its
Structural causes. Questions of rights of women, excluded groups and the livelihoods of the
Poor and the marginalized now occupy a front seat.
At present ARBAN works in 35 districts and has more than 200 local and community-based
Partner organizations. While ARBAN sets its own strategy, it is an international organization
With national accountability. The unity with Association for Realisation of Basic Needs (ARBAN)
International is in the common
Vision, mission and values, this enables ARBAN to take a determined action in the fight to
Eradicate poverty and establish equal rights.
From its inception to the present times, ARBAN moved from the regional to the thematic
Approach in its work. However the core values remain unchanged. There are 12 ongoing
Projects with major donors and child sponsorship continues to be a major source of fund.
The present Country Strategy Paper III of ARBAN focuses on “Equality, Citizenship and
Justice” which sums up the core concerns of ARBAN’s work.
1

10. INTERNSHIP REPORT
A new Country Strategy Paper was initiated in 2004, which required operational changes to
cope with new challenges. As a result, there has been a change from regionalization to
thematic programs based on ARBAN’s learning, experience and history of work for better
coherence. The themes are now pursuing to achieve specific strategic objectives and this has
provided greater space to engage the partners and other actors both at the local and national
level. With stronger position at the policy making level, there is now increased synergy in
ARBAN’s work as it benefits from linkages across themes.

11. INTERNSHIP REPORT
Organizational Objectives
The organizational objectives for ARBAN according to Country Strategy Paper III which is
applicable for the time period 2005-2009 are presented below.
Organizational objectives according to CSP III
• To promote effective organizational culture
• To promote Human Resource Development system that continuously addresses the needs and
updates the capacities of staff
• To promote gender equity and equality
• To nurture shared learning and establish a system of knowledge management to promote
institutional memory and greater synergy of work
• Commitment towards monitoring and evaluation for better understanding for the changes in
the lives of poor and marginalized
• To establish national accountability in light of internationalization
• To allocate resources at the optimum level for cost effectiveness and ensuring financial
transparency
• To raise sufficient resources and effectively manage the resources to be efficient, effective
and transparent
Goals & Strategic Objectives of ARBAN by Themes
Goal 1: Poor and marginalized people’s rights over their livelihoods are more secure
Strategic objectives for achieving goal 1
• To facilitate an enabling environment where poor and marginalized people are able to
exercise their right to sustainable livelihood through access to employment opportunities,
and also able to claim their fair share from the institutions, capital and market
• To reduce vulnerability and risk to the livelihood of the poor and marginalized from
disasters
• To increase access and control over natural resources and public services by the poor and
marginalized
Goal 2: Women’s rights are advanced for gender equality

12. INTERNSHIP REPORT
Strategic objectives for achieving goal 2
• To promote women’s right to self determination and create an enabling environment for
their effective participation in social, political, economic and environmental dimensions
• To create an enabling environment for practice of egalitarian gender relations and active
citizenship by adolescent
• To promote a culture of zero tolerance of violence against women
Goal 3: Development of a society inclusive culture where diversity is celebrated, equal citizenship
exercised, and non- discrimination is actively practiced
Strategic objectives for achieving goal 3
• To assert equal citizenship by those of diverse origins based on ethnicity, language and
religion
• To promote an inclusive and barrier free society where enabling environment and
conditions prevail for the people of disabilities
• To promote active processes for inclusion of the socially excluded
Goal 4: People’s movements for social and economic justice are strengthened
Strategic objectives for achieving goal 4
• To promote the right to “quality education” for the poor and marginalized children
• To promote public accountability of the government, private sector and international
development agencies that secures economic justice for all
• To promote the right to quality health care for the poor and marginalized
ARBAN’s Mission
A confident and responsible nation, free from poverty and indignity, in which its citizens can lead an
active life of freedom and livelihood security.
ARBAN’s Vision
To work with poor and marginalized women, men, girls and boys to eradicate poverty by overcoming
the injustice and inequity that causes it.

13. INTERNSHIP REPORT
ARBAN’s Core Values
Throughout Association for Realizations of Basic Needs (ARBAN) the following values are
maintained form the common basis to help in designing all organizational policy and practice.
Each person in Association for Realizations of Basic Needs (ARBAN) has the right to expect to be
treated and the obligation to treat others according to these principles implicit in organizational
values. ARBAN will actively, explicitly and continuously invest in keeping its values alive.
Mutual Respect: Association for Realizations of Basic Needs (ARBAN) recognizes the innate
dignity and worth of all people and the value of diversity.
Equity and justice: Association for Realizations of Basic Needs (ARBAN) will ensure that every
person, irrespective of sex, age, race, colour, class and religion has an equal opportunity to express
and utilize her or his potential.
Honesty and transparency: Association for Realizations of Basic Needs (ARBAN) will be
accountable for the effectiveness of their actions and open in their judgments and communications
with others.
Solidarity: Association for Realizations of Basic Needs (ARBAN)’s only bias will be a commitment
to the interest of the poor and powerless.
Courage and conviction: Association for Realizations of Basic Needs (ARBAN) will have the
courage of our convictions to be creative and radical, without fear of failure, in pursuit of making the
greatest possible impact on the causes of poverty.
Independence: Association for Realizations of Basic Needs (ARBAN) will be independent of any
religious or party political affiliation.
Humility: Association for Realizations of Basic Needs (ARBAN) recognizes that they are part of an
alliance against poverty and so, in their presentation and behavior, they will demonstrate humility.
Efficiency: Association for Realizations of Basic Needs (ARBAN) will manage their organization in
the most cost effective and efficient manner possible in order to maximize the impact of the resources
that are dedicated to their ultimate objective of eradicating poverty.

14. INTERNSHIP REPORT
Excellence: Association for Realizations of Basic Needs (ARBAN) will try and attain the highest
standards in their work with a view to establishing Association for Realizations of Basic Needs
(ARBAN) as a world leader in terms of the quality of the their development work.
Proximity: Association for Realizations of Basic Needs (ARBAN) will take decisions as close to
their consequences as possible.
International organizational structure of Association for Realizations of Basic Needs (ARBAN)
With its head office in UK, Association for Realizations of Basic Needs (ARBAN) has three regional
offices based in Asia, Africa and Latin America in the world to operationalize its work in the poorest
countries in the world.
The Head office primarily comprised of the following units:
Table: International organizational structure of Association for Realizations of Basic Needs (ARBAN)
Name of the department Purpose
Marketing department It assigned to manage and raise funds for the
organization. It has diversified funding sources,
starting from regular giving income from sponsors to
huge grants from large donors, e.g. DFID, European
Commission, Ford Foundation etc.
Policy support unit The unit is assigned to lobby the international
agencies in the arena of formulation of policies in
education, food rights, tied aid, emergency response,
HIV/AIDS, trade issues, etc. In addition to that it is
also involved in the building partnership with global
agencies.
Finance unit & IT unit It maintains the global accounts linked with income
from the alliance partners to expenditure to the
country where it is operating. It also maintaining the
IT infrastructure of the organization.
The regional offices with the same functions as above are maintaining the linkages between
the country program and the head office.

15. INTERNSHIP REPORT
Functions of Association for Realizations of Basic Needs (ARBAN) Bangladesh
Common work approaches followed in ARBAN form a strong basis for their unity. ARBAN is
committed to creating a diverse workforce that positively acknowledges the differences existing
between people- such as sex, gender, race, age, ethnic origin, caste, class, color, belief, nationality,
HIV status, sexual orientation, disability, education, social background etc. These differences may
lead to differences in attitudes, experiences, and ways of thinking, behaving, communicating and
working. ARBAN reserves the right to add other categories to this list and will apply this principle in
all aspects of organizational practice. ARBAN recognizes that a diverse workforce leads to better
organizational performance, improved productivity.
This chapter gives the detailed description of various functional units of ARBAN, its logo & slogan,
and organogram.
Identity & Resources Mobilization
IRM Dept. through its three unique functions of Sponsorship, Partnership Development and Identity
hope to create a cohesive and winning team environment to achieve a cost-effective funding base for
ARBAN through horizontal team work as well as interlink ARBAN’s local and national issues and
identity with other development stakeholders. It also hopes to create wider space for shared learning
and best practices through regular flow of information both from its local partnerships as well as AAI
Country Programs.
Sponsorship
1. Rights Based Approach and its outcomes/impacts more tangible to the supporters in its telling of
the reports
2. Creating opportunities for supporters to move on from being donors to becoming active
supporters of the social movements.
3. Capacity building of the staff of partner organizations to ensure the real and organized program
information from the field
4. Arranged communication training for Development Area (DA) staff
The Identity Unit
1. The identity of ARBAN is rolled out through information and case stories of their work
published in newsletters, brochures, information packs, identity materials ( such as posters,

16. INTERNSHIP REPORT
leaflets, greeting cards, year planners etc), photographs, media and news articles ( both national
and international), participation in national and international programs and exhibitions, the
website and the intranet.
2. An identity produces social messages in the print media and regularly follows up with the media
on programmatic involvements as well as continues dialogues on a regular basis.
3. Develops partnerships with educational institutions to promote future leadership in the
development sector and to familiarize the young leaders of tomorrow about work in
development.
4. Shares local/national issues in the international forums through electronic media, website and
external publications and regular communications update “The Asia Update”
5. Produce television and radio spots on priority sectored issues
6. Produces items for enhancing ARBAN’s Identity through video documentation
7. Developing media strategy for better professional linkages and capacity building of grass roots
level journalists
8. Gives active support to local and international campaigns
Partnership Development
1. Partnership Development Unit started with the inception of Identity & Resource Mobilization
Department (IRM) of ARBAN (Oct.2001). Since then Partnership Development initiated a
process of developing a structured fundraising system with strategies, policies, donor relationship,
systems of archiving, contract management and overall capacity of official and non official
fundraising, etc
2. Partnership development deals with official funding and relationships with bilateral and
multilateral donors, trusts, foundations & corporations.
3. Partnership Development unit also closely works with the DA and project partners to build their
fundraising capacity
4. Partnership Development unit critically engages itself with donors to influence
5. Partnership Development unit works both with internal and external entities

17. INTERNSHIP REPORT
Figure: Organogram of IRM Department
Head
Head
Sponsorship Partnership Development Identity
Sponsorship Partnership Development Identity
Assoc. Coordinator
Assoc. Coordinator Assoc. Coordinator
Assoc. Coordinator Assoc. Coordinator
Assoc. Coordinator
Officer
Officer
Assoc. Officer
Assoc. Officer Assoc. Coordinator
Assoc. Coordinator
Assoc. Officer
Assoc. Officer
1.3.2 Finance and Administration
ARBAN finance and administration unit work together. The main responsibilities of finance
department are:
1. Financial management (Planning, Fund management, Monitoring & Controlling)
2. Financial accountability
3. Internal controls
4. Recording financial events
5. Audits
6. Budgeting and planning
7. Treasury management
8. Reporting financial information
9. Financial efficiency measurement
10. Capacity building of Finance Staff members of ARBAN and at partners’ end
Work done by a ten (10) member team of dedicated and expert staff members under the
leadership and management responsibilities of Head of Finance and Administration. Team
contains different level of staff members, i.e. Manager, Deputy Manager, Officer, and Associate
Officer.

18. INTERNSHIP REPORT
Setting Strategic Direction done by Board of Trustees and International Directors.
The core responsibilities of Administration department are:
1. Assisting in organizing International & national meetings, seminars, workshops, training
courses and projects related events including administrative and logistics support
2. Processing visa & ticketing, maintaining petty cash ,coordinating and monitoring work of
support staff, keeping an inventory record of all properties, supervising office equipments and
maintenance
3. Procuring and purchasing equipments, reviewing vouchers and requesting for payments
related administrative functions, ensuring office safety, security and cleanliness, making
arrangements for travel and accommodation
4. Ensuring and keep functioning the communication systems of the office (internal & external)
5. Vehicle management and provide vehicle support to field visit and different events
Figure: Organogram of Finance & Administration Unit
Head of Finance and Administration
Head of Finance and Administration
Manager Administration
Manager Administration Manager Finance
Manager Finance
Officer
Officer Deputy Manager
Deputy Manager
Administration
Administration
Support Staff
Support Staff Officer
Officer
Assoc. Officer
Assoc. Officer
Human Resources & IT
1. Staff recruitment as per need
2. Placement of staff
3. Confirmation of regular staff, extension of probation period
4. Preparing Employment Policy, Consultant & Outsourcing Policy, Volunteer Policy,
International Secondment Policy

19. INTERNSHIP REPORT
5. Preparing job description of each personnel
6. Performance appraisal of the staffs
7. Arrangement of staff capacity building, staff retrenchment, staff leave, staff leaving a job,
staff medical benefits.
8. Management of smooth and uninterrupted ISP service
9. Plan, organize and procure IT items as per need
Figure: Organogram of HR & IT Unit
Head of HR & IT
Head of HR & IT
Coordinator-IT
Coordinator-IT Coordinator-HR
Coordinator-HR
Officer
Officer Officer
Officer
Assoc. Officer
Assoc. Officer
Country Director’s Unit
Country Director’s (CD) unit consists of CD’s unit, internal audit, monitoring & evaluation, reflects
development and shared learning. The responsibility of CD is
1. To rebuild and re-invigorate the organization and bring about stability within the organization
2. To deal with the negative publicity and other troublesome issues
3. To spend time on mission level issues and to do field visits to understand the perspectives of the
poor and marginalized people that ARBAN works for
4. To finalize various policies and publish the CSP.
5. To build up the relationship with the partners as well as ARBAN’s donors.

20. INTERNSHIP REPORT
Figure: Organogram of Country Director's Unit
Country Director
Country Director
Assistance to CD
Assistance to CD
Monitoring &
Monitoring & Internal Audit
Internal Audit Reflect
Reflect Shared Learning
Shared Learning
Evaluation
Evaluation Development
Development
Livelihood Security & Risk Reduction
The goal of this sector is to ensure a more secure livelihood for the poor and marginalized people.
Promotion and strengthening of livelihoods, protection from disasters, access to and control over
natural resources are the three themes in this sector.
Women’s Rights & Gender Equality
Gender sensitivity and promotion of women’s right and equal access for women in all the programs
and projects are the primary focus of ARBAN. It works to advance women’s rights for gender
equality, create an enabling culture to practice gender equality among youth and adolescents and
prevent violence against women.
Rights & Social Justice
ARBAN works for a socially inclusive culture where diversity is celebrated, equal citizenship
exercised and non-discrimination is actively practiced. This sector includes three themes diversity and
citizenship, disability & enabling environment and social inclusion.
Social Development & Economic. Justice
ARBAN tends to strengthen people’s movements for social development and economic justice
through ensuring quality education, economic justice and quality health care for all. Their objective is
to promote public accountability of government, private sector and international development
agencies that secures economic justice for all.

21. INTERNSHIP REPORT
Figure: Organogram of Livelihood Security & Risk Reduction, Women’s Rights & Gender Equality,
Rights & Social Justice and Social Development & Economic. Justice Units
Sector Head Sector Head Sector Head Sector Head
Sector Head Sector Head Sector Head Sector Head
LS & RR WR & GE R & SJ SD & EJ
LS & RR WR & GE R & SJ SD & EJ
Theme Leader
Theme Leader
Program Officer
Program Officer
Assoc. Program Officer
Assoc. Program Officer

22. INTERNSHIP REPORT
The logo and slogan of Association for Realizations of Basic Needs (ARBAN) Bangladesh
The logo of Association for Realizations of Basic Needs (ARBAN) Bangladesh is:
The slogan of Association for Realizations of Basic Needs (ARBAN) Bangladesh is:
Organ gram of Association for Realizations of Basic Needs (ARBAN) Bangladesh
An organogram of Association for Realizations of Basic Needs (ARBAN) Bangladesh is attached in
the following page.

23. INTERNSHIP REPORT
Figure: Organogram of ActionAid Bangladesh
ARBAM
ARBAM
Bangladesh
Bangladesh
Head- Head-
Head- Head-
Liveliho Head-
Women’ Head- Head-
Head-
Finance Liveliho
od Women’
s Rights Head-
Rights Head-
Social
Head- Finance Head- CD’s od s Rights Rights Social
Head- and Head- CD’s Security & & Social Develop
and
Adminis Security
& Risk &
Gender & Social
Justice Develop
ment &
IRM Adminis HR & Unit & Risk Gender Justice ment &
IRM tration HR & Unit Reducti Equality E.
tration IT Reducti
on Equality E.
Justice
IT on Justice
Identity Finance HR Monitori Liveliho
Identity Finance HR Monitori Liveliho
& Partners od
& Partners Manage ng & od Women’ Diversit Educatio
Commu & Manage ng & Promoti Women’ Diversit Educatio
Commu
nication &
capacity Promoti
ment Evaluati on s Right y& n
nication
s capacity
building ment Evaluati on s Right y& n
s building on Citizens
on Citizens
hip
hip
Sponsor Organiz Emerge Adolesc Econom
Sponsor Organiz Emerge Adolesc Econom
ncy and ic
ship Finance ational Internal ncyRisk
and ent & Disabilit
ship Finance ational Internal ent & Disabilit ic
Risk
Reducti
Manage Projects Develop Audit Youth y Justice
Manage Projects Develop Audit Reducti
on Youth y Justice
ment ment on
ment ment
Fundrais Informat Reflect Natural Violenc Social
Fundrais Informat Reflect Natural Violenc Social
Resourc e against
ing and Adminis ion Develop Resourc e against Health
ing and Adminis ion Develop es & Women Inclusio Health
es &
Public Women Inclusio
n
Contract tration Technol ment Public n
Contract tration Technol ment Services
Mgt ogy Unit Services
Mgt ogy Unit
Shared
Shared
Learnin
Learnin
g
g

24. INTERNSHIP REPORT
Overall Financial Performance of ARBAN (In 2010 and 2011)
The overall financial performance of ARBAN is measured by the total income it received,
percentage of costs according to international themes, and trends of income & expenditure.
The analysis of these data for the year 2005 and 2006 is presented in the following section.
Income mix
The total income for 2005 and 2006 was £ 3.59 and £ 3.94 million respectively. From this
ARBAN has spent £ 2.88 and £ 2.96 million as project cost for the year 2010 and 2011. The
percentage of income mix was:
Table: Income mix in 2010and 2011 Figure: Income mix 2010
Year 2010 2011
Regular giving 61% 48.51%
Other regular giving 0.97% 16.23%
Partnership (official) 35% 9.81%
Partnership (others) 2.36% 12.07%
Others 0.31% 0.33%
Transfer in 1.13% 13.05%
Total 100% 100%
Income mix 2005
2.36% 0.31% 1.13%
35%
61%
0.97%
Regular giving Other regular giving
Partnership (official) Partnership (others)
Others Transfer in
The income from Regular Giving is high for both the year 2005 and 2006. The income from
Partnership (official) is high in 2005 but in 2006 the second highest position held by other
regular giving. The least income came from other source for both the year as shown in the
graphs.

25. INTERNSHIP REPORT
Figure: Income mix 2011
Income mix 2006
13.05%
0.33%
12.07% 48.51%
9.81%
16.23%
Regular giving Other regular giving
Partnership (official) Partnership (others)
Others Transfer in
In 2005 the income from Regular giving and Partnership (official) are higher from 2006 as
shown in the above graphs. The income form Other Regular Giving, Partnership (others) and
Transfer in are higher in 2006 than 2005.
Percentage of costs according to International Themes
The analysis according to the various international themes is the following.
Table: Percentage of costs according to Figure 9: % of costs according to International
Themes 2010
International Themes in 2010 and 2011
Year 2005 2006
Food and hunger 25% 31%
Women’s rights 12% 20%
Human security 22% 18%
Right to education 28% 15%
Governance 7% 7%
HIV/AIDS 5% 5%
Others 2% 4%
Total 100% 100%

26. INTERNSHIP REPORT
% of costs according to international themes 2005
5%
7%
2%
25%
12%
28%
22%
Food and hunger Women’s rights Human security
Right to education Governance HIV/AIDS
Others
In the year 2005 ARBAN had spent most in Right to Education Theme, but in the following
year it turned its policy and spent most in Food and Hunger Theme. The second highest
contribution of ARBAN was Food and Hunger and Women’s Rights for 2005 and 2006
respectively.
Figure: % of costs according to International Themes 2011
% of costs according to international themes
2005
5%
7%
2%
25%
12%
28%
22%
Food and hunger Women’s rights Human security
Right to education Governance HIV/AIDS
Others
The development works of ARBAN for its international themes are higher in 2006 than 2005
in the themes like: Food and Hunger, Women’s Rights and Others. In Human Security and
Right to Education the costs are more in 2005 where in Governance and HIV/AIDS themes it
remained almost same for the both year.
Trends of income and expenditure in ARBAN
The following graph shows ARBAN’s last four years income and expenditure pattern from

27. INTERNSHIP REPORT
year 2004 to 2006 are given below. Here we can see the expenditures increased with incomes
and in the year 2005 and 2006 the expenditures were almost equal to incomes.
Table: Income and expenditure trend (2004-2006)
In GBP ‘000
Year 2004 2005 2006
Income 4,394 3,396 3,784
Expenditure
3,492 3,296 3,765
Figure 11: Trends of income and expenditure in ARBAN
Trends of income & expenditure
5,000
4,500
4,000
3,500
In GBP '000
3,000
2,500
2,000
1,500
1,000
500
0
2004 2005 2006
Income Year Expenditure
SWOT Analysis of ARBAN
The SWOT analysis comprises of the organization’s internal strength and weakness and
external opportunities and threats. SWOT analysis helps the company an insight of what they
can do very important to identify the current position of the strategic analysis of the
organization.
The strengths of ARBAN are:
 Good organizational culture of ARBAN.
 Its young, energetic, sincere and skilled workers.
 To attract donor Association for Realizations of Basic Needs (ARBAN) has priority
over other companies because it spreads in 40 countries.
 Association for Realizations of Basic Needs (ARBAN) is centralized. So each
Country Director has responsibility to the head of Association for Realizations of
Basic Needs (ARBAN) for reporting.
 Association for Realizations of Basic Needs (ARBAN) acts as pressure group for
the Government.
 Good organizational culture of ARBAN.

28. INTERNSHIP REPORT
 Participatory program development on need basis, which promotes harmony and
goodwill with in the organization, in the communities where it works and amongst
the donors.
The weaknesses of ARBAN are:
 Violation of policy as per senior management instruction sometimes happened.
 None is directly liable to anyone for his/her duties. The leader is all in one. So
negligence in service may occur.
 Sometimes, Association for Realizations of Basic Needs (ARBAN) is criticized for
not maintaining good relationship with NGO affairs bureau.
 Weakness in management system including unbalanced distribution of
responsibilities, inadequate and inappropriate assessment and evaluation of projects,
lack of unity in management.
The opportunities of ARBAN are:
 More scope of collaboration with various government programs.
 Greater collaborative programs with other NGOs.
 Diversification of donor source.
 Expanding activities in new areas and new fields of activities.
 The policies are reviewed time to time, so there is lot of opportunity to adapt the
policies with the changing demand of the world.
The threats of ARBAN are:
 Association for Realizations of Basic Needs (ARBAN) may lose donor fund if they
don’t maintain good liaison relationship with donor organization.
 Multiplicity of NGOs in Bangladesh.
 Government policy change and bureaucratic nature of decision making lead to
unequal exchange.
ARBAN’s Current State of Operations and its Expected Future Direction
Currently ARBAN is operating in Bangladesh with a hope to eradicate poverty. AA has six
international themes. They are Food and hunger, Women’s rights, Human security, Right to

29. INTERNSHIP REPORT
education, Governance and HIV/AIDS. Of that, in Bangladesh it gives most emphasize on
food and hunger theme. The rationale of this, they are trying to enhance the livelihood of the
marginalized people of Bangladesh.
Association for Realizations of Basic Needs (ARBAN) International, which has been
working in Bangladesh since 1983, is uniquely placed to address the development challenges
that the people of Bangladesh will face in the coming years. Over the past 20 years, ARBAN
has established a track record for working effectively with communities for their
advancement and empowerment. Since 1998, ARBAN has expanded its partnership to include
organizations from vulnerable locations throughout the country. It has developed expertise in
working with disabled, development of adolescent programs.
The special characteristics of ARBAN to promote and strengthen national leadership within
an international organization, and its funding structure provide ARBAN with a unique
opportunity to pursue the challenges faced by Bangladesh in the coming years through
development of innovative grassroots programs and provide policy insights and directions.
This will provide ARBAN the strategic advantage. Though, ARBAN faces some problems in
strategic and operational level.
Strategic and operational issues facing ARBAN
Strategic issues
Although ARBAN emerged as public benefit organizations in advancing the interests of a
broader community where a large number of men and women are marginalized, vulnerable to
structural social injustice and victim of violation of human rights, their management practice
does not show any line of accountability to the community. The lack of defined accountability
to the community blurs the downward accountability of ARBAN & other NGOs and therefore
creates accountability gap.
NGOs should have accountability relationship between their peer organizations from the
perspective of upholding the standard, value tradition and reputation from the sector.
However, the reality is that the norms around the sharing of good accountability practice are
often absent and as a result NGOs frequently lack a common standard or accepted behavior to
hold each other to account.
Operational issues
For an effective organization leadership, accountability and transparency are needed. So,

30. INTERNSHIP REPORT
ARBAN has to build up leadership and develop inner strategies. ARBAN has to elect people
in the board view of changing the nation in a positive direction.
The strategic and operational issues that ARBAN is facing can be minimized by the following
strategies and tactics:
The strategies and tactics used to cope with them
• Building responsive governance within the organization.
• Developing policy guidelines and manuals as open document.
• Coordination and creation of space for shared learning in terms of accountability.
• Regular revisit of the policies, values and norms in line with existing policies.
• Minimum standard setting for organizational accountability.
• Promoting self assessment with organizational domain.
• Developing relationship with government officials.
• Dissemination of information at all levels.
• Practice of participatory decision making process.
• In case of preparation and implementation of policy the method should be sharing,
involvement, and dissemination.
• Peer accountability should be trust building, development of mindset about shared
learning.
• Downward accountability should be mind setting of subordinates, trust building and
reducing dependency.
• Real partnership has to build up with donor through local fund mobilization.
Introduction to the Project
Association for Realizations of Basic Needs (ARBAN) Bangladesh is a leading International
Non Government Organization in Bangladesh. In preparing this report financial management
practice of ARBAN has taken among non government sector. The study is based on the three
months internship program at the ARBAN. The study is about the overview of the financial
management practice of ARBAN.
Objective of the Study

31. INTERNSHIP REPORT
Through this study, I tried to attain the following objectives:
 Prime objective of my study was to find out financial management of NGO
 To reach in a comparative analysis of financial management of profitable and non-
profitable organization.
Significance of the Study
This project titled “Financial Management of NGO: Case of Association for Realizations
of Basic Needs (ARBAN) Bangladesh with Comparative Discussions of Practices in
Profit Oriented Firms” was designed to present the financial management of NGOs in an
easy and understandable way. I have selected this topic to present the financial management
of non profitable organization. As non profitable organization has no profit motive, so how
they organize their income and expenditure in their financial statements according to their
organizational objective was my attempt to prepare this report. The report is totally
descriptive in nature.
Scope of the Study
The scope of the project part is limited to the financial manuals of Association for
Realizations of Basic Needs (ARBAN) and their financial reports only. Reviews of their
operational manuals are also used to prepare the report. Besides, text books were used as
supplementary when needed. A detailed list of them has mentioned in the bibliography.
Methodology
Preparing a report about the financial management of an organization is a difficult and
complicated task and no single method is appropriate for preparing the report. Effective
research involves six basic steps, shown in the following figure:
Figure: Methodology of the research

32. INTERNSHIP REPORT
Define the Problem Research Objective Develop Research Plan
Define the Problem Research Objective
Findings & Recommendations Data Analysis Data Collection
Findings & Recommendations Data Analysis
The project title is “Financial Systems of NGO: Case of Association for Realizations of
Basic Needs (ARBAN) Bangladesh (ARBAN) with Comparative Discussions of
Practices in Profit Oriented Firms”. This is a descriptive research. The major purpose of
this descriptive research is to describe the financial management of non profit oriented
organizations.
Types of Data
The report is mainly based on 2 types of data-
1. Primary data
2. Secondary data
Collection of Data
Primary source of data
 Personal observation of the financial activities.
 Interview with the officials of the Association for Realizations of Basic Needs
(ARBAN) Bangladesh.
Secondary Source of data
 Annual financial reports of Association for Realizations of Basic Needs (ARBAN)
Bangladesh.
 Published documents and reports.
 Relevant Websites
Limitations of the Study
Some of the limitations faced while preparing this report are mentioned here:
♦ Time was the most important limitation in preparation of the internship report. The
program allotted only 3 (three) months for entire study, which disable many opportunities
for a comprehensive study.

33. INTERNSHIP REPORT
♦ Relevant papers and documents were not available sufficiently.
♦ In many causes updated information were not available.
♦ The time schedule of ARBAN senior staffs did not allow me to discuss with them. But
their opinion could make this report so informative. It seems a great limitation to me.
♦ The lack of experience of the researcher in this field may have become another limiting
factor.
Financial Management of Association for Realizations of Basic Needs

34. INTERNSHIP REPORT
(ARBAN) Bangladesh
The core requirements of the financial management aspects of ARBAN include structure of
finance unit, accounting procedures, recording of accounting information, budgeting,
taxation, auditing, and performance measurement & controlling of projects by finance
section.
Structure of Finance Unit of ARBAN
The structure of finance department of ARBAN is as follows:
Figure: Structure of Finance Department of ARBAN
Board of Trustees/International
Board of Trustees/International
Directors
Directors
Set Strategic
Direction
Country
Country
Director
Director
Head-Finance
Leadership and Head-Finance
and
and
management Administration
Administration
Planning, controlling Payment and Cash
Payment and Cash Reporting and
Reporting and Capacity Building
Capacity Building
Management
Management Statutory
Statutory
and reporting Compliance
Compliance
financial activities
Table: Number of Employees in Finance and Administration Unit
Finance section Administration section
Head of
Payment and Reporting and Capacity Administrati Admin
Finance and
Cash Statutory Building ve Support
Administration
Management Compliance Officer Officer Staff
(HOF)
1 3 4 2 1 1 10
Composition of the finance team
The HOF of the Country Program has the responsibility to manage the overall financial
management of the country program. The HOF reports to the Country Director of the CP,
who is appointed by the International office of Association for Realizations of Basic Needs

35. INTERNSHIP REPORT
(ARBAN) International. In absence of the HOF the CD is responsible of overall financial
management and financial integrity of the organization.
Performance, standards and capacity building: The team is responsible in capacity
building of the partners as well as ARBAN in house staff. The team engaged in appraisal and
review of projects/partners performance, review of performance In addition to that they
prepare different financial reports for AAI, Regional Office and ARBAN Management (as per
requirement), provide support during planning & budgeting, developing policies & procedure
and reserve management to HOF.
Reporting & statutory compliance: This team is responsible for the overall reporting to
internal as well external entities that is a part of the overall financial information system of
the organization. This includes providing expenditure/income/committed expenditure
information to the budget holders of ARBAN, project reporting to the donors, project
reporting to the NGO bureau, and reporting to the international offices. Finance uses financial
software SUN for recording of all financial information, transaction, budget etc. They use
software named VISION (Version 5) for reporting purpose. In doing so, Team members are
involved with partner expenditure checking as well as providing feedback to them,
monitoring the utilization, reconciling partner expenditure with SUN, finalizing contracts of
partners/third parties and providing support in preparation of project proposal. Team prepares
final accounts of projects of ARBAN and help external auditors to conduct external audit and
meet audit queries. Team also involved with providing support to internal audit and different
donor audit.
Disbursement and cash management: This team is responsible to ensure timely payment to
all third parties, including proper coding of the expenditure and verification of the documents
provided to them for payment preparation. Team members are responsible to record
transactions and reconciliation of the control account codes. The team leader of this team will
be responsible for treasury management of the Country Program.
In profit oriented organization, generally the finance team is divided in three sections, such
as Finance, Personal Accounts and Costing. Finance section handles all activities related to
debtors. It is responsible for the payment of bills. Personal account section deals with salary
payment, group insurance, foreign affairs and issues related with corporate heads. Costing
section deals with the production cost and profit related issues. So profit oriented
organization’s finance team is broad than non profit oriented organizations finance team.
Accounting System of Association for Realizations of Basic Needs (ARBAN)
Bangladesh

36. INTERNSHIP REPORT
Non profit organizations such as NGOs need accounting to record and account for fund
received and disbursed. Though they do not have a profit motive, yet they should operate
efficiently and use resources effectively. This chapter will give idea about the accounting
principles of ARBAN, their accounting cycle, financial reports & statements, accounting
equation of ARBAN, accounting policy and procedure, recording of accounting information,
and software used in ARBAN by finance unit..
Accounting Principles
Dual aspect principle: Double entry should be recorded in all ledgers.
Monetary principle: ARBAN uses Bangladeshi Taka (BDT) as its based currency in all local
financial reports. However, the transactions incurring in other currencies such as US Dollar
(USD), Great Britain Pound (GBP) should be recorded in the original currencies and
translated into BDT based on the accounting exchange rates for reporting purposes.
Consistent principle: This principle regulates that all the accounting methods, books and
reports should remain unchanged until their financial manual is revised or communicated
through memo and notice.
Materiality principle: A transaction will be considered as material when its value equals to
or is over GBP 1,000 or USD 1,600 or BDT 114,000.
Fully disclose principle: All transactions must be recorded in the books and be disclosed in
all financial reports.
The Accounting Cycle in ARBAN
The accounting cycle practiced in NGOs is almost same with accounting cycle of profitable
organization. They also contain bookkeeping and accounting steps.

37. INTERNSHIP REPORT
Bookkeeping steps
1. Record transaction in a journal. Transaction means cash receipt and payment.
2. Transfer amounts from various journals to general ledger.
3. Calculate whether sum of all debit balances equals sum of all credit balances.
Accounting steps
4. Posting the cash ledger to the accounting software SUN.
6. Analysis of data for reporting and preparing financial statements.
Financial Reports ARBAN Produce (Formal & Informal)
To measure the overall financial performance of a country program each country program has
to send their Annual Financial Report to AAI. This report contains the following financial
statements:
Statement of income and expenditure - This include income from regular giving donation,
income from partnership, net transfers in, transfers out, expenditure by project, support,
fundraising & government. This statement shows the amount of money coming into ARBAN,
how this money was paid out and any leftover money for a given period of time (i.e.: three
months, one year, etc).This statement is equivalent of a Profit and Loss Statement for profit
oriented organizations. In some NGOs this statement is called Statement of Receipts and
Disbursements. A sample of income and expenditure statement is included in appendix part
(Table 1)
Balance sheet- The balance sheet provides a picture of the assets, liabilities and capital
reserves of ARBAN at a given point in time. A sample of balance sheet is included in the
appendix part
These two statements in combination with more frequently generated performance reports can
form the basis of financial reporting for ARBAN. Besides, the statements needed to support
this two base statement are as follows:
Summary of movements in reserves- This table gives the summary of fund flow from
different country programs and check the reserve held at the end of the year.
Expenditure, income and reserves by DA- Opening reserve, expenditure and closing
reserve by each Development Area is shown here.
Financial performance measures (FPM table) - It shows the progress of the development
work in a year. It is the key table to show accountability to the trustees and donors.
The reports ARBAN has to submit to AAI, regional office, CD, donors are mentioned below:

38. INTERNSHIP REPORT
Table: Financial reports of ARBAN
Report type To be submitted
Yearly financial report AAI
Annual report & Half yearly report To Regional Office
Consolidated Quarterly management To CD and Regional Office
report
Monthly management report To the CD and every budget
holder of the CP
Project financial report for the donor To the donor
Accounting Equation in ARBAN
The principal of accounting that is Asset = Liability + Owner’s Equity is also
maintained in ARBAN. ARBAN uses accrual basis of accounting.
Total assets = Debt to staffs, other country programs, income due from local contracts + cash
at bank and ST bank deposit.
Total liabilities = Due to staffs, other country programs, deferred income on local contracts
Total assets-Total liabilities = Total equity.
Accounting Policy and Procedure
Association for Realizations of Basic Needs (ARBAN) has Financial Management
Framework where accounting policy and procedures are established. This involves the
policies and procedures ARBAN should use to record and monitor financial transactions. Its
purpose is to help Association for Realizations of Basic Needs (ARBAN):
 . Record all financial transactions
 . Monitor and control expenditures
 . Satisfy statutory reporting requirements
 . Ensure timely and accurate financial and management reporting to donors and grant-
makers
The core aspects of their accounting policy are about: income, expenditure, reserve, currency
and exchange rate movement, fixed asset, depreciation method, liabilities, accrued income
and expenditure, and advance and pre payments.
Income
ARBAN receives its income as donation and contribution from individual donor or
institutional donor from Bangladesh or outside of Bangladesh in support of its activities taken

39. INTERNSHIP REPORT
under the Country Strategic Paper (CSP). Only when the income has practical certainty of
being approved then it is realized in the accounts. Main child sponsors are from UK, Ireland,
Spain, Italy and Greece.
For management purpose income is restricted according to the following group:
 (Development Area) DA /Project level
 National level and
 Un-restricted at country level
Income restricted at DA level is to be spent with sole purpose of the development of that
particular DA with the expenditure of supporting that DA. National level income is restricted
to be spent at national level to support the DA level work and to address the broader poverty
issue. Un-restricted income is spent with the approval of the CD without having any
restriction as said above.
Income from individual donor is classified according to the following structure received from
the Alliance partners.
Table: Income allocation
Alliance partner DA level National level Unrestricted Fundraising
UK/Italy/Ireland 70% 10% 10% 10%
Greece 60% 40%
Spain 80% 10% 10%
Note: Income allocation is used after deduction of Alliance partner levy.
Income received from institutions is restricted according the objectives/activities that have
been agreed between the donor and ARBAN. Only the administrative levy is part of the
unrestricted income if the said project has covered its all operational level expenditure.
Expenditure
Expenditure incurred must follow the internal control procedure set within the policy and in
particularly follow:
 Expenditure should be included in the financial statements in accordance with the
accruals concept i.e. recognizing expenditure in the period in which they incur.
 Must be consistent with the intention of the mission/objective of the organization.
 Must be processed in accordance with the guidelines, policies and procedures.
 Expenditure should be appropriately authorized as guided by the existing Authority
Protocol and changes there in time to time.

40. INTERNSHIP REPORT
 All expenditures must be supported with appropriate supporting (i.e. cash memo,
Chillan /invoice, bills, claims, Work order etc.)
 Expenditure only which are incurred for the organization will be included in the books of
accounts.
Reserve
Reserves represent the capital of the organization, fixed and working, including short-term
resources. The statutory reserve level will remain over the Country Program according to the
2
AFMF guideline which will be not less than 2 months and not more than 4 months of
planned expenditure of the following year. Every year the reserve level will be analyzed and
reviewed before annual budgeting and it would be adjusted in the plans & budget for the next
year.
Currency and exchange rate movement
Dealing with international institutions, and having an international presence ARBAN is
exposed to varieties of exchange rate and as a result is open to exchange rate gain or loss. The
policy of the CP is to minimize exchange rate loss through maintaining a Great Britain Pound
sterling (GBP). Foreign currency account and utilizing the exchange rate information received
from The Hong Kong and Shanghai Banking Corporation (HSBC) and from the website
www.oanda.com to translate foreign currency to local currency.
Fixed Asset
Fixed asset are purchased and controlled to support the functions in order to efficiently
manage the organization. Fixed asset are of two types:
Table: Types of fixed asset
Fixed asset type Nominal value Economic life
Capital items Above or equal to £ 5,000 or 3 years
equivalent amount in BDT
Non-Capital items Below £ 5,000 or equivalent amount More than one year
in BDT
Depreciation method in ARBAN
Depreciation is charged to the income and expenditure account in order to write up the cost of
a fixed asset over its expected life. This means that the cost of asset will be divided by the
number of years of asset life to get the annual depreciation charge.
2

41. INTERNSHIP REPORT
Capital items are subject to properly authorize, purchase, recorded, and accounted for,
valuation and disposal. It is also subject to depreciation according to the following principle
and depreciation of assets to be charged in straight-line method.
Table 9: Depreciation period of capital items
ASSET DESCRIPTION OUTSIDE EUROPE
FREEHOLD Buildings owned by Association for 10 years
PROPERTY Realizations of Basic Needs (ARBAN)
International, ARBAN has no such
property in Bangladesh
OFFICE EQUIPMENT Computer Equipment 3 years
Other Equipment e.g. photocopiers, 3 years
generators and any other equipment
used in the CP
MOTOR VEHICLES All Motorized transport e.g. cars, trucks 3 years
Note to mention in case of depreciation: Freehold land will not be part of depreciation. Full year
depreciation charged in the year of purchase of an asset and nil in the year of disposal.
Liabilities
As ARBAN is following the accrual basis of accounting, it is important that financial
obligation to the third parties who have provided resources or to whom ARBAN is liable to
pay (e.g. Association for Realizations of Basic Needs (ARBAN) Bangladesh employee
provident fund, Association for Realizations of Basic Needs (ARBAN) Bangladesh Employee
Gratuity Fund) is accounted in the local balance sheet in the accounting period in which the
resources have been received and against whom expenditure has been charged. It should be
paid in the following accounting period and be removed from the balance sheet
simultaneously. Transaction recorded as liabilities must be supported by sufficient
documentation that establishes the basis for their inclusion in the accounts.
However, any goods and services purchased by the CP will be on payment on delivery basis.
The CP must not have any agreement with any suppliers that require an interest payable in
case of failure of terms and conditions for payment without written approval from the HOF
and CD.
Accrued income and expenditure
Accrued income represents income due from local/international contractors with sufficient
documents supporting the realization of the income with certainty for the project activities

42. INTERNSHIP REPORT
already completed in an accounting year. This income is categorized to be received in the
local bank account of the CP. Income due from international donor for which the money is to
be received in Association for Realizations of Basic Needs (ARBAN) International office is
not accounted for in the local account. During the year-end process, this needs to be informed
to those offices in order to be incorporated in there accounts. Income due must properly
recorded in the debtor account.
In order to accrue expenditure, the goods or services to be received against the expenditure
must be received in the accounting period with the purpose of matching the expenditure with
the budget and for which payment has not been made. While considering the accrued
expenditure the followings are to be considered by HOF:
 What are the legal arrangement of the contract and how any disputes arising are to be
settled
 Whether any entitlement to the funding requires a specific performance to be achieved (a
contract or performance related grant)
 Whether funds can be used for any of the purposes of the organization, or whether they
can only be used for a specific purpose
Accruals expenditure should not be booked in the accounts merely to show expenditure
utilization against the budget for that specific period, unless the goods or services have been
received in that specific period.
Where the incoming resources are received in advance then Association for Realizations of
Basic Needs (ARBAN) may not have entitlement to these resources until the goods or
services have been provided. In this situation, incoming resources received in advance should
be deferred until Association for Realizations of Basic Needs (ARBAN) becomes entitled to
the resources.
Advance and pre-payment
All payments in advance of the current period should be recorded as assets until receipt of the
goods or services involved or until contract terms are met. This excludes Grants to Partners
which should be expensed in the Income and Expenditure Account. However a separate
ledger to be maintained to track expenditure against the advance made to the partners.
Finance staff ensures that invoices are verified to identify areas where prepayments may
occur. Prepayments are considered a standard business practice for the following types of
transactions; Memberships and Subscriptions, Rent, Insurance Premiums, Payment to

43. INTERNSHIP REPORT
Government Units and Required Deposits. Other prepayments may be acceptable only if it is
cost beneficial. The location, reputation and other characteristics of the vendor should be
taken into consideration when making prepayments as it could have a bearing on the ability to
recover the payment if the vendor defaults in the delivery of the supply or service.
Recording of Accounting Information in ARBAN
In the cash payment section, when any advance is taken by an individual it is recorded as
debit. At the time of returning the remaining amount it is recorded as credit. All the
expenditure is recorded as debit in the journal. The transaction part of a sample Cash Payment
and Receipt journal in included the appendix part (Table 3 and 4).
ARBAN maintains two types of vouchers. One is for payment and another one is for receipt.
At the time of receipt the all the expenditure is debited along with received amount. The
original amount that had taken as advance is recorded as credit as follows:
Only payment up to 10,000 taka is paid in cash. Payment above 10,000 taka is paid by check.
For preparing check ARBAN use a software HEXAGON which is supplied by HSBC. After
preparing voucher the transactions again recorded in Excel which later converted into 3SUN
software for further analysis.
Software Used in Finance Unit of ARBAN
SUN: SUN (Version 4) is accounting software used by most of Country Programs of
Association for Realizations of Basic Needs (ARBAN). Software is fully equipped with lot of
data recording and analyzing tools.
Through SUN they can capture:-
• Staff wise transactions (training , advance etc),
• Partner NGO wise transactions (advance, expenditure),
• Theme/ Sector wise expenditure
• Donor/ funding country wise expenditure
• Expense incurred on behalf of other county program & vice versa
• Budget
Vision: Vision is reporting software. Through this ARBAN can further analysis the financial
data recorded/ processed through SUN. It also gives them the space to prepare report in time
donor’s requirement. They also produce the internal management reports (budget and actual
expenditure) through vision.
3

44. INTERNSHIP REPORT
In profit oriented organization and also in non profit oriented organization, accounting
policies are established based on the organization need. The objectives of accounting i.e.
analyzing and interpreting financial information, preparing financial statements, conducting
audits, designing accounting system, preparing forecasting and budgets, and providing tax
services are same. But it varies in its operational nature with the need of the organization
whether it is profit oriented or not. For example, most organizations use a standard accounting
software for accounting purpose. But it is not same in all organizations; accountants choose
the software according to their organization’s need. All NGOs require a financial
management system, however, many small NGOs may only have an accounting or
bookkeeping system. Accounting or bookkeeping are a subset of financial management. In
NGOs, financial management systems can be broken down simply into administrative
systems and accounting systems. Administrative systems assist all NGO managers in
decision-making, planning, communicating, controlling and evaluating. Accounting system is
concerned with identifying financial information, expressing the information in numeric terms
and communicating this information to interested parties. An accounting system provides the
framework for working with financial information.
Budgeting of Association for Realizations of Basic Needs (ARBAN) Bangladesh
Budgets have a crucial role to play in strong financial management. For budgets to be useful,
they must be accurate and complete. That means that they have to be based on a realistic

45. INTERNSHIP REPORT
assessment of the activities that NGOs expect to carry out and of how they expect to pay for
them.
An important internal control of financial management is the operating and activity budget.
This budget includes all monies approved in donor proposals and all activities planned for a
given period of time (preferably the fiscal year of an organization). The line items in the
budget should coincide with chart of account line items so that expenses can easily be tagged
to budget. In ARBAN, budget done in accordance with its income. They follow zero based
budgeting. Using a zero-based budgeting and properly dealing with the difference from month
to month allows ARBAN to gain total control over every money they spend. If they spend
less than planned during the year, they can easily redirect that money where they really want
it instead of letting it misused through unfocused spending.
The parties involved in preparation of budget are sector head, finance department, and partner
organization for partner budget. Important aspect of budgeting of ARBAN are their three year
rolling budgeting process, budget responsibility and implementation, and yearly budgeting
process.
Three years rolling budgeting process
AA introduced 3 year rolling plan in 2000 which enables each AA offices to have medium
view on its program, organizational and funding aspects.
Responsibility
• The regional finance coordinator (RFC) provides guidelines and table formats annually.
In ARBAN, Asia finance coordinator provides these formats.
• The HOF is responsible to coordinate the process from providing guidelines to
consolidating ARBAN budget tables and submit to the region.
• Budget holder is responsible to formulate the plan and budget for the area of her/his
responsibility.
• Funding & fundraising head in collaboration with the HOF is responsible to prepare the
funding plan for the whole organization.
• The senior management team is responsible to review and approve the plan/budget as
well as plan execution.
• The CD in consultation with the HOF and other concerned line managers authorizes
supplement plan/budget and or makes any adjustment when and where necessary.

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• The team leader of reporting and statutory compliance team is responsible to review the
coding and import the budget into accounting software (SUN).
Implementation
• Time for planning: September every year for 3 year plan; November every year for
annual budget.
• Time for approval within the country: October every year.
• Process: the HOF in consultation with the CD and management team will issue
guidelines for the process every year.
• A major review & planning process involving larger stakeholders will be undertaken once
every 3 years. In the years between a minor review and readjustment of the plan will be
done.
Yearly budgeting process
For the budgeting purpose each sector has given a budget range. Then the finance section
revises the budget and finally prepares it.
After completion of the 1+2 budgeting process the reporting and compliance team will
provide formatted budgeted expenditure with codes (for tracking expenditure) to every units
in the CP in order to provide their plan of expenditure across twelve months. The final
individual budget is approved by the CD of the CP and a signed copy is circulated from the
finance. After completion of the monthly budget, the budget is uploaded before
commencement of the budget year.
Profit-oriented organizations sell goods or service, so they have revenues and operating cost
that must have to be budgeted. They prepare projected income statements and balance sheets.
Non profit oriented organizations prepare cashflow forecast that tells them when receipts and
payments will happen, because they cannot start spending money on the project before they
have actually received the cash. They also prepare partner budget for various projects. So the
classifications of budgets for NGOs are: Unit budget, Cashflow forecast, Salary budget,
Project budget. Unit wise budget is their master budget because it includes costs, income,
salary, and DA/ non DA budget.
Taxation of Association for Realizations of Basic Needs (ARBAN) Bangladesh
Taxation is the system of raising money to finance government. All governments require
payments of money i.e. taxes from people. But non profit organizations do not have to pay

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any tax for their income from grants. But the employees, who are working in there, have to
pay taxes for the incomes they received. Most of the organizations follow tax deduction at
source. The suppliers VAT are also deducted at the time of payment by accounts unit of
NGOs.
For the taxation purpose in terms of salary of employees of ARBAN it follows tax deduction
at income source. The withholding of Tax and suppliers’ VAT are described in the following
section:
Withholding Tax
The team leader of payment and cash disbursement shall ensure that withholding tax is
deducted as envisaged in the Bangladesh statutory laws. The tax deducted shall be deposited
to government treasury every quarter. S/he shall prepare statutory/tax returns and get it
approved from HOF to be submitted to authorities. The tax heads are like salary tax, VAT on
suppliers’ goods.
There is no any tax imposed on NGO income as it is grant. It is totally tax exempted. But
recently Bangladesh government is thinking to impose tax on the income from micro credit
and other small income generated activities of NGOs. But ARBAN has no any micro credit
scheme.
Suppliers’ VAT
Suppliers’ VAT is also deducted at source by payment and cash disbursement section of
ARBAN at the time of payment.
Tax is the largest income source for government. For this taxation has a crucial role in
profit oriented organization? They try to give minimum tax and sometimes evade tax so
that they can enjoy most profit. They have to give tax for both the personal and corporate
income. Governments impose many types of taxes for which only profit oriented
organizations are entitled. When high tax rates affect the behavior of profit oriented firms to
pay their corporate tax by evasion, non profit oriented organizations do not have any such
impact.
Auditing of Association for Realizations of Basic Needs (ARBAN)
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Auditing is the process inspection and verification of the accuracy of financial
records and statements. Private businesses and all levels of government conduct
internal audits of accounting records and procedures. Internal audits are conducted
by a firm’s own personnel to uncover bookkeeping errors and also to check the
honesty of employees. An external audit is used to give the public a true statement of
a company’s financial position. It is made at least once a year by public accountants
who are not regular employees of the organization. The auditors make sure that the
organization has followed proper accounting procedures in its financial records and
statements. They compare the current financial statements with those of the previous
year to determine whether the statements are calculated consistently. If they are not,
they present a distorted picture of the organization’s financial position. The auditors
also inspect real estate, buildings, and other assets to see if their value is overstated.
Debts and other liabilities are checked to see if they have been understated.
When the auditors are satisfied that the organization’s accounts are in order, they
issue a statement certifying that they believe the organization’s balance sheet,
income statement, and records fairly reflect the organization’s financial condition.
The audit statement is then made public in the organization’s annual report.
Like profit and non profit oriented organization, in ARBAN both external and
internal audit is followed. This chapter discusses the internal and external audit of
ARBAN, audit terms of reference, major areas covered by each audit, and the
process of recruitment of an external auditor.
Internal audit
ARBAN internal audit function is completely independent of the finance function and is

49. INTERNSHIP REPORT
administratively reportable to the CD & functionally reportable to the SMT of the CP. There
core role include:
 Strengthening the financial integrity of the organization.
 Ensure compliance with international/local policies and procedures.
 Coordinates the outsourced audit to the third parties of CP.
 Coordinates the risk management of the organization.
 Update the SMT and local of the audit issues and follow up the recommendation with
focal person of the CP.
Internal Audits are required for:
 Country programs and affiliates (every 2 years)
 International themes (every 2 years)
 Regions (every 2 years)
 International secretariat (every 2 years)
 International functions, like for international themes of AA. Whether planned
expenditure is utilized for the adequate purpose.
External audit
Head of Finance and Administration initiates the process through a circulation of Terms of
Reference (TOR) of audit. Checking or verification is done by Senior Management Team and
approved by the Country Director.
The purpose of external audit is to independently examine records, procedures and activities,
and provide a legally valid report outlining the auditor’s opinion on the state of affairs.
External audits are required for:
 Association for Realizations of Basic Needs (ARBAN) International consolidated
statutory accounts (every year)
 Affiliates, associates and country programs (as per local law)
 NGO Affairs Bureau
 Government bodies, Tax authority etc.
Standard terms of reference for an external audit will include:
In an audit the standard terms of reference are Scope of Work, General Control and
Compliance Requirements, Special Audit Areas, Reporting of Audit and Fees.

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 Review of financial and management controls (in countries this will include both in
country office and in at least 1 DA/partner organizations)
 Identification of major risk areas and a review of risk management
 Review of progress against strategy/strategic plan.
Major areas to be covered in each audit:
 Asset control and payments
 Financial reporting, including management accounts, reporting to institutional
donors/sponsors etc, cost classification, performance measures (including partners),
donor relationship management, revolving funds and savings and credit schemes (if
applicable)
 Other support functions, including local internal audit function (if applicable), work
with partners and partner relations, information technology, compliance with local
laws (tax etc).
 4ALPS core requirements, including how ALPS core requirements, processes and
standards have been implemented and includes appraisals, strategies/ strategic plans,
external reviews, annual review and reflection processes, annual review and learning
reports
 How countries/regions and themes have applied the principles of accountability to
stakeholders especially to poor and excluded groups and their organizations. This will
include budget transparency processes, implementation of open information policy
etc.
Audit report depends on the TOR of the organization. If external auditor is appointed to audit
the financial statements of the organization then they report about that. No major difference
between the audit of profitable and non-profitable organization. Only scope of work may be
different. Because in profit oriented organization auditors have to audit the inventory of the
organization.
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51. INTERNSHIP REPORT
In both profit and non profit oriented organizations, internal auditing is an
ongoing procedure. There is no any difference in the appointment procedure of an
external auditor in profit and non profit oriented organizations, only the regulating
body of that particular industry can affect in the recruitment of an auditor. In case of
NGOs external auditors should be from the approved list of NGO Affairs bureau and
internationally reputed firm.
The process of recruitment of an external auditor: