Good Practice Guide
No 2
Financial Procedures
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GPG No 2: Financial Procedures
Introduction
These money rules/financial procedures have been written for small to
medium-sized voluntary sector organisations. It is recommended that the
Management Committee or Finance Sub-Group discusses the rules and
inserts details on the dotted lines. Copies should then be circulated to all
Management Committee members before approval at a full committee
meeting. It is advisable to attach a copy of the rules, once approved, to the
back of the constitution.
Please refer to these notes before filling in the blanks on the following
pages, delete any sections which are not applicable but remember that
organisations grow and you may require these sections in the future.
Top of Page 1. Write in your organisation’s full name.
Superscript notes:
(1)
This should be the date of the meeting when the rules were adopted.
(2)
Most organisations have a financial year that ends on 31st March but you
can have a year-end date at the end of any month appropriate to your
organisation. If you are a limited company this will be decided by the date
of incorporation unless you have asked to change this date.
(3)
If the organisation is a charity or company, accounts must be sent to the
Charity Commission/Companies House within a number of months of the
end of the financial year (9 months for Companies House, 10 months for
the Charity Commission) so an appropriate figure might be 7 months.
(4)
Insert every one, two or three months depending on when your committee
meetings are held.
(5)
Insert the bank’s name, the branch name, the name used on the accounts
and the type of accounts, eg current account, deposit account. If further
accounts are held a new clause will need adding and subsequent clauses
will need renumbering.
(6)
Insert an amount which is reasonable for the size of organisation and
number of cheques / cash received. Eg £100 for a small organisation,
£500 medium organisation.
(7)
Insert here the person responsible for writing the cheques which may be
the treasurer / finance worker / manager - insert the role.
(8)
Insert an amount which enables the organisation to function adequately
but not be so much that if it was stolen would be detrimental to the
organisation. Insert an appropriate figure, usually no more than £200
(make sure this is covered by insurance).
(9)
Insert here the person responsible for paying out petty cash which may be
the treasurer / finance worker / manager - insert the role.
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GPG No 2: Financial Procedures
(10)
The person who looks after the petty cash should ideally do this on a
monthly basis to ensure that the petty cash records are correct and any
errors quickly identified and corrected.
(11)
Insert the person responsible for authorising payment of the expense claim
so may need to be amended to accommodate a number of different
people depending on the size of the organisation.
(12)
Insert the person responsible for passing the information for calculation of
salaries to the relevant person / organisation (insert name) responsible for
calculating salaries.
(13)
To ensure sound financial management accounts should be reviewed
ideally monthly or quarterly. – insert the timescale.
(14)
Insert the person and the value they can authorise up to without the
request being submitted to the management committee for approval.
(15)
Enter the period for review of these items.
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GPG No 2: Financial Procedures
FINANCIAL PROCEDURES
(ORGANISATION NAME)
Approved by the Management Committee on (Date) .................................
(1)
1. General Rules
Financial records will be kept so that the Management Committee can:



meet their legal obligations, e.g. Charities Act, Companies Act
monitor and plan the finances of the organisation
meet the contractual obligations and requirements of funders
The Management Committee should ensure that the organisation keeps
proper books of account, which will include (where appropriate):




a cash book/computerised accounts, analysing all the transactions
from and to the organisation’s bank account(s), and showing
transactions on restricted funds
an asset register
a petty cash book
Inland Revenue deduction sheets P11.
The financial year will end on ……………………………….. (2)
Accounts will be drawn up after each financial year within …………… (3)
months of the end of the year. These will be presented, after audit or
independent examination (if required by law, funders or the constitution/
memorandum and articles of association), to the Annual General Meeting
having been previously approved at a meeting of the Management Committee
/ Trustees.
Before the start of each financial year the Management Committee will
discuss and approve a properly costed budget for the following year.
A report comparing actual income and expenditure with the budget will be
presented to the Management Committee / Trustees at their meetings held
every ……………. (4) months.
The AGM will appoint an appropriately qualified auditor/independent examiner
to audit/independently examine the accounts if required by law, by the
constitution / memorandum and articles or a funder.
2. Money Control
Cash is one of (Organisation name)’s main assets, appropriate procedures
should be followed to ensure that it is safeguarded and only used for genuine
expenditure.
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GPG No 2: Financial Procedures
2.1 Bank Accounts
The organisation will bank with ………………………………. where the
accounts will be in the name of (Organisation name). The following accounts
will be maintained:
(1) ……………………………………………………………
(2) …………………………………………………………… (5)
No other accounts will be held at any other bank or financial institution unless
approved and minuted by the Management Committee / trustees.
A bank mandate should be in operation to regulate the following: opening /
closing / amending bank account details or cheque signatories (it is important
to delete signatories that are no longer required) and for the approval of
standing orders / direct debits.
Amendments to the mandate can only be made with the approval of the
Management Committee or the Chair of the Management Committee. A copy
of the mandate should be kept in the Bank Account file.
2.2 Cash / Cheque Receipts
Care should be taken to ensure that once funds are received into the control
of the organisation, their continued security is maintained.
Money received should be deposited at the bank at least weekly, or if current
holding exceeds £……………. (6) A duplicated receipt should be given for all
cash income. No money should be held back to “feed” petty cash.
All cash and cheques received by post should be listed as soon as they
arrive.
The paying in book should be completed accurately, and the detail of the
individual items deposited as part of the totals should be filled in on the
counterfoil or banking sheet.
Monies not deposited should be kept in a secure place (the office safe) until
deposited.
If a large amount of cash income is received, e.g. from a fund-raising event
two people should count it and sign a sheet confirming the amount.
All documentation (e.g. the terms and conditions of a grant) relating to income
should be kept and filed.
2.3 Payment by cheque
Money will only be spent to meet the conditions and requirements of the
funders within the objectives of the constitution.
Cheque books should be stored in a secure place, and ……………………….
(7) will be responsible for holding the cheque books (both unused and partly
used cheque books) .
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GPG No 2: Financial Procedures
Cheques should be used sequentially, and wherever possible one cheque
book used at a time.
Before a cheque is written it should be ensured that sufficient funds are
available to cover the amount of the cheque.
Cheques should not be signed unless all relevant details on the cheque have
been completed. Before signature, it should be ensured that the cheque
details are in accordance with the invoices that have been provided with the
prepared cheque.
All cheques should be signed by two authorised signatories. Blank cheques
should NEVER be signed. A cheque must not be signed by the person to
whom it is payable.
2.4 Electronic payments
Payments made directly from the bank account include direct debits, standing
orders, switch payments, cashpoint withdrawals and BACS payments.
No one person should be able to authorise / set up such payments
Delete as appropriate:
1) The bank mandate allows two individuals to electronically authorise
payments and set up standing orders / direct debits. The individuals
must be two of those named on the bank mandate.
2) The organisation may hold a pre-loaded cash card (Alto card). This
limits the expenditure to the amount pre-loaded to that card.
3) Electronic payments made on an individual’s credit card will be
processed promptly, in order that the funds are there to pay the credit
card bill after processing.
The organisation will not hold a single PIN cashpoint card which is linked
directly to the current account.
3. Bank Reconciliation
As a primary means of financial control, a bank reconciliation should be
produced on receipt of each bank statement. The bank statement should be
initialled and dated when reconciled.
4. Petty Cash Control
The petty cash float should be kept in a secure place, and access limited to
designated staff members.
4.1 Payments by Cash
All cash payments should be from a cash float (preferably on the Imprest
System) which is replenished from the bank account and not by the retention
of incoming money. The cash float will never exceed £ ……………………….
(8)
_________________ (9) will be responsible for holding the petty cash tin key
and for paying petty cash against a properly authorised petty cash voucher
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GPG No 2: Financial Procedures
with receipt attached. If a round sum is taken from petty cash to cover
expenditure an IOU showing the purpose, amount, date and recipient should
be signed and placed in the petty cash box. This should be replaced with a
petty cash voucher once the expenditure has taken place.
All payment and topping up of petty cash will be recorded in the petty cash
book.
The cash float will be counted and agreed to the cashbook on a
……………….. (10) basis by …………………………….(10) and on the last day
of the financial year by the Treasurer.
No personal advances will be made.
4.2 Expense Claims
Expenses incurred by all members of staff, consultants, volunteers and
members of the Management Committee must be genuinely incurred in the
performance of (Organisation name) duties. Expenses should not be rounded
up. Expense forms should be completed and should be submitted with all
relevant receipts / invoices.
All expense forms should be submitted to ……………………………. (11) for
review and approval. The forms should be signed as evidence of this review.
The completed and approved forms shall be paid and placed in the accounts
file.
4.3 Wages and Salaries
Personnel records will be kept for each member of staff and these should be
kept separately from the pay records.
Staff appointments/departures will be authorised by the Management
Committee, stating the start / finish dates and salary level. Similarly all
changes in paid hours and payments, such as overtime, will be authorised by
the Management Committee.
………………………………………. (12) is responsible for ensuring that all
relevant information is passed to ……………………………… (12) to enable the
correct calculation of salaries.
All members of staff will be employed under a proper contract of employment
and compliance with PAYE/NIC regulations ensured. If a new employee does
not have a P45 the organisation will issue them with a P46 which must be
filled in and signed by the employee.
5. Review of Accounts
Statutory annual accounts will be reviewed and approved by the Management
Committee prior to the Annual General Meeting.
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GPG No 2: Financial Procedures
The Management Committee will review management accounts on a
…………………………. (13) basis.
6. Capital Expenditure
When an asset (land, buildings, equipment etc) is acquired, its details will be
entered onto the fixed asset register, this will include cost, age of asset, name
and address of supplier, serial numbers, details of guarantees and it’s
estimated length of useful life noted in order to ascertain depreciation rates.
Assets should be checked regularly and adequate insurance cover taken out.
7. Authorisation Limits
…………………………. (14) is authorised to place orders or commit to
contracts and sign cheque requisition slips up to £………………. Any order
for items or services exceeding this amount should be authorised and minuted
by the Management Committee.
8. Other Rules
Once a year the Management Committee will consider the level of reserves
that it is prudent for the organisation to hold. Consideration will be given to
redundancy liabilities, lease agreements and any other significant factors that
should be taken into account if the organisation were to close.
The treasurer will be responsible for taking out appropriate insurance. The
Management Committee will review all insurance cover at its …………(15)
meeting every year.
These procedures will be reviewed at the ………………….
year/two years.
(15)
meeting every
WYCAS Advice Line: 0113 270 6269
Website: www.wycas.org.uk
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