Benhard Juma Nyagaya

Isignature Finance Policy December 2025 2|Page CONTENTS Contents........................................................................................................................................................... 2 List of Abbreviations ......................................................................................................................................... 3 Executive Summary.......................................................................................................................................... 4 Main Body of Report ......................................................................................................................................... 5 1.0 Accounting System ..................................................................................................................................... 5 2.0 Balance Sheet ........................................................................................................................................... 5 3.0 Fixed Assets .............................................................................................................................................. 5 4.0 Bank Accounts................................................................................................................................................................5 4.1. KES Bank Account… ......................................................................................................................................6 5.0 Cash… .............................................................................................................................................................................6 5.1. Cash Custodian .............................................................................................................................................. 6 5.2. Cash Receipts ................................................................................................................................................. 7 5.3. Cash Payments................................................................................................................................................7 5.4. Cash Advance..................................................................................................................................................7 5.5. Replenishing Office Cash… .......................................................................................................................... 8 5.6. Cash Withdrawal from the bank ................................................................................................................... 8 6.0 Mpesa payments ....................................................................................................................................... 8 7.0 Money Laundering Policy........................................................................................................................... 8 8.0 Employee advances/other debtors ............................................................................................................. 8 9.0 Prepayments/Deposits ................................................................................................................................................. 9 10.0 Accrued/Deferred revenue ...................................................................................................................... 9 11.0 Trade creditors ............................................................................................................................................................ 9 12.0 Expenditure Accruals .............................................................................................................................. 9 13.0 Corporation Tax ....................................................................................................................................... 9 14.0 Share Capital......................................................................................................................................... 10 15.0 Balance sheet........................................................................................................................................ 10 16.0 Profit & Loss Account ............................................................................................................................ 10 17.0 Monthly Routines .................................................................................................................................. 11 17.1 Payroll ........................................................................................................................... 11 17.2. Monthly Financial Reports ........................................................................................... 12 17.3 Management Accounts................................................................................................ 12 18.0 Segregation of Duties ........................................................................................................................... 12 19.0 Monthly Reporting Package .................................................................................................................. 13 20.0 Audits....................................................................................................................................................................... 13 21.0 Payment Authorization ......................................................................................................................... 13 22.0 Chart of Accounts .................................................................................................................................13 23.1 Nominal codes.............................................................................................................................. 14 23.2 T3 codes…....................................................................................................................................14 23.0 Year End ............................................................................................................................................. 14 24.0 Filing/Archiving ........................................................................................................................................................ 15 25.0 Budgeting & Forecasts......................................................................................................................... 15 26.0 Approval Authority Levels…………………………………………………………………………………………..15 Appendices .................................................................................................................................................... 15 2|Page 3|Page LIST OF ABBREVIATIONS BVA COA HELB KES SHIF NSSF PAYE P&L YTD 3|Page Budget versus Actual Chart of Accounts Higher Education Loans Board Kenyan Shillings Social Health Insurance Fund National Social Security Fund Pay As You Earn Profit and Loss Year to Date 4|Page EXECUTIVE SUMMARY Isignature Finance Policy acts as a guide to proper financial management and is made up of different sections that govern each operation. ACCOUNTING SYSTEM IN USE: Isignature will make use of Zoho Books system that enables high speed report generation and ensures a high level of data accuracy. The accounting system also enables different coding and can classify costs based on the company codes and T3 codes. BALANCE SHEET: Isignature prepares and maintains its balance sheet on an accrual basis and that balance sheet represents the true and fair view of the status of affairs at any point in time. FIXED ASSETS: Isignature maintains an asset register for all procured assets and inventories. All assets procured are charged directly to funds responsible for the procurement. BANK ACCOUNTS & SIGNING MANDATE: Isignature operates one bank account in Kenya Shillings (KES). The signing mandate for the account is any of the two signatories. PETTY CASH MANAGEMENT: Isignature has set internal control policy to manage the cash withdrawal from the bank limits, replenishing petty cash mechanisms/procedures & cash advances to staff & advances liquidation procedures that enable cash control. MONEY LAUNDERING: Isignature maintains a copy of the Money Laundering policy and staff are well informed on the policy details. PREPAYMENTS/DEPOSITS: Isignature maintains a suppliers’ database for regular service providers such as for rent etc. Isignature makes prepayment for their services and tracks this against each supplier assigned code in the system for amortization monthly once the service is offered. EXPENDITURE ACCRUAL: Isignature prepares and maintains its accounts on an accrual basis and from time to time accrues all bills incurred but not yet paid for accuracy on reporting and ensuring no costs are left out while reporting. PAYROLL: Isignature payroll is done internally. The payroll is due on the 26 th of each month. The payroll is prepared by the Finance & Operations Director and approved by the Managing Director. All inputs to payroll changes are communicated by the Finance & Operations Director to the Managing Director. MONTHLY MANAGEMENT ACCOUNTS & AUDITS: Isignature monthly reports are due to office by the 5 th of the following month or earlier. The annual statutory audits are conducted within three months after year end. BUDGETS, TREASURY MANAGEMENT & FORECAST: The Finance & Operations Director prepares quarterly forecasts for the business and is approved by the Managing Director. 4|Page 5|Page 1.0 Accounting System Isignature uses Zoho Books Accounting System. The management accounts, monitoring reports and other ad hoc reports are all taken from Zoho Books Accounting System. A suite of reports has been created that enable monthly reports to be produced by just changing the period. Zoho Books Accounting System is available through web access and is accessed via a unique and secret password for Zoho Books online. The Isignature financial year runs from January to December. Once the month end is closed following the production of the Management Accounts, no adjustments can be made to the closed period reports. 2.0 Balance Sheet All balance sheet codes must be reconciled on a monthly basis before monitoring reports are distributed to the Board of Directors. This ensures that the costs that are being charged to the profit and loss (P&L) have been fully reconciled to the balance sheet. Failure to do this can result in inaccurate financial information being passed onto our system. 3.0 Fixed Assets All assets are purchased under Isignature. A full reconciliation between the values on the fixed asset register and Zoho Books system takes place at the end of each financial year. An annual physical check should take place to ensure all assets are present and agree to the asset register in line with segregation of duties. The physical count will be performed by the Finance & Operations Director before being approved by the Managing Director. All assets procured must be capitalized through the balance sheet. It is imperative that the asset register is regularly reconciled to actual assets and any damage to assets is reported to the Managing Director. All assets must be procured in line with the procurement policy. 4.0 Bank Accounts All bank accounts opened must be in the name of Isignature. All accounts opened must be approved by the Managing Director. No overdrafts are to be agreed without the express permission of the Managing Director. Accounts must always be in credit. Bank mandates must be in place for all bank accounts; sole signatory is not permitted in any circumstance. 5|Page 6|Page 4.1. KES Bank Account Payments and transactions under the KES bank account require signatures from either of the authorized signatories. All bank accounts held will have a separate nominal code. Each month, every bank account is to be reconciled in full in the Zoho Books System. Any non-reconciling items are to be investigated and corrected swiftly. Exchange differences from bank accounts not in local currency are to be recognized each month in Zoho Books. Bank reconciliations and bank statements are to be submitted along with the normal monthly account pack, these must be authorized by the Managing Director. All transactions carried out with the bank are done either through cheque or wire transfers. Each transaction requires an inputter and any of the two bank signatories for authorizations. Payment runs are made on Thursdays and payments are not made outside of this time frame unless it is unavoidable. 5.0 Cash Cash and cash equivalents are held in a secure location and access is restricted to designated members of staff. All cash and equivalent accounts are to be physically counted and reconciled to Zoho Books monthly and these are prepared by the Finance & Operations Director and authorized by the Managing Director. Cash holdings should be kept to a minimum using an imprest system and there is need to have an agreed limit on the amount of cash that can be paid through petty cash. The amount held should allow for any contingencies that are likely in a given location, e.g., an evacuation plan in a fragile state maybe appropriate as well as a float for staff travel advances etc. 5.1 Custodian Custody of cash and access to the safe is assigned below. Custodians are responsible for any cash losses, with the exception of cases deemed beyond his/her control, such as armed robbery, fire, natural disaster, etc. Account Office safe keys Primary Custodian Reserve Custodian Finance & Operations Director Managing Director The operating cash accounts are outlined below. The minimum and maximum cash amounts are outlined for each. Under no circumstances should the cash on hand exceed the maximum amount. 6|Page 7|Page Account Office safe– KES 5.2 Minimum & Maximum/ Replenishment Custodian Level Finance & Minimum KES 5,000 Operations Director Maximum KES 10,000 Replenish at 10,000/= Cash Count Every week (Fridays and end of the month) Cash Receipts Miscellaneous cash receipts (reimbursement of personal expenses, repayments of advances, etc.) are included in office cash. If any cash receipt brings the total amount of cash on hand above the maximum amount allowed a cash deposit to the bank account should be made within one business day if deem necessary. A pre-numbered cash receipt will be issued to the individual paying in cash at the time of the payment. Prenumber receipts are not issued for repayment of advance amounts. Cash reimbursement to staff for purchases made without a purchase requisition, cash advance form or travel advance request are generally not allowed. In special circumstances, these reimbursements must be reviewed by the Finance & Operations Director, and approved by the Managing Director, and must be under KES 10,000 in total value. 5.3 Cash Payments Petty cash payments will only be made when it is not possible to make cheque or bank transfer payments. Convenience or ease of payment is not a consideration. Petty cash payments of more than KES 10,000 for any single transaction/in total value will not be made without the approval of the Managing Director. No cash payments will be made without signed authorization at the appropriate level of authority based on the Isignature Approval Authority Levels. 5.4 Cash Advance Isignature will issue a monthly Admin/Procurement advance of KES 5,000 for daily purchases of office supplies & certain petty cash expenses requests. The advance will be issued in local currency (KES) upon review by the Finance & Operations Director and approval by the Managing Director. The advance must be accounted for by submitting support documentation such as receipts for clearance by the Finance Department before a second advance can be issued. The Finance & Operations Director will keep a log of all advances and will monitor when they are cleared. 7|Page 8|Page 5.5 Replenishing Office Cash When operating cash on hand reaches the replenishment level: • A Bank Transfer Request is prepared. Amount requested must not exceed the maximum amount of operating cash on hand established unless approved by the Managing Director. • Approved cash count at the time of the cash replenishment request is attached to Bank Transfer Request. • Cash Replenishment Request is approved by the Managing Director. 5.6 Cash Withdrawals from the Bank Funds withdrawal from the bank account will be performed by the Finance & Operations Director after approval by the Managing Director. 6.0 Mpesa payments Isignature will pay some vendors and staff members from the bank account directly to their mobile phone numbers. This recognizes that some vendors may not have a bank account and will need their funds on a timely manner hence the need to have this provision. This process also eliminates the need for cash. Mpesa payments are made only on Tuesdays and Thursdays unless there is an urgent need for payments. The procedure for Mpesa payments is as follows; i. ii. iii. Finance & Operations Director will prepare payment requests with full supporting documents and submit them to the Managing Director for approval. Once approved, the Finance & Operations Director will upload payments every Tuesdays and Thursdays on the online banking platform and submit to the Managing Director for approvals on the system. Once payments have been authorized in the online banking system, the Finance & Operations Director will update the payment tracker accordingly. 7.0 Money Laundering Policy The management of cash and other financial transactions at Isignature is also administered considering strict policy in this area. The policy is held on file. 8.0 Employee Advances / Other Debtors Any payment made to a staff member (other than salaries) should go through their individual balance sheet code. Advances are paid to employees mainly for travel. There is a separate expense claim form that is to be completed, reviewed by Finance & Operations Director and approved by the Managing Director in line with the Approval Authorization Levels. Staff advances should be retired within 5 working days of returning to the office. A new advance should not be issued until previous ones have been retired. 8|Page 9|Page Employee accounts should be reconciled monthly to ensure that any outstanding advances are legitimate and necessary costs have been charged through to the Profit & Loss. Each month the employee advances are reported in the management accounts. Emphasis is placed on overdue advances. Outstanding employee advances are monitored weekly, and it is the Finance & Operations Director’s responsibility to initially follow-up long overdue advances with the employee and agree on any action that will be taken. In case after initial follow up, the advance remains outstanding, the issue will be escalated to line managers via emails for appropriate action. Once liquidation has been done, the advance is cleared against the employee’s name in the Zoho Books system, and the advance tracker is updated. Uncleared advances after the stipulated period will automatically be recovered via payroll. 9.0 Prepayments/Deposits There is a separate nominal on the balance sheet for prepayments. This code must be reconciled fully to the prepayments schedule that is held on a spread sheet outside of Zoho Books. When an invoice is processed for a service in the future then it is entered onto the prepayments schedule and coded to the prepayment nominal code. The prepayment is then entered on the spread sheet and costs are allocated across the period(s) of consumption. Each month the prepayments for that month are charged to the relevant code in the P&L. Each prepayment line is to be reconciled in full to ensure that the full cost has been charged through to the P&L once the prepayment term has expired and reconciled at summary level. 10.0 Accrued / Deferred Revenue Isignature’s policy on revenue recognition is to recognize revenue when the revenue has been received. Isignature sources of revenue will be through sales of products and other related services. Other revenues will be generated through annual bank interests earned on the KES bank accounts. 11.0 Trade Creditors Isignature operates a supplier’s ledger. All trade creditors have separate nominal codes. Trade Creditors must be reconciled in full monthly. This ensures that all aged supplier’s ledgers have been entered correctly by the Finance & Operations Director and validates the integrity of the P&L and in turn the reporting of management accounts. Isignature payment terms are 30 days, except for some vendors where payments must be made immediately. Aged creditors need urgent action to ensure that they are legitimate and do not result in any inaccuracy on the P&L. Trade Creditors are matched each month to ensure accuracy. 12.0 Expenditure Accruals Isignature operates an accruals-based accounting system. Each month, expenditure accruals must be posted into the Zoho Books Systems where appropriate using the accruals nominal code and T3 code. Accruals should be reconciled each month to ensure the accuracy of the balance in the balance sheet. 9|Page 10 | P a g e 13.0 Corporation Tax Each year Isignature is required to complete a Corporation Tax Return to Kenya Revenue Authority. The computation is calculated by our auditors, and they make the return on behalf of Isignature. There is a separate Corporation Tax creditor and expense code in the trial balance. 14.0 Share Capital All share capital is fully owned by the directors at the time of registration and may be adjusted where necessary. The share capital amount will be credited in the balance sheet. 15.0 Profit & Loss Account (Balance Sheet) The P&L account in the balance sheet includes the retained earnings from previous years and the profit year to date for the current year. There is a separate nominal code for retained earnings. Year to date profit is the sum of all the income nominal codes less the sum of all the year-to-date expenditure nominal codes. 10 | P a g e 11 | P a g e 16.0 Profit & Loss Account All expenditure for the month is posted into the Zoho Books system which includes all balance sheet reconciliations, payroll, suppliers’ ledger etc. This is generally completed by the 5th of the following month. Once all expenditure has been posted and reconciliations completed, Finance sends out the first run of the monitoring reports which provide summary analysis against budget and detailed transactional reports. It is the Finance & Operations Director’s responsibility to review expenditure that has taken place in the month and request any code changes. At this point the Finance & Operations Director will identify any accruals that need posting. The Finance & Operations Director then enters the cost for each budget line on the tracking sheet (budget versus actual (BVA) template) as per the management accounts and then shares with the Managing Director. Finance must ensure that the total cost on the tracker matches the total cost in the Zoho Books system. This must also be reconciled on each budget line. Finance must also review each budget line to ensure no mistakes have been made. Completed management accounts are submitted each month for both their review and approval. 17.0 Monthly Routines 17.1 Payroll Payroll is managed by the Finance & Operations Director. All additions and amendments to the monthly payroll are communicated by the Managing Director. Once payroll is completed, the Finance & Operations Director will send it to the Managing Director for reviews and approval. Once the monthly payroll has been confirmed, reports are generated. All payroll reconciliations are carried out by the Finance & Operations Director monthly to ensure there are no errors. Salaries and on costs are then posted into the Zoho Books system using journal entry. All Isignature-based staff are coded to their T3 codes. Salaries are posted monthly and paid on the 26th of the month, at the same time as the pension contributions. Statutory deductions are paid before the respective deadlines in the following month. Each month-end there is a balance in the statutory deductions control account which will match the payment made in the following month. Statutory deduction payments include PAYE, SHIF, NSSF, Pension & Student loan deductions (HELB). 11 | P a g e 12 | P a g e 17.2 Monthly financial Reports As referred to in P&L income and expenditure, all financial reports are due to office by the 5th day of the following month. 17.3 Management Accounts Management Accounts are produced each month and are distributed to the Managing Director and the Board monthly. Management accounts are also distributed to external auditors at given points in the year. Distribution to any other party requires the authorization of the Managing Director as they contain commercially sensitive information. The Management Accounts contain the following schedules; 1. 2. 3. 4. 5. Summary profit & loss account Balance sheet Employees Advances Suppliers Ledger Analysis between Budget vs Actuals. The Managements accounts are produced using the Zoho Books system then exported to excel. 18.0 Segregation of Duties It is the policy at Isignature to ensure segregation of duties is practiced throughout the organization on all financial tasks and payments as best practice. The segregation of duties practices has been highlighted throughout this policy. E.g., all processed journals are reviewed by finance staff during the month end process. All payment requests and invoices are prepared by one employee and authorized either by the Managing Director. Payments and payroll also require one person to prepare and one separate individual to review and authorize. 19.0 Monthly Reporting Package Isignature requires the following documentation to be returned each month (scanned copies of signature pages are sufficient, along with soft copies of the following); 1. 2. 3. 4. Cash and bank reconciliations with bank statements and cash count sheets. Cash and bank books with costs coded to an appropriate budget code. Signed summaries of the accounts by the Managing Director Signed payroll summary sheet. Hard copies of expenditure invoices must be stored in the office once the month-end process has finished. The external auditors will also request sample supporting documentation when carrying out the audit. 12 | P a g e 13 | P a g e 20.0 Audits Each year Isignature must have a statutory audit for the financial year, which is a legal requirement. Isignature aims to have the audit signed off at the end of March and annual return filing undertaken with Kenya Revenue Authority. Results of these audits are shared with the Board and findings are discussed and corrective actions are agreed. Engagement of auditors is done in conjunction with the Finance & Operations Director and the Managing Director. Any issues of major concern arising from audits (internal or external) are discussed with the Finance & Operations Director and the Managing Director and remedial action takes place. 21.0 Payment Authorization Isignature uses her bank account to process payments to suppliers. Once the request for payment form has been completed and handed to Finance, there are several checks that should take place before the payment is processed; 1. 2. 3. 4. 5. A valid invoice / supporting documentation is present for the requested payment amount. The request for payment is authorized in line with the authorization schedule. Coding is complete / accurate and charged to a valid budget line. The purchase is in line with Isignature’s’ procurement policy. Check accuracy of bank account details It is the Finance & Operations Director’s responsibility that the above are checked before payment is made. 22.0 Chart of Accounts (COA) Isignature uses the COA stated below; 22.1 Nominal Codes- 13 | P a g e – Fixed Assets – Current Assets – Cash at bank and in hand – Employee advances - Prepayments/Deposits – Accruals and other Liabilities – Retained earnings & share Capital – All revenue 14 | P a g e 22.2 T3 Codes- Budget Line This enables the transaction to be charged to the individual budget line and provides flexibility for reporting. These are bespoken to each line and need setting up in the first instance in Zoho Books as it is a validating field. 22.3 Code/Cost Centre This enables the transaction to be charged to the individual cost Centre. 23.0 Year End Isignature must have a statutory audit each financial year. The audit generally takes place 2 months after year end. The internal deadline set to have signed accounts is three months past the year end date (end of March). Generally, there is a longer period for the Finance & Operations Director to comprehensively review their monitoring reports and provide accruals to ensure the accounts are accurate. The P&L and balance sheet are extracted directly from Zoho Books and there should be no need for manual manipulation of data. The Trial Balance is arranged in a manner that allows the statutory accounts to be produced in a straightforward manner. Given the month end processes that are employed, year-end should not reveal any surprises. The completeness of the month end reconciliations and the scrutiny of the P&L and balance sheet provide us with assurance that the year-end process is effectively another month end, albeit the process taking slightly longer to ensure that all assets and liabilities are fully recorded and reconciled. The additional workload comes from preparing the notes that accompany the financial statements. 24.0 Filing / Archiving All financial documents should be filed and stored in a logical manner. Isignature keeps financial records on site for 5 years plus the current year. Isignature will also utilize an archive service and keeps financial records for 10 years. 25.0 Budgeting and Forecasts It is the Finance & Operations Director’s responsibility to create the quarterly forecast budgets and send them to the Managing Director for review and approval. The individual monitoring reports will then report against the budget, whereas the Management Accounts will report against both budget and forecast and this allows tracking against the original budget. 26.0 Approval Authority Levels Isignature has a documented approval authority levels that indicates the limits for each approver in the organization. The Finance & Operations Director will be responsible for making updates subject to the Managing Director’s approval. 14 | P a g e 15 | P a g e Title Authorization limit Line manager KES 20,000 Finance & Operations Director KES 20,000 Managing Director Any amount-including all amounts above KES 20,000 APPENDICES-. Chart of Accounts Payment request form Travel Approval request Expense Claim Form Cash advance request from Cash receipt voucher Expense claim-no receipt Version control Version Number 1 15 | P a g e Date of version 14 December 2025 Author Financial Management Consultant 16 | P a g e 16 | P a g e