Financial controls (campaign group)

This is a model for your group to adapt.

{delete as appropriate }

[fill in as appropriate]

Name of your group:

 1. Introduction

Financial records will be kept so that [name of your group] can:

(a) Meet its legal and other obligations, e.g. HMRC, Charities Acts, Companies Acts, contract and common law.

(b) Enable the committee to be in proper financial control of the [name of your group].

(c) Enable the [name of your group] to meet the contractual obligations and requirements of funders.

1.2 The [name of your group] will keep proper books of accounts which may be excel spreadsheets or a handwritten cash analysis book.  They will include:

(a) A cash book (spreadsheet page), analysing all the transactions in the [name of your group] bank account(s).

(b) A petty cash book (another spreadsheet page) if cash payments are being made.

(c) HMRC real-time information (RTI) returns if staff are employed.

1.3 The financial year will end on the [31st March] each year.

1.4 Accounts will be drawn up after each financial year within three months of the end of the year and presented to the next committee meeting.

1.5 Prior to the start of each financial year, the committee will approve a budgeted income and expenditure statement for the following year.

1.6 A report comparing actual income and expenditure against the budget will be presented to the committee every three months.

1.7 The committee will appoint an appropriately qualified scrutineer to examine the account.  The scrutineer will comply with the requirements of the Charities Acts for Charities above the threshold for external scrutiny.

{We have referenced to the Charities Acts so that the scrutiny is done within a framework of regulations.  The Companies Acts only requires directors (the committee) to have an external accountant’s report if turnover is over £1.2 million.  Your organisation may not be a charity but by referencing to the Charities Acts you are providing a set of recognised rules that the scrutineer must then follow}

2. Banking

2.1 The [name of your group] will bank with the Lotsofdosh Bank plc at its Moneytown Road Branch: accounts will be held in the name of the [name of your group]. The following accounts will be maintained:

[name of your group] Current Account

{[name of your group]  Investment Account  [if needed]}

{[name of your group]  PayPal Link account. There will be no automatic sweeps to or from the current or investment accounts}.

{We recommend Unity Trust Bank because it provides for dual electronic signatures, but it costs £90 per annum.}

{PayPal is a security risk.  It will require to link to one of your bank accounts, we suggest you have a separate bank account for collecting and paying Pay Pal transactions and that the account is ring-fenced from your main account.  Some groups find Pay Pal useful for collecting donations.    Pay Pal links to other accounts quickly so you could find that just after you have received a £25,000 grant payment into your main bank account a committee member has flow off to Thailand having brought the airline ticket via Pay Pal and lots of laptops which they will sell on e-bay to finance their new life on a beach}.

2.2 The bank mandate (list of people who can sign cheques on the organisation’s behalf) will always be approved and minuted by the committee as will all the changes to it.

2.3 The charity will require the bank to provide statements every month or electronic access to all transactions. These will be reconciled with the cash book at least every three months.

2.4 The charity will not use any other bank or financial institution or use overdraft facilities, credit cards or loans without of the agreement of the committee.

3. Receipts (income)

3.1 All monies received will be recorded promptly in the cash analysis book and banked without delay (note this includes sundry receipts such as payment for telephone calls, photocopying etc.). The [name of your group] will maintain files of documentation to back this up.

4. Payments (expenditure)

The aim is to ensure that all expenditure is on the [name of your group] business and is properly authorised and that this can be demonstrated. The latest approved budget provides the cheque signatories with authority to spend up to the budgeted expenditure, not beyond it.

4.1 The Treasurer will be responsible for holding the chequebook (unused and partly used chequebooks) which should be kept under lock and key.

4.2 Blank cheques will NEVER be signed.

4.3 The relevant payee’s name will always be inserted on the cheque before signature and the cheque stub will always be properly completed.

4.4 No cheques will be signed without original documentation (see below).

4.5 Internet Purchases. When purchases are made over the internet the [name of your group] will ensure that only well know bonafide sites are used for purchasing and that they have appropriate security as illustrated by a locked padlock in the bottom right-hand side of the screen when a payment is being made.  The supplier’s star rating for customer satisfaction will be reviewed. Purchases will be properly authorised in a similar way to other purchases. Purchases will not be made from unknown private individuals over the internet.  Complex passwords (include lower case and upper case letters, numbers and symbols) will be used and a copy given to the [treasurer].

5. Electronic banking

{This assumes Unity Trust Bank or CAF bank, some other banks have dual electronic authorisation}

5.1 Each signatory and the banking administrator will have a unique password which will be made up of lower and upper case letters, numbers and symbols.

5.2 The [banking administrator: bookkeeper, volunteer, etc.] will be able to access the electronic banking system for the purposes of putting transactions onto the system for authorisation by the cheque signatories and for assessing bank statements.

5.3 The [banking administrator: bookkeeper, volunteer, etc.] will check that purchases have been properly authorised and when appropriate there is evidence that goods in good condition or proper services have been received.

5.4 The banking administrator will scan and e-mail invoices and evidence of authorisation to the cheque signatories.

5.5 The [banking administrator: bookkeeper, volunteer, etc.] will check and enter the supplier’s sort code, account number, and account name into the system and provide these by email to the cheque signatories.

5.6 The cheque signatories will check the payment details: sort code, account number, invoice and amount. If these are accurate the cheque signatory will authorise the payment.

5.7 Authorisation from two cheque signatories will be required for each payment.

5.8 Following authorisation, the cheque signatory will e-mail the administrator to confirm their authorisation.  This email will act as evidence for the Independent Examiner as to who authorised the payment.

5.9 The banking administrator may / may not also be a cheque signatory.

6.0 PayPal

6.1 [The treasurer] and the [chair] will each hold the login details and password for Paypal and will authorise payments from Paypal.  Details of payments and transfers in and out of the account will be e-mailed to the banking administrator immediately they have been made.

6.2 Two signatories will be required for credits from the charities bank account to Paypal or if a sweep system is in place it will be from a bank account that is ring-fenced from PayPal.

6.3 The balance in Paypal will not exceed [£1,000]. Appropriate transfers will be made to the [name of your group] bank account to ensure that this amount is not exceeded}.

6.4 The [name of your group] acknowledges that there are greater risks of fraud via PayPal than bank accounts and will ring-fence PayPal by having a separate bank account for sweeps into and out of PayPal that does not connect via sweeps to any other bank account held by [name of your group]

{Or: if it is agreed to open a PayPal account these controls will be revised prior to the opening of the PayPal account}.

7. Payment documentation

7.1 Every payment out of the [name of your group] bank accounts will be evidenced by an original invoice (never against a supplier’s statement or final demand). That original invoice will be retained by the [name of your group] and filed. The cheque signatory should ensure that it is referenced with:

  • Cheque number
  • Date cheque was drawn
  • Amount of cheque
  • Committee date and minute number of approval
  • Who signed the cheque

7.2 The only exceptions to cheques not being supported by an original invoice or screenshot of an electronic payment to a supplier would be for small payments to individuals. Here a cheque requisition form will be used and a photocopy of the cheque kept or a screenshot of the BACs payment.

8. Wages and Salaries

8.1 There will be a clear trail to show the authority and reason for EVERY such payment; e.g. a cheque requisition slip, asking for payment to an employee, the HMRC etc. All employees will be paid within the PAYE, National Insurance and pension regulations.

8.2 All staff appointments/departures (if any) will be authorised by the committee, minuting the dates and salary level. Similarly, all changes in hours and variable payments such as overtime, etc, will be authorised by the trustees.

9. Petty cash

9.1 Petty cash will always be maintained on the imprest system by a committee member who is entrusted with a float as agreed by the committee. [This may relate to one-off floats for events or a general petty cash float.] When the float is, more or less expended, a cheque for cash or BACs payment to the float holder or a BACs payment to the float holder, will be drawn for sufficient funds to bring up the float to the agreed sum. The cheque or BACs payment will be supported by a complete set of expenditure vouchers, totalling the amount required to top up the float to the amount agreed by the committee i.e. £100.  The vouchers will be analysed against the budget headings.

10. Expenses/allowances

10.1 The [name of your group] will, if asked, reimburse expenditure paid for personally by staff/volunteers, providing:

  • Fares are evidenced by tickets or if paid contactless a redacted bank statement
  • Other expenditure is evidenced by original receipts
  • Car mileage is based on local authority scales
  • A minute approving the expenditure
  • No cheque/BACs signatory signs for the payment of expenses to themselves
11. Cheque signatures and cash cards

11.1 Each cheque, BACs payment, standing order or direct debit will be signed by at least two people. {adjust if the bank does not allow for two electronic signatures for BACs (etc.) payments.  We recommend Unity Trust Bank which costs £90 a year or CAF bank (free) if the organisation is a registered charity}

11.2 A cheque, BACs or Direct Debit (etc.) must not be signed by the person to whom it is payable.

11.3 ATM hole in the wall type cash cards will not be used and if issued by the bank they will be immediately cut in half.

12.  Other undertakings

12.1 The [name of your group] does not accept liability for any financial commitment unless properly authorised. All orders placed, or undertakings given, must be authorised and minuted by the committee. In exceptional circumstances, such undertakings can be approved by three committee members by e-mail. Their approval will then provide full details to the next committee meeting.

{This clause does not protect you from legal action by a supplier.  If a supplier has reason to believe that a person purchasing something has the authority of the group to make the purchase, then each committee member is joint and severally liable for the amount.  For this reason, we recommend you become a Community Interest Company (CIC) or a Charity Incorporated Organisation (CIO). The CIO is more difficult to register}.

12.2 All fundraising and grant applications undertaken on behalf of [name of your group] will be done in the name of [name of your group] with the prior approval of the committee or in urgent situations the approval of three committee members by e-mail one of whom will provide full details to the next committee meeting.

12.3 The [name of your group] will adhere to good practice in relation to its finances.

12.4 When relevant the committee will set up and maintain a fixed-asset register stating the date of purchase, cost, serial numbers and normal location. Of physical assets like laptops. The [name of your group] will maintain a property record of items of significant value, with an appropriate record of their use.

12.5 The committee will review the need for insurance each year.

12.6 These controls will be reviewed at least every year and with committee approval revised if necessary. The committee will be shown the existing controls and the proposed revisions.

Date last reviewed:

———-

CASHFACTS Financial controls (campaign groups) is reviewed at the start of every financial year. It may be amended throughout the year. If you want to be informed of major updates subscribe to CASH eNEWS or follow/like us on Twitter and Facebook.

———-

Support our work

Make a donation

If you found this factsheet helpful please make a donation. Click the PayPal button and pay with your debit/credit card or by joining PayPal. You won’t be charged a transaction fee.

£2.50