Financial Policy and Procedures

Contents

1 Introduction

2 General

3 Accounting

4 Audit

5 Authorisation

6 Bank Accounts and Administration of Accounts

7 Budget Setting and Budgetary control

8 Expenses and Petty Cash

9 Insurance and Fixed Assets

10 Reserves

11 Funding management

Appendix 1: Roles and Responsibilities

Appendix 2: Purchase Order System
Appendix 3: Staff Expenses

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1 Introduction

1.1 Organisation Name is a Insert Legal Structure (without share capital).

1.2 Organisation Name has developed these procedures in order to comply with
the legal requirements of the Companies Act.

1.3 Responsibility for and monitoring of finances fall within the following
structures/posts of the organisation and are reflected within job descriptions
and terms of reference
(see appendix1)

Board of Trustees
Resources Sub-Committee
Chief Executive
Resources Manager
Finance & Membership Administrator

1.4 The company auditors are:

Insert Details

1.5 All paid and unpaid volunteers with the organisation as well as the Board of
Trustees are required to follow these procedures.

1.6 The Board of Trustees and Resources Sub-committee meet regularly and
consider financial items at these meetings.

1.7 These procedures will be updated as and when necessary to reflect any
changes to the legal governance or structure of the organisation.

1.8 Abbreviations will be used throughout these procedures as follows:

Trustees Board of Trustees

1.9 Organisation Name believes that full and effective financial procedures are
necessary in order to promote efficient operation and in order to protect its
staff in their handling of the organisations finances and assets.

1.10 The Trustees may carry out spot checks on all areas of the financial system
at least annually in order to see that procedures are being followed.

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1.11 The Chief Executive is also the Company Secretary.

1.12 The Chief Executive and Resources Manager offer information to the
Trustees on all financial matters as well as being responsible for all financial
reporting.

1.13 The Board should nominate one of its members as a Treasurer to support the
work of the Resources sub-committee and the Resources Manager. They
should provide an overview on financial policy and procedures and be
acquainted with the financial systems in operation.

1.14 Quarterly meetings of the Resources Sub-Committee will be held to include

the Treasurer, one member of the Board of Trustees, the Chief Executive and
the Resources Manager.
(See appendix 1)

1.15 The Chief Executive is responsible for arranging all cover of financial
functions within these procedures if the named post-holder is absent.

1.16 The companys financial year will run from 1 April to 31 March.

2 General

2.1 The Trustees are legally responsible for ensuring that the organisation is
adequately resourced and that financial procedures and controls are effective
and in place.

2.2 The Resources Committee are responsible for approving the organisations
financial procedures and policies and for ensuring that these are followed in
all aspects of the companys work.

2.3 The day-to-day operation of the financial procedures is carried out by the paid
staff of the organisation and is the responsibility of the Chief Executive.

2.4 The Resources Manager is responsible for performing the majority of tasks
that constitute the finance function within the organisation in consultation with
the Chief Executive.

2.5 External monitoring of these procedures is carried out by the appointed

company auditors and there may also be further monitoring by funders.

2.6 Any issues or proposed changes arising from the monitoring and
implementation of the approved financial procedures or from asset

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 management, financial planning, reporting and resourcing are reported
through the organisational structure to the Board of Trustees for
consideration. The Chief Executive makes recommendations to the Board.

2.7 The responsibility for ensuring that the accounting records are in good order
and for submitting them for audit in line with existing statutory regulations lies
with the Insert Job Title who is also responsible for balancing the accounting
records, including bank accounts, and reconciling the control accounts.

2.8 All accounting records, vouchers and any related documentation, including
computer data disks and software are kept for a minimum of 7 years. In the
case of certain restricted funds such as EC funds, it is a condition of receipt
of funds to retain documents for a minimum of 3 years, and may be further
interpreted by agencies as a requirement to, keep all source
documentation for the project together with working papers which show how
the claim was compiled until notified that it is safe to destroy them.

3 Accounting

3.1 The Insert Job Title is responsible for the establishing and monitoring of all
accounting records. Any major changes to existing systems must be reported
to the Chief Executive and the Board of Trustees.

3.2 Any member of the Board of Trustees has the right to inspect the financial
records at any time.

3.3 The day-to-day maintenance of accounting records is carried out by the

Insert Job Title.

3.4 The Insert Job Title prepares the monthly bank reconciliation and the
records of account each month. Printed reconciliation report and bank
statements are to be presented to the Resources Sub-Committee after
reconciliation for checking.

3.5 The Insert Job Title is responsible for setting overall priorities of finance
work within the organisation and managing day-to-day financial priorities.
These are agreed by the Chief Executive and by the Board of Trustees within
the overall work plan and priorities of the organisation.

3.6 Management accounts are prepared quarterly by the Insert Job Title are
submitted to the Chief Executive and the Resources Sub-Committee.

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3.7 Any exceptional items of expenditure and any large adverse variances to the
organisations operating budget are to be reported by the Insert Job Title to
the Chief Executive, Treasurer and Chair of the Board between regular Board
meetings.

3.8 The overall responsibility for all project budgets rests with the Chief
Executive. The Insert Job Title is responsible for preparing budget reports
on all projects. Project workers are responsible for cost control of direct costs
within individual projects.

3.9 The Insert Job Title is responsible for all cash management functions.

3.10 It is the responsibility of the Chief Executive to provide information regarding

new funding contracts with details of specific funding arrangements to the
Insert Job Title.

4 Audit

4.1 The Board of Trustees is responsible for appointing the auditors initially at a
Board meeting and then re-appointing at the AGM of the company.

4.2 The auditors report to the Board annually on the following:

The appropriateness, adequacy and application of internal controls.
The extent to which the organisations assets and interests are accounted
for and safeguarded from losses of all kinds arising from fraud and other
causes.
The suitability and reliability of financial information and reporting.

4.3 The auditors have access to all financial records and to any other
documentation needed in their on-site visit or requested otherwise.

4.4 The auditors have a professional obligation under Auditing Standards to

report any case of financial irregularity or any case of fraud within the
organisation to the Board of Trustees. They have to ensure that the Trustees
take appropriate steps to deal with the reported irregularities and fraud. As a
last resort, if appropriate steps are not taken by the Trustees then the
auditors will report to Companies House.

4.5 Liaison between the auditors and Organisation Name is the responsibility of
the Insert Job Title.

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4.6 An audit timetable is agreed each year by the auditors and the Insert Job
Title to meet legal requirements for the submission of annual accounts to
Companies House and to meet the requirements of some funders.

4.7 Audited accounts are produced and approved by the Trustees and auditors
every year to cover the previous year.

4.8 As part of the annual audit, the auditors produce a management letter
containing recommendations to improve financial systems as well as to
highlight areas of concern or of note. This letter is considered by the Board of
Trustees and a written response is made to the auditors.

4.9 The auditors may also provide on-going advice and interim audits at the
request of the Chief Executive or the Board of Trustees.

4.10 Organisation Name may also be subject to audit or investigation of other

financial matters by external funders and during such an event Trustees will
have full access to the financial and other records of the organisation.

4.11 Whenever any matter arises which involves, or is thought to involve,

irregularities concerning cash or other property belonging to the organisation
or any suspected irregularity in the exercise of any aspect of the financial
function, it is a requirement that the person making the discovery reports the
details immediately to the Chief Executive. If the matter is thought to relate to
the Chief Executive or any member of the Board of Trustees, then a report
must be made to the Chair of the Board.

5 Authorisation

5.1 The Board of Trustees delegates to the Chief Executive the power to
authorise all orders for work, goods and services within the approved
business plan.

5.2 The procurement procedures adopted by Organisation Name are as follows:

Values up to 500 Obtain single oral quote and confirm it in writing
Values between 501 and 2,500 Minimum of three oral quotes, to be
confirmed in writing.
Values between 2,501 and 15,000 Minimum of three written quotes,
based on a clear written specification or requirement.
Values between 15,001 and 50,000 Minimum of three formal
competitive tenders invited.

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5.3 All orders made to suppliers must be accompanied by a purchase order
number.

5.4 All staff must use the current purchase order system.
(see Appendix 2)

5.5 Wherever possible quotes should be obtained from existing social enterprise
businesses.

5.6 Project workers are responsible for cost control on direct project costs in their
respective areas of work under the supervision of their line manager or with
the support of the Insert Job Title.

5.7 On receipt of invoices into the Organisation Name offices, they should be
date stamped, entered into the post log. It is then responsibility of the staff to
approve the expenditure against their orders and sign off the approval sheet.

5.8 Once the invoice is approved it is then to be authorised by either the Insert
Job Title or Chief Executive (or in their absence by a member of the staff
based Management Team).

5.9 On approval and authorisation it is the responsibility of the Finance &

Membership Administrator to entre details on to the accounting software.

5.10 It is the responsibility of the person(s) authorising an order to ensure that the
value of the order is within the limits of the approved budget for that item.
Any item that exceeds the budget or is extra-budgetary must be referred to
the Chief Executive.

5.11 Cheque or BACS payment should always be offered to suppliers for goods.
(No petty cash is held at Organisation Name).

5.12 Cheques require two signatures, and those signatures should also appear on
a remittance slip which is then retained with the Approval Sheet and original
invoices.

5.13 The Insert Job Title must be notified of any change to the authorisation
procedures.

5.14 In the case of salaries and payroll benefits all establishment of or removal of
personnel to/from the payroll must be recorded in writing and passed to the
Insert Job Title.

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5.15 All new salaries or changes to current salaries must be approved by the
Board of Trustees.

5.16 The Insert Job Title is responsible for ensuring that all salaries are paid in
accordance policies and procedures. All monthly payroll reports are to be
checked and authorised and then taken to the Insert Job Title.

5.17 The regular date on which monthly salaries will be credited to employees
bank accounts will be the Insert Date of each month or the nearest preceding
working day if it falls on a weekend or bank holiday. In December and
January, salaries will be paid on Insert Date of each month.

5.18 Staff loans or advances are not issued.

6 Bank Accounts and Administration of Accounts

6.1 The Organisation Name bankers are:

Insert Name

6.2 Cheque Signatories

In order to operate day-to-day matters, there should be two cheque

signatories on the current account from anyone on either List A or List B.

List A List B
Chief Executive Chair
Senior Staff Member Treasurer
Member of the Board of Trustees

6.3 Transfers between bank accounts should be made on the authority of one of
the signatories or the Insert Job Title.

6.4 New bank accounts should only be opened with the authority of the Board of
Trustees with a minute of the Board meeting as evidence. Signatories should
be agreed in line with the above policy.

6.5 Cheque books and printable cheques are kept in a secure cabinet along with
contracts and other confidential documents. All cheques are crossed and
printed with payee only.

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6.6 Any changes to the panel of signatories must be approved by the Board of
Trustees and the appropriate bank mandate form signed.

6.7 All bank accounts have an official title and no account is ever opened in the
name of an individual.

6.8 Bank account statements are received weekly and are reconciled to the cash
book on a monthly basis by the Insert Job Title.

6.9 The Insert Job Title has delegated authority to liaise with the banks on all
matters related to the financial affairs of the organisation, and to review the
bank accounts regularly.

6.10 A company credit card is held with the bank in the name of Organisation
Name, the Chief Executive has authority to use the card.

6.11 There is a limit of 2,000 worth of transactions on the credit card.

6.12 The credit card will be paid by direct debit on a monthly basis. Statements
will be reconciled monthly by the Resources Manager.

7 Budget setting and budgetary control

7.1 It is the responsibility of the Chief Executive to decide the overall budget that
is to be presented to the Board of Trustees. Responsibility for producing the
budget in line with the timetable agreed by the Board of Trustees lies with the
Resources Manager and Chief Executive.

7.2 There may be some viring between budget headings during the financial year
with the agreement of both the Chief Executive and the Insert Job Title.

7.3 The Chief Executive must bring requests for additional extra-budgetary or
exceptional items of expenditure during the year to the Insert Job Title at
timetabled meetings. In the case of urgent requests for new expenditure,
approval can be given via Chairs action at the specific request of the Chief
Executive. Such action must then be reported to the next meeting of the
Board of Trustees.

7.4 Budget reports showing variances and any exceptional items of expenditure
should be presented to the Board on a quarterly basis by the Insert Job
Title.

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8 Expenses

8.1 Staff expenses are reimbursed through the expenses system. To claim
expenses, staff must complete an Expenses Claim Form. The claim must be
supported by the relevant documentation and properly authorised (See
appendix 3).

8.2 Travel and subsistence claims will be settled on a monthly basis in arrears.
Any large additional business expense which may result in a member of staff
being significantly out of pocket may be reimbursed before the month end
(eg, hotel bills, train fares etc).

8.3 Payments of expenses will be made by cheque or telepay.

8.4 The same person is not permitted to both claim and authorise payments.

8.5 Expenses can also be claimed by the following:

Volunteers/activists
Board of Trustees members
Job applicants attending for interview

An expense form with supporting documentation must be presented in all

cases.

9 Insurance and Fixed Assets

9.1 The Chief Executive is responsible for ensuring that the assets of the
organisation are properly recorded and secured and that all the assets,
activities and members of the organisation are adequately ensured.

9.2 The Board of Trustees and Insert Job Title should arrange and review
annually all insurance policies.

9.3 Organisation Name currently insures:

Office contents, computers and peripherals
Professional Indemnity Insurance
HR staff management Insurance
Trustees Insurance
All staff and Board members for loss of money, and personal accident,
gross income and for Public Liability and Employers Liability.

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9.4 The Landlords as owners of the property insures the buildings as part of their
obligations under the terms of the lease.

9.5 The Chief Executive and Insert Job Title are responsible for making claims
against insurance policies and each staff member is responsible for ensuring
that all losses and claims are fully investigated and the police notified when
appropriate.

9.6 It is the policy of Organisation Name to capitalise only those fixed assets
that have a purchase price of more than 1,000 and an estimated life of more
than 12 months. IT equipment should include all peripherals, software
programmes and installation costs for the purpose of valuation. Depreciation
is calculated at 25% on a straight-line basis.

9.7 Organisation Name maintains an inventory of all fixed assets that is

compiled and updated by the Insert Job Title.

9.8 The organisations property cannot be removed or loaned from its premises
without the agreement of the Chief Executive.

10 Reserves

10.1 Organisation Name will seek to maintain sufficient funds in the Reserves
accounts to cover the following contingencies:

Staff Contingency Reserve (to cover costs arising from sick leave or
other enforced staff absence). The level should be based on average
replacement costs for one full time member of staff for a period of four
months.

General Reserve (to cover funding shortfalls or interruption to normal

operating activities). The level should be based on 3 months budgeted
core operating costs for the following financial year.

Redundancy Reserve (to cover the costs of closure of the organisation

and its activities.) This should be based on 6 months running down
time, including redundancies, any contract obligations and skeleton
staffing.

11 Funding Management

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11.1 The Insert Job Title with the assistance of other appropriate staff is
responsible for collating and compiling all financial information for the grant
funding claims.

11.2 The Insert Job Title is also responsible for reconciling the project accounts
with Organisation Name s internal accounts on a regular basis and
reporting on income and expenditure against individual project budgets.
However, the responsibility for monitoring the actual expenditure incurred
against the budget and for budgetary cost control rests with the Chief
Executive.

11.3 All funding claim documentation must be authorised by the Chief Executive
and the Insert Job Title as required by individual funders before submission
and copies of claims retained for auditing purposes.

11.4 Budgets for restricted funding claims must be prepared with breakdowns of
direct costs (labour, materials, and variable expenses) and indirect overheads
(premises, insurances, and management and administration costs). All
indirect overheads must be apportioned to project accounts by a suitable
methodology that recognises the level of activity generated by each fund.

11.5 All other unrestricted contracts must be budgeted to include a proportion of

direct costs plus apportioned indirect overheads (may be calculated as a
standard cost per project worker hour) plus a minimum of 5% of total costs,
charged as a management fee, at the discretion of the Chief Executive.

11.6 All substantial funding bids and contracts should be viewed and approved by
the Insert Job Title prior to signature by the Chair and Treasurer.

11.7 The Chief Executive is responsible for reviewing the financial structure of the
organisation on a regular basis and for developing future fundraising strategy
in line with the policy outlined in the financial policy and procedures
document.

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 Appendix 1

Roles and Responsibilities

Roles of the Treasurer

The Treasurer works in close co-operation with, and provides

support and advice to the Insert Job Title and Chief Executive.
There will be a Resources Sub Committee who will support the work
of the Treasurer.

The Resources Sub Committee will comprise the Treasurer and one
other management committee member, the financial Officer and
the Chief Executive or Deputy Chief Executive. It will:

guide and advise the Board of Trustees in the approval of budgets,

accounts and financial statements

keep the Board of Trustees informed about its financial duties and
responsibilities

advise the Board of Trustees on the financial implications of

Organisation Name's strategic plans and key assumptions
included in Organisation Name's operational plan and annual
budget

assess the current and anticipated financial resources of

Organisation Name in the light of present (committed) and
planned (but still uncommitted) activity

understand the accounting procedures and key internal controls and

communicate these when relevant to the Board of Trustees

Ensure that the accounts are properly audited, that accepted

recommendations of the auditors are implemented.

The Treasurer will

Formally present the accounts at the AGM, drawing attention to

important points.

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7.2 Role of the Board of Trustees

The Board of Trustees is responsible for:

approving budgets for the year
Approving bank signatories.
Receiving finance reports from the Insert Job Title.
Ensuring that they have some understanding of the organisations
accounts.
Approving exceptional items of expenditure.
Monitoring the financial position based on quarterly reports, with
advice from the Insert Job Title, and taking appropriate action when
necessary.
Approving the annual accounts and auditors' report.

Role of the Chief Executive (extracted from the Chief Executives

job description):

to prepare, manage and work within agreed budgets;

to ensure relevant management of Organisation Name financial

information;

To ensure compliance with the legal requirements of funding bodies.

Role of the Resources Manager (extracted from job

description):

to contribute to Organisation Names budget making process,

ensuring that budgets for all areas of responsibility are prepared
and regularly reviewed;

to oversee the financial performance for all areas of responsibility,

proposing and implementing corrective action as required;

to ensure that accurate, up to date financial and management

information is provided as required by the Board of Trustees of
Organisation Name;

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 To maintain up to date and accurate accounting records and
contribute to the efficient and effective management of all financial
matters within Organisation Name.

Appendix 2

Purchase Order System

Purchase Order System

All staff must be aware that expenditure is committed when an order is

placed on behalf of Organisation Name, not when the cheque is
requested. Therefore, all orders must be placed on the purchase order
system within agreed budgets and powers. The Chief Executive (and in
the absence, the Treasurer or Chair of Organisation Name) has the
power to authorise spend.

A central purchase order register will be maintained.

All staff must allocate a purchase order number to goods or services
ordered.
A shortcut to the purchase order register will be accessible from
each computer terminal.
Staff will allocate the next number in sequence and complete the
purchase order form.
Purchase orders must all be allocated to a specific budget (or split
in a defined way between specific budgets).
No invoices will be paid without an appropriate purchase order
number, approval signature and authorization signature.
All staff members responsible for invoices will check off invoices
received against the purchase order system.
All invoices will be countersigned by the Chief Executive or Insert
Job Title or appropriate Management Team Member

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 Appendix 3

Expenses

Organisation Name will reimburse reasonable actual expenses incurred on

Organisation Name business. No staff should be out of pocket in these situations
but care should be taken to incur only reasonable levels of cost. Expenses should
be submitted regularly, preferably at the beginning of each calendar month
following the month of the claim, and not delayed more than 2 months. All
expenses, apart from mileage should be accompanied by original receipts. All
expenses should be claimed via a Organisation Name expense claim forms.
Claim forms should be signed by employee/volunteers, authorised by their line-
manager (or in the case of the Chief Executive a Trustee) and checked and signed
by a member of the finance team.

Mileage
Employees can claim business mileage through the normal expenses procedure
when using their own vehicles for company travel. This must not include claims for
travel to and from home and the normal place of work.

The following rates, announced by the Inland Revenue are currently payable.
These rates will be reviewed regularly.

Cars
On the 1st 10,000 miles 45p (5p for additional passengers)
On each mile over 10,000 25p

Motorcycles 24p
Bicycles 20p

Organisation Name will not reimburse any additional costs associated with use of
employees own vehicles such as insurance or maintenance costs. These notional
costs are implicit in the mileage rate given.

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In addition Organisation Name will not reimburse staff for any costs associated
with fines or other penalties incurred for illegal parking or traffic offences while
using own vehicles.

Public Transport and Taxis

Standard class for all travel should be used in normal circumstances. Where
possible, full advantage should be taken of advance bookings or restricted travel
schemes if they result in lower costs without disrupting arrangements.

Essential taxi fares, supported by receipts, will be met for journeys inaccessible by
public transport, where transportation of equipment is involved or where staff are
returning home from events late at night. (This is the only concession to
reimbursing travel costs to or from home.)

Public transport should be used when travelling to other urban centres, or other
locations outside a 25-mile radius of Bristol City Centre, if that location is accessible
by public transport. Any concessions to this policy need to be authorised by the
Chief Executive (eg. group travel by car or the transportation of equipment).

Telephone Calls
Home telephone:
Any claims for use of employees home telephone when working from home must
be accompanied by an itemised telephone bill showing the individual business calls
highlighted.
Mobile phones:
Organisation Name does not provide mobile phones to employees as part of the
conditions of service. The costs of telephone calls made from employees own
mobile phones may be reimbursed in the same way as calls from home telephones
above.

Overnight accommodation
If employees are required to stay away from home on Organisation Name
business the cost of Bed and Breakfast accommodation at a 3 star or equivalent
rated hotel will be reimbursed. In addition, subsistence claims of up to a maximum
of 15.00 may be claimed to cover the costs of meals and other out-of-pocket
expenses during the stay. Receipts must be provided.

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