Introduction to Bookkeeping in Shimenkan Community Development Foundation

Introduction to Bookkeeping in Shimenkan Community Development Foundation

Guan Yuhong March 2006

The community bookkeeping for the Weining Project is divided into day-book journal and account journal; the day-book journal is a journal book while the account journal is journal voucher, divided into the ledger and the subsidiary ledger. The entries vary with the division of sums from communities not donating and communities donating. According to the actual situation of the communities, measures such as on-site repayment and loan issuance, on-site book keeping, on-site loan repayment announcement are taken to help farmers aware of and supervise fund operation.

Focusing on this series of activities, design and use accountant book keeping, day book journal, day book subsidiary subject book, farm family joint application form, community loan contract, five-family joint-guarantee and mutual help contract, loan repayment card for family-group (the three-couplet receipt is not used), and the on-site community financial training.

I. Division of amount：

1. Communities not donating: According to the loan contract signed by the project office and communities, the amount is divided into the loan principal, community fund and item interests. For example, the farm household loan is RMB1,000 with the monthly interest being 6.67‰, among which 3.67‰ is the community public accumulation(community fund), 3‰ turned to the county project office as risk fund to be deposited in credit cooperative by Shimenkan Center. If the load can be repaid on time, it is calculated on monthly base and the formula is as follows:

Monthly receivable principal=Loan principal÷12

Monthly receivable foundation=Loan principal×3.67‰

Monthly receivable interest =Loan principal×3‰

2. Communities donation: According to the items set by the community after donation, the amount is divided into development fund, education fund and public welfare fund. For example, the farm household loan is RMB1,000 with the monthly interest remaining 6.67‰, among which 2.67‰ is deposited in the special education fund to support children’s education, 4‰deposited in public welfare fund as the accumulation or expenses by the community. If the load can be repaid on time, it is calculated on monthly base and the formula is as follows:

Monthly receivable development foundation (principal)=Loan principal÷12

Monthly receivable education fund=Loan principal×2.67‰

Monthly receivable public welfare fund=Loan principal×4‰

II. Community loan issuance procedure: Five families forming one group→ electing group leader→ submitting application to community committee→ examination and approval by community loan issuance and evaluation team(not applicable to donating communities) →on-site loan issuance at community farm household conference(all procedures are completed in the community).

III. Community money collection procedure: members of the “Five families” → group leader→ committee→ committee filling the group’s repayment card and returning to the group leader and book keeping onsite→ supervising the team’s announcement of issuance and repayment to loan(the whole process is completed at the community farm household conference.

IV. Subjects setup:

1. Communities not donating: The total account subject is set as allocation fee, other income, amount receivable-principal, fund (accumulation) income, project interests and other expenses. Family subsidiary ledger lists every family’s loan and repayment on one page. The debit, the credit and balance are changed to principal, fund and interests.

2. The total account subject of communities donating is set as allocated fee, other income, amount receivable-development fund, education fund income, public welfare income, medical care fund and other expenses. Family subsidiary ledger lists every family’s loan and repayment on one page. The debit, the credit and balance are changed to development fund, education fund and public welfare fund.

V. Community family deposit: for convenience of community cashier and accountant to verify and for the farm family to check and supervise, the community, after discussion, opens account in the credit cooperative as needed and deposit is made on family basis. For example, there are four bank books for Xinying Community, the balance of development fund bankbook corresponds to the balance of development fund in the account book, the balance of education fund bankbook corresponds to the balance of education fund in the account book, the balance of public welfare fund bankbook corresponds to the balance of public welfare fund in the account book, and the total of all the bank book corresponds to the balance of the day book journal.

VI. The community has been filling seasonal statement of community fund since 2002.

　

Flow of Farm Household Loan (All activities are completed within the community.)

Step	Financial Management	Note
Five families forming one group	Farm families form 5-7 household joint loan, joint-guarantee and a mutual help loan group
Electing group leader	The group leader asks the group to think about three issues: ①Whether it is necessary to apply for loan and how to obtain loan? ②To learn about the project management, and understand the purpose of the loan? ③ How to realized mutual help and mutual supervision?	How to write loan application?
Submitting application to community committee	Kept by the committee, organizing and holding loan evaluation conference.
Examination and approval by community loan issuance and evaluation team	The main principle is: whether the name is authentic, whether the loan purpose is true, whether the application is made as per the loan system, the loan amount, repayment mode and time, the reliability of the loan, to make sure that father and son, or brothers are not in the same group waiting for evaluation, signature by all upon qualified, submitted to the committee for filing and loan issuance. The committee makes budget to see if the monthly collection of money is enough for loan issuance. If not, withdraw cash from the credit cooperative before the farmer family conference to get fully prepared.	The evaluation group is made up of committee, supervising team leader.
Check by community staffs	Check the reliability of the loan application and the loan purpose according to understanding of the community	(not applicable to donating communities)）
On-site loan issuance at community farm household conference	At the monthly community meeting,① announce the new loan group and members, fill out the joint family loan application form and five-family loan contract in three copies, which the farmer group, community committee and the project program keep one each,② the cash is issued to the loan farmer family on site,③ to fill the loan amount in the big table hung in the community,④ to fill out the group name and loan amount in the repayment card which is to be kept by the group leader after each repayment.⑤ to make day book journal on site ⑥to make loan principal book keeping on site⑦ to set up family individual book keeping on site	Farm family supervision

Flow of Farm Household Receiving Loan (All activities are completed within the community.)

Step	Financial Management	Notes
Member of the five family group	The members of the five-family group should hand in the amount payable to the group leader(only on-site supervision by the farmers without any written proof). Private leave is permitted and the repayment can be done by other members.
Group leader	The group leader collects the money and turns over to the committee teller, who fills in the repayment card, signs and then returns to the group leader( the repayment card in the hand of the group leader is proof)
Community Committee	The committee teller collects money under the supervision of the accountant and the two people make the entry in the journal on site and tick “√” on the table published.
Community Staff	After the community issuance and collection of loan, the monthly payable risk fee shall be turned to the community staff, who signs on the community card of loan repayment(the repayment card left with the community is proof)	(Not applicable to communities donating)
Supervising Team	Supervising on-site book keeping. After the activities, the supervising team announces loan issuance and repayment. The whole loan issuance and repayment lasts one hour or so.	Farmer family supervision

After the activities, the committee deposits the remaining money in the credit corporative on time.

GuanYuhong

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shimenkan--English--Introduction to Bookkeeping in Shimenkan Community Development Foundation