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Year End Finance Procedures

Posted on 14 February, 2019 at 12:10

By Luxon Kalonga

As the curtain comes down on year 2018, people are in holiday mood and the last things they want to think about are the work tasks at hand. However, year-end is a perfect time for finance people to perform some of those tasks that nobody else thinks are important. During the peak of programme implementation, it is difficult for a finance person to convince their non-finance superiors that she/he needs to also prioritise supplier reconciliations, tax position etc. All the boss wants to know is “Do we have enough money to go for the field.” All else is trivial at the time.  Now that the programmes are on hold as people are ready to go for holidays, you can spare a day or two just to clean up these “trivial” things.


Supplier Reconciliations

The types of suppliers that organisations deal with depend on the activities being undertaken. Those undertaking “software” based projects (i.e. those that involve a lot of interaction with communities through workshops and related activities, without much purchases of physical goods) will have suppliers of workshop venues, hotels, external facilitators and car hire companies as their major suppliers. On the other hand, organisations involved in construction, advocacy, intensive training of trainers etc will be dealing more with suppliers of building materials, training materials and materials for advocacy. In both these cases, organisations sometimes maintain short-term credit accounts with these suppliers and there may be supplier balances that would show as outstanding from the supplier’s perspective whilst in the organisation’s books, everything would be paid-up. Similarly, the organisation might have overpaid the suppliers on events; for instance, the organisation might have paid for the attendance of 60 people for a hotel workshop but only 53 showed up.

It is therefore vital for suppliers’ reconciliations to be drafted to ensure that the balances are agreed from both perspectives – the organisation and the supplier. In order to prepare such reconciliations, the finance department will request statements from suppliers and compare them with the internally generated suppliers’ statement. Any differences would need to be discussed and adjusted to ensure that the suppliers balances at year end are free from misstatements.


Inter-grant Reconciliations

Again, in the heat of programme implementation, funds dedicated for a certain project or the endowment fund or administration account may be diverted for another project (ideally upon official authorisation by the donors involved). In our internal audit and grant review work, we have noted that it is a normal weakness among development organisations that these inter-grant balances are not reconciled.

It is necessary to extract all the inter-grant and administration transactions and reconcile them to ensure that by year-end, the expenses incurred in the projects tally with their respective outflows from the bank accounts. Inter-grant transfers may need to be done before year end to regularise these positions.


Taxation Considerations

Save for only a handful, the majority of non-profit organisations only have to comply with employee tax: Pay-As-You-Earn (PAYE). It is important to ensure that the organisation’s PAYE position is intact before proceeding to the next fiscal year.

The first task is to confirm if the organisation’s records tally with the Zimbabwe Revenue Authority (ZIMRA) system. A PAYE statement for the organisation can be requested from Zimra and this is compared with the internally generated schedule of taxes due and paid. In most cases, we have seen that there are issues where some returns may not have been captured into the Zimra system, particularly those that require manual inputting during times when their online system experiences challenges. It would be necessary for the organisation to make copies of any outstanding returns and submit to Zimra to ensure parity between internal records and Zimra records.

Employees are entitled to tax credits that can reduce their PAYE burden. Tax credit that apply to taxpayers who receive income from a source within Zimbabwe are as follows:

  • Elderly persons’ credit – a credit of USD900, 00 shall be deducted from the income tax of a taxpayer who has attained the age of 55 years. The taxpayer should have turned 55 years before the commencement of the year of assessment.
  • Visually Impaired Persons’ Credit – a credit of USD900, 00 shall be deducted from the income tax of a taxpayer who is blind. An unused credit for a blind person who is married can be transferred to his or her spouse.
  • Invalid appliances – e.g. wheelchairs, artificial limbs, spectacles/contact lenses, special modifications to aid the disabled. The tax credit for costs of such invalid appliances is 50% of the cost incurred.
  • Medical Expenses – medical practitioner services, purchase of drugs on prescription, hospitalisation, medical aid contributions by the taxpayer for himself, spouse or minor children

However, these tax credits fall away if not claimed by the end of the fiscal year (31 December 2018). It is important for finance people to inform all employees to submit any proof of tax credits for consideration before year end. These credits may be considered for the December payroll or during the final assessment by ITF16.

Other costs that are allowable for deduction should also be proven before year end. Examples include subscriptions to professional bodies.

Once the tax credits and allowable deductions have been gathered, the finance person needs to begin preparing the ITF16 (a return which shows a monthly summary of PAYE) which is due for submission by 31 January 2019. A clean tax position will put the organisation in pole position to obtain a tax clearance for 2019 timely.



For most of the year, accountants in non-profit organisations are pre-occupied with project reports and other donor reporting requirements. It is important for all the projects to be consolidated to produce organisational financial statements. Although the organisational financial statements are usually due by the end of the second month, it is good to have created a draft which will only require minor adjustments.


I am sure someone has just realised there is actually more work to be done that they initially though… Welcome to the world of finance people.

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