Social Impact Assessment of Microfinance Programmes - weman

5.1.5.3 Policy Environment
As Akhuwat is registered as a society, it does not have to comply with the State Bank of
Pakistan’s regulations for MFIs. The rules for societies are not as stringent and Akhuwat
easily fulfils them. Recently, Akhuwat got a tax exemption certificate from the Pakistan
Centre of Philanthropy. It was awarded after a complete scrutiny of internal governance,
financial management and programme delivery of Akhuwat. Akhuwat is also registered
with the Pakistan Microfinance Network and has to share information with them on
certain indicators which promotes transparency of their operations. The only constraint
Akhuwat finds in the regulatory environment is that it cannot use the savings it collects
from its members for onward lending.
5.1.5.3 Operational Systems
Akhuwat has a computerized accounting and management system both at the Branches
and the Head Office. The system was borrowed from PRSP at inception and is still being
used. The software can generate 40 different kinds of reports for tracking operational and
financial performance on a regular basis along with efficient tracking of the overdue
portfolio. However, new software has been designed by the help of FFSP customized to
Akhuwat’s needs and is currently in the testing phase. The software is more
comprehensive and will be better suited to the microfinance operations of Akhuwat.
In terms of reporting, information from all the branches is sent to the Head Office for
consolidation. The branches send liquidity status and cash flow reports to the Head Office
on a weekly basis to enable it to monitor compliance with the cash reserve regulations.
The financial statements (balance sheets, profit and loss accounts), summary of loan
releases, list of current accounts and list of overdue and past-due accounts, are sent to the
Head Office on a monthly basis for monitoring and consolidation.
5.1.5.4 Audit System and Financial Planning
The organizational structure is well defined and the hierarchies provide various internal
checks. The Area Manager spends one day a week in branches under his control, while
the Programme Manager visits branches every 15 days. The Finance Manager visits the
branches monthly; the Internal Auditor audits the branches quarterly, while an external
auditor appraises the branches annually. The Executive Director makes surprise audits,
while the Steering Committee also has to oversee all the functions like credit quality,
recovery and so on. The finance and credit advisors also review the performance and
policies with all the branch managers on a monthly basis. Therefore, there is constant
inspection going on and the status of recoveries and targets is being checked. This also
prevents accounting errors and helps in identifying any misappropriation, leakage or
pilferage.
The finance department prepares the overall budget for the organization. All financial
transactions are properly maintained such as a cash book, salary ledger and so on. A
professional Chartered Accountant reviews the accounts annually. Budgets and financial
targets are set several times during the year based on available funding. As soon as funds
are available, Akhuwat tries to increase its target disbursement so that they are loaned
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