7 Things Every NGO CFO Should Check in Monthly Financial Reports

For NGOs, financial reporting is not just about balancing the books—it’s about safeguarding donor trust, ensuring compliance, and keeping programs sustainable. As a CFO, your monthly review of financial reports is one of the most powerful tools you have to protect the organization’s reputation and future funding.

Here are seven critical areas every NGO CFO should focus on:

1. Cash Position and Liquidity

• Assess cash balances against the monthly burn rate.
• Ensure sufficient liquidity to cover payroll, program commitments, and statutory obligations.
• Flag potential delays in donor disbursements.
• Track liquidity ratios (e.g., current ratio, quick ratio).
• Mitigate foreign exchange risks where grants are in foreign currencies.

2. Budget vs. Actual Performance

• Compare actual expenditure against the approved budget.
• Investigate significant variances, whether under- or overspending.
• Ensure any over-expenditure on donor-funded projects is pre-approved.
• Assess whether spending patterns align with activity implementation timelines.

3. Donor Funds Utilization and Compliance

• Confirm that restricted funds are applied only to the intended activities.
• Ensure cost allocations across donors follow agreed grant terms.
• Review compliance with donor requirements such as:

• 1. Allowable vs. non-allowable costs
  2. Cost-share and co-financing obligations
  3. Reporting deadlines and formats
  4. Procurement and exchange rate rules

• Watch out for risks like late reporting, untracked exchange losses, ineligible costs, or large unspent balances.

4. Program, Grant, and Sub-Grantee Tracking

• Ensure program-level financial reports reconcile with the general ledger.
• Confirm each grant/project has a clear statement of income, expenditure, and balances.
• Check that sub-grant disbursements are based on approved budgets and properly liquidated.
• Review the financial reports of sub-grantees to confirm:
  • Completeness and accuracy
  • Availability of supporting documentation
  • Compliance with donor rules and timelines
  • Any capacity gaps requiring training or oversight

5. Statutory and Regulatory Compliance

• Confirm all statutory deductions and taxes are filed and remitted on time.
• Ensure compliance with NGO regulatory frameworks and donor due diligence requirements.
• Align monthly financials with IFRS and donor-specific frameworks.
• Monitor risk indicators such as late filings, penalties, inconsistent reporting, or donor audit queries.

6. Internal Controls and Risk Indicators

• Review reconciliations (bank, cash, advances, payables) to ensure they are current.
• Investigate unusual transactions or spending patterns.
• Confirm that approval processes and segregation of duties are maintained.
• Monitor staff and sub-grantee advances to ensure timely liquidation.
• Check the asset register for completeness and accuracy.

7. Narrative and Strategic Insights

• Accompany the numbers with explanations that highlight trends and implications.
• Link expenditures to program achievements and donor objectives.
• Highlight risks such as funding gaps, foreign exchange exposure, or weak sub-grantee systems.
• Provide lessons learned to improve efficiency and planning.
• Ensure reports also address progress toward long-term goals, not just donor deliverables.

Conclusion

For NGO CFOs, monthly financial reviews are not simply about reconciling figures—they are a leadership function that reinforces donor trust and strengthens program delivery. By systematically addressing cash flow, budget performance, donor compliance, sub-grantee oversight, and risk indicators, you can transform financial reports into a strategic management tool.

At MGK Consulting, we help NGOs strengthen financial reporting, donor compliance, and governance. Reach us at enquiries@mgkconsult.co.ke for tailored support.