FREETOWN, July 14 (232news.com) – The Irish League of Credit Union Foundation (ILCUF) Limited has ended a three-days Financial Management Training for chairpersons and managers of Credit Unions at the Young Men’s Christian Association Hall (YMCA), Fort Street in Freetown.
The 38 participants were drawn from various CUs nationwide.
The training also included sensitization on currency redenomination by officials of the Bank of Sierra Leone at Bank of Sierra Leone offices.
The objectives of the training were to explain the meaning of financial management, its importance, identify types of Credit Unions (CU) reports, frequency of preparation, determine sustainable interest rates on loans, savings and deposits, prepare budgets/forecasts and analyze and interpret different financial statements using financial ratios.
According to the General Manager of ILCUF, Mr. Solomon Mwongyere, many CUs entered the financial business for social reasons, that there are now thousands of new CUs around the world noting that many are small but many more have grown to reach thousands of people.
He continued that financial management is a necessary evil in CUs and that the success of CUs depend mainly on how well it manages its resources and offer better services to its members.
The training presents an overview of the basic financial tools and covered the fundamentals of financial management, reports, sustainable interest rate determination, budgeting and budget forecast, ratio analysis and interpretation of financial statements, all useful in improving financial management practices in CUs and provision of reliable financial information to a wide range of users and the interpretation thereof.
According to the ILCEF General Manager, financial management is the process of planning, organizing, monitoring and controlling the financial or economic resources of an organization in order to achieve a desired objective.
Dilating on CU Board members as trustees, he explained that they have the responsibility to maintain accurate financial records and effective reporting system, ensure reserves are adequate to cover losses, protect assets of the CU, establish legitimate sources of funds, monitor the financial health of the organization as well as provide direction to management in financial matters.
Other responsivities of CU Board members are to ensure regular supply of funds to the CU, adequate returns to members, optimum utilization of funds, safety of investments, plan for sound capital structure asserting that CUs do financial intermediation.
Mr. Solomon Mwongyere furthered that CU Board members take in deposits that they lend to members who apply for loans, underscored that good financial management is essential because to be able to play an intermediary role, a CU that seeks deposits must show the members its reliability and soundness in order to obtain their confidence.
He stressed that without this confidence and trust, no one would deposit his/her savings there, affirmed that maximization of all the CU resource is required to enable it to become profitable and grow.
He also revealed that financial management, therefore, consists of analyzing the financial impact of the decisions taken while ensuring that the resources are used optimally with a view to profitability, viability and control and called for estimating the amount of capital required
He also talked on determining capital structure, choice of sources of funds, mobilizing funds, utilization of funds, disposal of profits or surplus, management of cash and financial control and highlighted tools of financial management that he categorized into four broader areas planning tools, organizing tools, controlling tools and monitoring tools.
The General Manager went on to reveal that there are many tools, not necessarily financial, which managers can use to help achieve good practice in financial management and that these include planning, strategic, business, budget, work plans, feasibility studies, bye law, organizational chart, financial policies, loan and credit control policies, bookkeeping and accounting manuals and budgets.
On controlling tools, he mentioned budgets, delegated authority, procurement procedure, reconciliation, internal and external audit, fixed assets register, motor vehicle policy, insurance, financial statements, monthly management reports, loan aging reports, budget monitoring repots, cash flow reports, audit reports both internal and external and evaluation reports.
Mr. Solomon Mwongyere reiterated that financial management to a CU is rather like maintenance is to a vehicle stressing that if you don’t put in good quality fuel and oil and give it a regular service, the functioning of the vehicle suffers and would not run efficiently underlining that if financial management is neglected, the CU would eventually fail concluding that financial management is about taking action to look after the financial health of the CU and not leaving things to chance.
Other topics included key factors in liquidity management, liabilities, non-earning assets, productive assets, earnings and profitability, loan aging report, loan loss provision, delinquent loans to total loans, financial ratio analysis and approval of budget.
