Financial Management Policy for Kabul Municipality

The policy aims to ensure compliance with the Public Finance and Expenditure Law (PFEML) and the Financial Regulations adopted by the Government of Afghanistan. The policy defines key terms, including the Chart of Accounts (COA), Control and Audit Office, Financial Management Information System (FMIS), International Public Sector Accounting Standards (IPSAS), Public Finance and Management Law (PFEML), and Public Financial Management Regulation (PFEMR). The policy also outlines the scope of financial management policies, which include preparing and presenting financial statements, managing cash flows, and accounting for expenses. The policy on accounting for expenditure and revenue states that the Kabul Municipality adopts the Cash Basis standard of IPSAS. Revenue, expenditure, appropriations, and allotment advices are measured on a cash basis, recognizing transactions and events only when cash is received or paid. The Accounts and Revenue departments are responsible for accounting for all revenues collected and expenditures incurred for the purpose of delivering services and goods. The policy requires the Accounts and Revenue departments to record all revenues and expenditures on a daily basis, classify them according to their nature, and enter them into the FMIS on a real-time basis. The FMIS performs controls at different levels of budget execution, including budget appropriations, allotments, expenditures, and advances. The policy also requires the Revenue Department to prepare and file a bank reconciliation report on a weekly basis and provide direction and guidance to district officials on revenue collection and accounting for revenues. The policy on purchase commitments requires the service department of the KM to account and report for purchase commitments strictly in accordance with the procedures determined in the Procurement Law 2008 and subsequent amendments or applicable international agreements. No expenditures may be incurred or payments made without first being properly authorized and checked for budget and allotment availability, except petty cash payments made within the amount of imprest advance extended to district offices or service units. The policy on cash management aims to ensure that there is adequate cash to fund the KM's operations. The policy requires revenues to be collected when due and banked promptly, payments to suppliers to be made not earlier than necessary, and prepayments for goods or services to be avoided unless required by contractual arrangements. Discounts for early payment are only accepted when included in monthly cash flow estimates provided by the Revenue Department. The policy also requires debtors to be regularly pursued to collect and bank amounts receivable by the government promptly. The policy outlines the retention periods for certain types of accounting records, including general ledger and cash books, main transaction summary records, primary evidentiary records, subsidiary ledgers, and supplementary accounting records. The policy requires accounting records to be kept in their original form unless otherwise advised by the Financial Regulations, and information may be secured in an alternative form after the expiry of the retention periods. Overall, the Kabul Municipality's Financial Management Policy provides a framework for the management of public funds and assets within the municipality, ensuring compliance with relevant laws and regulations and promoting good financial stewardship.