Friends of Evington Financial Procedures Policy
|Status: Working document as the Trustees have no other document to guide financial decisions.|
|Approved By Trustees Yes|
|Equality Impact Assessment Completed No|
|Implementation Date May 2020|
|Planned Review Date
|Author Helen Pettman (Secretary of Friends of Evington)|
|Friends of Evington’s Treasurer (2020) is Paul Archdeacon
|Policy Validity Statement
This document will be reviewed one year from its issue date.
CONTENTS OF THIS POLICY
PAGE 1 Status of this policy
PAGE 2 Contents of this policy
PAGE 3, 4 and 5 Introduction including: Purpose of this policy, Vision, Objectives
Financial responsibilities, Reserves, Conflict of Interest, Segregation
Page 6 Exercising Budgetary Control and Monitoring
Page 7 Controls on Income
Page 8 Controls on Expenditure
Page 9 Procurement, Estimates and Tendering
Page 10, 11 and 12 Controls on the Financial assets, Record Keeping, Making payments
Credit and Debit cards, Cash Handling and procedures, Safety of
Volunteers, Petty Cash, Accounting, Records, Bank Reconciliations
Page 13, 14 and 15 (Part) Reimbursement of Expenses. Travel and Making Claims
Page 15 and 16 Controls on Physicla Assets. Fixed assets. Stock. Insurance.
Page 17 Investment and Borrowing
Page 18 Appendix A. Expenses Claim Form.
1.1 PURPOSE OF THIS POLICY
VISION: To inspire a healthy community in Evington through bringing environmental and educational projects to life, providing solutions that benefit local people and protect the planet.
TO PROMOTE FOR THE BENEFIT OF THE PUBLIC THE CONSERVATION PROTECTION AND IMPROVEMENT OF THE PHYSICAL AND NATURAL ENVIRONMENT IN THE EVINGTON SUBURB OF LEICESTER AND THE SURROUNDING AREA.
TO PROMOTE FOR THE BENEFIT OF THE INHABITANTS OF EVINGTON AND THE SURROUNDING AREA THE PROVISION OF FACILITIES FOR RECREATION OR OTHER LEISURE TIME OCCUPATION OF INDIVIDUALS WHO HAVE NEED OF SUCH FACILITIES BY REASON OF THEIR YOUTH, AGE, INFIRMITY OR DISABLEMENT, FINANCIAL HARDSHIP OR SOCIAL AND ECONOMIC CIRCUMSTANCES OR FOR THE PUBLIC AT LARGE IN THE INTERESTS OF SOCIAL WELFARE AND WITH THE OBJECT OF IMPROVING THE CONDITION OF LIFE OF THE SAID INHABITANTS.
Friends of Evington aims to keep £4,000 each year in the bank account in order to be able to manage cash flow.
Friends of Evington identifies core activities as the management of the Evington Echo and Evington in Bloom and through an Annual Plan will seek to finance these through income streams including membership payments, donations, fundraising, grants and loans.
Financial Year runs from: 1stJuly to 30thJune
Accounts will be drawn up after each financial year within 4 months of the end of the year. These will be presented, after independent examination to the Annual General Meeting, having previously been approved at a meeting of the Board of Trustees.
Friends of Evington is required to have an independent examination of accounts each year.
1.2 FINANCIAL RESPONSIBILITIES
The Board of Trustees is responsible for:
- approving Friends of Evington’s financial policies and key financial procedures
- establishing financial management priorities, responsibilities and levels of delegated authority
- approving properly budgeted annual plans
- monitoring performance against these plans and budgets, and approving budget variations above 10%
- approving the trustees annual report and accounts
- appointing the independent examiner and formal communications with them.
- risk management planning and implementation of risk management plans
The Treasurer is responsible for:
- preparing, and presenting for approval, properly budgeted annual plans, in collaboration with the other trustees or external advisors.
- ensuring that finance systems and processes which support these policies are set up, documented and implemented
- ensuring that sufficient records are maintained to show and explain Friends of Evington’s transactions, in order to disclose accurately, the financial position of Friends of Evington as required by the trustees and by members at the Annual General Meeting.
- managing the budgeting process for the annual plan
- presenting financial reports at each trustees’ meeting which give the Board of Trustees an understanding of Friends of Evington’s overall finances, and giving advice and information to support decision making
- liaising with the independent examiner to produce the statutory accounts.
Project Managers are:
- Designated trustees of Friends of Evington with key responsibilities for managing specific areas of core activity e.g. Evington Echo, Evington in Bloom or other projects identified in the Annual Plan.
- Responsible for submitting annual budget proposals or requests for extra- budgetary spending to the Treasurer for approval by the Board of Trustees.1.3 RESERVES
- 3 RESERVES
Reserves are that part of a charity’s unrestricted funds that is freely available to spend on any of the charity’s purposes. Friends of Evington maintains free unrestricted reserves:
- to provide a level of working capital that protects the continuity of our core work
- to provide a level of funding for unexpected opportunities
- to provide cover for risks such as unforeseen expenditure or unanticipated loss of income.
The Board of Trustees may designate funds from free reserves for significant project costs or replacement of major assets providing a proposal has been submitted and been agreed by a quorum of the Trustees.
1.4 CONFLICT OF INTEREST
Trustees have a legal duty to act in Friends of Evington’s best interests when making decisions, and to declare a conflict of interest immediately they are aware that there is a possibility that their personal or other business interests could influence their decision making. (See Conflict of Interest Policy).
1.5 SEGREGATION OF DUTIES
In order to reduce the risk of errors and fraud, the processes in finance will be designed such that no individual is in a position to oversee a transaction through all its stages from start to finish. The stages are as follows:
- Initiating/authorising transaction
- Custody of assets relating to transaction
- Recording transaction in accounting records
- Reconciling accounting records
For example, a person who requests a purchase cannot authorise it, pay for it and record it in the cashbook, without another Trustee being involved as a check and balance. This applies to all transactions whether carried out online or by cheque with the exception of petty cash purchases, where the limit is £150.
Nominated members of the Board of Trustees will draft a budget of expected income and expenditure for the year to present to the full board of trustees for discussion and approval annually.
The Treasurer will draw up the budget section following discussions with project managers. This section will include written explanations of the estimates and assumptions underlying the figures and identify potential risks.
If opportunities arise mid-year, the budget for those projects will be prepared by the relevant Project Managers in consultation with the Treasurer.
The Treasurer will produce regular reports which provide clear financial information to underpin decision making and support trustees to discharge their responsibilities.
Reports to each trustee meeting will include:
- comparison of income and expenditure to date against budget, and forecast income and expenditure to year-end against budget on a project by project basis
- explanations of any material variances from plan, and suggestions for corrective action where necessary
- cashflow forecast for the following 3 months
- funds held in the bank account (s) including any deposit account
The aim of this policy is to ensure that Friends of Evington receives the full amount of income due to us at the right time.
3.1 DUE DILIGENCE ON ACCEPTING FUNDS
Friends of Evington must exercise due diligence prior to accepting significant donations and ensure that any funds accepted:
- fulfil our mission
- are not in conflict with our values
- do not present a risk to our reputation or independence.
To inform decisions, Friends of Evington will evaluate the profile of the funder or donor, taking into consideration the original sources of their funding, the purpose of the funds and whether any conditions attached are reasonable, ethical and achievable.
3.2 INVOICING AND DEBT CONTROL
In order that Friends of Evington’s Board of Trustees is aware of what income is due, all members who are responsible for contracts, grants, or other activities that generate income should inform Treasurer of the details promptly.
If payers are late settling invoices, the project trustee will inform the Treasurer.
If this request is not met, the matter shall be raised with the Board of Trustees by email or at the next meeting of the Board of Trustees, who will then agree a course of action.
The aim of this policy is to ensure that expenditure is only incurred where it is:
- in pursuance of Friends of Evington’s charitable purposes
- an effective use of Friends of Evington’s resources
- in compliance with any requirements relating to funding.
Members need to be aware that Friends of Evington is committed to expenditure when an order is placed, or contract is signed, not when the payment is made, so it is vital that orders are made responsibly, and within the approved budget and authority levels.
Any spending beyond the budget must be authorised in accordance with the delegated authorities.
4.1 EXTRA BUDGETARY SPENDING APPROVAL
Where an item or service needs to be purchased to fulfil the core activities of the organisation but has not been identified in the budget, the following limits will apply:
|Spending limit||Approval Required|
|Cash payments under £150||Management via the Petty Cash policy.|
|Up to £499 online or by cheque||Approval of two signatories|
|£500+ online or by cheque and all other cash payments||Quorum of Trustee Board Approval required (in person or electronically)|
4.2 PROCUREMENT, ESTIMATES AND TENDERING
In order to ensure value for money for significant purchases, research should be carried out on the goods or services in question and a relevant specification drawn up. Written quotes should then be obtained, or the contract put out for tender, dependent on value.
Where two or three written quotes are specified, but a specialist item or service is required for which it is not possible to obtain more than one quote within a reasonable amount of time, a business case must be made and signed off by the Treasurer.
- Agree specification for the service or product and the requirements of the supplier including quality issues
- Advertise as widely as possible through local networks and contacts, place opportunity on Friends of Evington web site, allowing a minimum of three weeks for responses
- Ensure the advertisement gives clear information about how to apply
- Send out the specification to interested parties with full information of how to submit a tender
4.3 GRANT-MAKING BY FRIENDS OF EVINGTON
Friends of Evington has the power to distribute grants to local organisations whose aims, objectives and projects align with our core activities.
- Grant applications shall be made in writing on a standard application form.
- All grant awards shall be subject to approval by the Board of Trustees, who will also agree the grant criteria including but not limited to payment terms, requirements for submission of receipts of spend and requirements for production of an evaluation report to be submitted to the Board at the end of the funded project.
Our policies and procedures are set up to ensure that it is safeguarded and only used for genuine expenditure.
5.1 BANK ACCOUNT(S)
- Bank accounts in Friends of Evington’s name must only be used for Friends of Evington business, they must not be used to receive or transfer money for the private benefit of individuals or third parties.
- The opening or closing of bank accounts, and the approval/removal of signatories on bank accounts is determined by the Board of Trustees and recorded in the minutes.
- Friends of Evington currently banks with the Co-operative Bank. This is an ethical bank. When opening new accounts the ethical policy of any alternative provider will be one of the criteria considered when choosing a new bank.
- Cheques, online payments, standing orders, direct debits and other withdrawals from bank accounts are authorised by two signatories.
- The Treasurer is responsible for keeping records of all bank accounts and ensuring that the bank mandate is kept up to date.
5.2 BANK ACCOUNT PROCEDURES
- No person can authorise any payment involving themselves or any related party.
- The use of multiple payments to circumvent the authorised signing limits is not allowed.
- No blank cheques shall be pre-signed.
5.3 CREDIT AND DEBIT CARDS
- Friends of Evington will issue credit or debit cards where there is an operational requirement.
- These cards will only be used by the named cardholder for the purchase of goods or services on behalf of Friends of Evington.
- The cardholder will be responsible for ensuring that the card is kept in a safe place at all times, and that the PIN is protected.
- Claims for the purchase of any items that do not comply with Friends of Evington’s expenditure policies will be rejected and the cardholder will reimburse Friends of Evington for such expenditure.
Cash is the asset most obviously at risk of misappropriation and fraud. In order to ensure the security of our cash and the protection of our staff, our procedures are set up with the following criteria:
- Cash received is paid into the bank as soon as possible.
- The use of cash for payments is kept to a minimum and is properly controlled.
- All cash is securely locked up.
- No payments are made directly out of cash received.
5.5 CASH HANDLING PROCEDURES
Income through the post
- Post will be directed to the registered address.
- The Treasurer will be notified as soon as possible that income has been received by post including the amount, source and project reference of the income.
- The cash/cheques must be banked at the earliest opportunity.
Income in Person
- Any cash/cheques received in person must be notified to the Treasurer at the earliest opportunity.
- The cash/cheques must be banked at the earliest opportunity.
- If there is no other documentation a receipt/acknowledgement will be given to the personwhodeliveredthecash, detailing the amount and purpose of the income. Acopyofthereceiptshouldbe kept.
5.6 SAFETY OF VOLUNTEERS (TRUSTEES AND MEMBERS)
When banking or collecting cash, the safety of staff is paramount. Staff and volunteers should on no account put themselves into situations of danger and should give up/not seek to recover cash or valuables if in physical danger.
5.7 PETTY CASH
Petty cash will be used to pay for small expenses up to £150 where payments through other means are not practical or appropriate.
5.8 ACCOUNTING RECORDS
Friends of Evington will keep accounting records which are sufficient to explain all transactions and show the charity’s financial position at any time. These will include:
- Evington Echo’s spreadsheet showing creditors and debtors
- Bank statements with downloaded on line bank transactions
- Grant files
All accounts files will be kept for the statutory period of six years from the end of the accounting period in which they were generated.
5.9 BANK RECONCILIATIONS
Reconciling the entries in the spreadsheets and receipt books to the bank statements is a central financial control. Bank reconciliations will be carried out promptly after receiving each bank statement and will be recorded on a Sage programme by the Treasurer.
The Treasurer will check online statements and carry out reconciliations twice a year.
Friends of Evington wants to ensure that trustees and volunteers are not out-of-pocket for the work they do for us, while also looking to get the best use of limited funds.
HM Revenue and Customs expenses and benefits rules recognise that reimbursement of standard business expenses (such as travel) are not taxable. Friends of Evington’s policy is guided by these rules and we do not pay expenses that will give rise to tax or National Insurance.
6.1 GENERAL RULES
- Expenditure incurred by trustees or volunteers of Friends of Evington should be necessary to achieve our objectives and represent good value to the organisations that fund us.
- Each person is responsible for familiarising themselves with these rules and understanding the limits of their authority, as Friends of Evington may not reimburse any expenses considered unreasonable or outside this guidance.
- All expenses should be itemised, with supporting receipts attached on Friends of Evington’s claim form
- Friends of Evington may decline to reimburse an expense claimed with no supporting receipt.
6.2 PUBLIC TRANSPORT FARE
Expenses associated with public transport such as trains and buses
Persons making a claim are expected to make use of any special reduced fare arrangements, such as cheap day and period returns, where possible.
6.3 USE OF PERSONAL VEHICLES AND TAXIS
Trustees may use their own vehicles for Friends of Evington/Evington Echo/Evington in Bloom travel if they wish, at their own risk. Where practicable, volunteers should travel together to inimise costs. Any volunteers using his or her vehicle for Friends of Evington purposes must have a full UK driving licence and the behicle must have an in date MOT certificate and be a fully taxed vehicle. A mileage allowance may be claimed by trustees and authorised volunteers using their own behicle for agree Frield of Evington work associated with the distribution of the Evington Echo and environmental projects agreed by the Board of Trustees. Current mileage allowance rates are as follows:
|Car or van||25p per mile|
|Motorcycle||24p per mile|
|Bicycle||20p per mile|
|Passenger on travel (car or van only)||25p per mile paid to driver|
Parking fees, congestion charges and toll charges will be met by Friends of Evington, but not parking fines.
The cost of travel by taxi will be reimbursed in the following circumstances:
- There is no reasonable or practical alternative to getting to the destination.
- A heavy load is being transported, which would be unreasonable to carry on public transport.
- The individual has a disability such that public transport is not appropriate.
The reason why the volunteer member has chosen to travel by taxi must be described in the expenses claim form, and a receipt provided showing the date, place of departure and destination.
6.4 MAKING CLAIMS
- All claims for travel and other expenses from trustees and member volunteers must be completed on the appropriate form. he individual has a disability such that public transport is not appropriate.
- Claims by trustees should be authorised by the Treasurer.
- Claims should be submitted bimonthly or, may be submitted more frequently if the total claim has reached over £20.
- CONTROLS ON PHYSICAL ASSETS
Friends of Evington’s have depreciating physical assets. All volunteers are expected to behave responsibly in using them in order to protect these resources and make them last.
7.1 FIXED ASSETS
Fixed assets are items, for example office equipment, computers or vehicles, owned by Friends of Evington for use in our work (not as an investment), which have a life of more than 12 months and have not been annually depreciated to a value of £0. The acquisition value also needs to be over £200.
The trustee responsible for maintaining a fixed asset register details:
- A description of the asset (including identifier as appropriate)
- Date of acquisition (purchase or donation to Friends of Evington)
- Annual estimate of the value of the acquisition.
The register will be updated immediately when new purchases or disposals are made.
The Treasurer is responsible for ensuring that fixed asset inspections are carried out every year to check that the assets exist , and are being used effectively.
The disposal or scrapping of a fixed asset must be authorised by the treasurer.
Where projects close, assets will be redeployed. Where there are specific funder rules regarding treatment of project assets, these will be compiled with (eg handing the assets back to the funder).
Documents relating to the ownership of any fixed assets will be held securely by the Secretary.
For the purposes of depreciation, the anticipated useful life of Friends of Evington’s assets are as follows:
|Type of fixed asset||Anticipated useful life|
|Computer equipment||3 – 5 years for Apple macs.|
|Office equipment||5 years|
The trustees are responsible for appointing a volunteer for a stock count every year (for low cost items) and comparing the physical stock to the stock records. The types of stock that will be counted and valued will be goods for resale, raw materials, work in progress.
Stock will be valued at the lower of cost and net realisable value (sales value minus the costs associated with the sales).
Friends o Evington maintains appropriate insurance cover at all times, both to cover our legal obligation and to underpin our duty to protect trustees, volunteers, assets and resources. This will include:
- Employers liability insurance to cover member volunteers description of the asset (including identifier as appropriate.
- Public liability insurance
- Buildings and contents insurance if the value is above £2,000
Friends of Evington reviews its financial policies annually and the secretary of Friends o Evington is responsible for providing its insurer with a detailed and accurate schedule of activities and inclusions to be covered.
The trustees are responsible for ensuring all insurance policies are current and appropriate documentation maintained.
- INVESTMENT AND BORROWING
There are powers in the constitution to allow loans and investments.
8.1 INVESTMENT MANAGEMENT
In order to invest and borrow money the following need to be taken into account:
Background, Investment powers and decision making, Investment objective, Risk, Cash flow requirements, Time horizon, Ethical policy, Management, reporting and monitoring, Approval and review.
Other than pre-approved credit cards, any borrowing must be approved by the Board of Trustees, and in accordance with Friends of Evington’s constitution, delegated authorities and rules on procurement.
Friends of Evington’s ability to pay back both the loan and the interest must be determined before entering into any borrowing.
The impact on Friends of Evington of any security required or bank covenants attached to a loan must be considered before entering into any borrowing.
Any loans taken out for cash flow purposed will be restricted to short term borrowings of six months or less and must not exceed £10.000.
Where loans are advanced by an individual, including trustees, the Board of Trustees must be satisfied that this represents value for money. The loan must be properly documented setting out the principal, interest, charges and payment schedule. Any conflicts of interest must be noted and managed in accordance with Friends of Evington’s policy.
Records of all outstanding loans will be kept, noting:
- The history of repayments of principal and interest and the outstanding balance
- If the loan is secured or subject to bank covenants, the terms of the security or bank covenant will be logged on the fixed asset register.
If you’d like to be paid by BACS, please complete your bank details below.
|Name on account|
|Date of expense||Details||Amount||Receipt attached or explanation if no receipt|
I confirm that this claim is accurate and that the above expenses have been incurred by me in the performance of my duties for Friends of Evington
Friends of Evington will meet all reasonable expenses incurred by claimants in carrying out their duties. Please give brief details of what work each expense relates to, giving details of all journeys and attach corresponding receipts. Expenses claimed without receipts may be declined. Your assistance in keeping Friends of Evington’s costs as low as possible is greatly appreciated.