Internal Financial Procedures - .NET Framework



Internal Financial Procedures

Segregation of Duties

TAMHI appreciates that one of the prime means of control is the separation of those responsibilities of duties which if combined would enable one person to record and process a complete transaction. If duties are segregated, this reduces significantly the scope for errors and oversights, as well as deliberate manipulation or abuse, and builds in additional checks. For example, if the person who records incoming cash is the same person who checks that cash paid in is recorded on the bank statements, it would not be easy to detect any dishonesty. Mistakes are more likely to go undetected if a person checks their own work. The principle of segregation is important with regard to both income and expenditure, and capital transactions. TAMHI therefore ensures that all financial personnel within the organisation have clear segregation of duties.

Qualification of Staff and Advisors

TAMHI are also aware of the importance to have staff and any volunteers that are competent, properly trained and qualified for the tasks they have to perform. TAMHI will therefore ensure that only financially qualified people carry out the financial duties of the organisation. In addition, any general or specific advice from the accountant, independent examiner or auditor must be brought to the attention of all of the trustees.

Budget setting

12 monthly income and expenditure budgets will be prepared in time by the treasurer for final approval by the Board, before the start of the financial year under consideration.

The approved budget will be used as a base to construct a cash-flow forecast for the year, which will be updated quarterly.

Income

The majority of income received by TAMHI is from fundraising and grants for programme costs.

All invoices should be raised on TAMHI letterhead, or in a format agreed with funders and be drawn up in accordance with standard invoice requirements. In particular VAT invoices need to meet HM Customs and Excise requirements, and must include the VAT registration number, VAT rate and VAT amount. All invoices will be sequentially numbered.

Invoice listings will be produced on a regular basis.

Information about non-routine and all grant income must be passed to acting secretary with the cheque or remittance advice. This will be filed by the acting secretary , and used to ensure such income is correctly recorded in the accounts and grant conditions etc. noted. It is the responsibility of the applicant gaining the grant to ensure all grant income is claimed as it becomes due or available, and that all appropriate staff/board members are aware of relevant grant conditions and exactly how the grant is to be expended.

Post opening (and control of cheques and cash in) will be subject to random management checks. The process will be written down, so that there is a clear standard for those doing the work regularly, and others covering or checking.

Fund-Raising Events

Specificially, in terms of fundraising, TAMHI has the following controls in place:

• records be maintained for each fund-raising event, in sufficient detail to identify gross receipts and how they have arisen, and all costs incurred; and

• for all events for which there is ticket income or gate money:

▪ that tickets all be pre-numbered;

▪ a record be kept of all persons who have been issued with tickets to sell, and of which ticket numbers have been allocated to each;

▪ a record be kept of which tickets have been sold; and

▪ a reconciliation be made of receipts against tickets sold.

• Similar records need to be maintained for sponsored events.

Bank accounts

All income will be paid into the current accounts as soon as possible, not less than once a week.

Banking and custody procedures

Care always needs to be taken to ensure that, once funds are received into the control of club, their continued security is maintained. Following the guidelines listed below will provide a basic level of protection for the organisation’s funds:

▪ Incoming receipts must be banked regularly and as soon as possible

▪ Frequency of banking will depend on the amount of cash received. Keeping cash in a locked cash box is really only suitable for small amounts of money, say less than £100.

▪ Cash or cheques must be placed in a safe or locked cash box if they cannot be banked on the day of receipt.

▪ All incoming money be banked gross – no amounts be held back for "feeding" petty cash.

▪ All TAMHI money of must be kept quite separate from any individual’s personal money. For example, TAMHI’s treasurer must not use his own bank accounts for the charity’s finances.

• Where possible, two people should lodge the money in the bank for safety, particularly if significant sums of cash are involved.

Ordering Supplies and Services

All staff need to be aware that expenditure is committed when an order is placed on behalf of TAMHI, not when the cheque is requested. Therefore, it is important that all orders are placed properly, and are within agreed budgets and delegated powers.

Budget holders can place orders for goods or services within their budget areas, subject only to cash-flow restraints.

Any lease, hire purchase agreement or other contract involving expenditure will be subject to the same authorisation procedure as above, with the appropriate expenditure amount being the total committed expenditure over the period of the contract, or where the contract is open-ended, over the first 12 months of the contract. Larger contracts should not be entered into without adequate advice from a relevant professional adviser (e.g. accountant, solicitor, surveyor).

Orders of £100 or more must be placed in writing. Each Department will devise appropriate ways of keeping records of such orders, which will be contained in an Appendix. Suppliers must be requested to produce invoices. If payment is needed on or before delivery or no credit is given, a 'pro-forma' should be provided.

While claims for small items of expenditure may be made via petty cash (see section 5), adequate supporting documentation, preferably receipts, must be obtained. Large items requiring cash payment must be checked by committee before the arrangement is confirmed.

Payment Authorisation and Purchase Ledger

All invoices must be authorised for payment by secretary , although the actual checking of details may be delegated. The authorising department is responsible for checking invoices for accuracy in terms of figures and conformity with the order placed, that the services or goods have been received, and following up any problems.

A Purchase Ledger is operated by the Treasurer. All incoming invoices are to be passed to Treasurer as soon as they arrive. Invoices will be recorded on to the Purchase Ledger within two days. They are then passed on to secrtary for authorisation. Once authorised as above, suppliers will be paid within the appropriate timescale.

Cheque Writing and Signing

Signatories will only be drawn from senior staff and Trustees, and any new signatory must be approved by the Trustees before the bank is notified. All cheques require two signatories. Cheque signatories should check that the expenditure has been authorised by the appropriate person before signing the cheque.

Signatories will not sign cheques which are payable to themselves, or blank cheques. Cheques should be filled in completely (with payee, amount in words and figures, and date) before cheques are signed.

Handling of Cash

Petty cash will be topped up on the 'imprest' system, where the amount spent is reimbursed. It is intended for small items, up to £100. Anything over this should be paid by cheque where possible. The imprest has a balance limit of £250. The petty cash balance will be reconciled when re-storing the imprest balance, or monthly if this is more frequent.

Mixing money or receipts from different petty cash sources creates large accounting problems. In a real emergency, where another cash float has to be used for something, a clear record must be kept, and brought to secretary attention.

The petty cash box will be located within the locked safe in a locked room. The Chair is the only person with the key to the locked room and the Treasurer is the only person who has the key to the safe. Therefore, both parties must be together in order to access the safe.

▪ Accounting for Cash as it is Received

1. If received in person, record on a pre-numbered multiple-copy receipt form. Give a copy of the receipt to the customer.

2. Indicate the type of payment (currency or cheque).

▪ Separating Individual Cash Handling Duties

Separate the components of cash handling - collecting, depositing, and reconciling - so that one individual does not have responsibility for more than one component. Always separate the handling of the actual cash from the reconciliation.

▪ Safeguarding the Handling and Storing of Cash

1. During hours of operation, secure coins, currency and checks to restrict access.

2. At other times store all coins, currency and checks in the above safe or other locked secure place until they are deposited.

▪ Reviewing / Approving Voided Cash Receipts

The supervisor of the cash collection area has the responsibility for reviewing and approving voided cash receipts and documenting all actions performed.

▪ Depositing Cash Promptly

1. Deposit cash receipts at least weekly or when the total on hand reaches £___. Certain locations may require a more restrictive policy based on security, cash/check composition, and the average dollar amount of checks.

2. If credit cards are accepted, settle authorized transactions daily.

3. Deposit all funds received.

▪ Reconciling Daily and Monthly Activity

1. Daily balancing: balance each deposit by comparing:

o the cash receipt records (cash register tape, pre-numbered receipts, or receipt log totals)

o the completed cash transmittal

2. Monthly balancing: monthly reconcile the cash and cheque ledgers with the bank statements.

3. Document unidentified differences.

▪ Monitoring the Cash Receipts Process

Administrators not directly involved with the cash receipt process have the responsibility to periodically:

1. Review the nature and extent of overages and shortages.

2. Compare actual deposits recorded with expected receipts.

3. Review daily and monthly cash activity reconciliation.

4. Compare the mode of payment (coin/currency or cheques) recorded at the time the cash was received with the coin/currency and check totals on the validated deposit document.

5. Evaluate overall internal controls to ensure that reasonable controls exist to safeguard cash, and that employees understand and follow them.

Books of Account and Records

Proper accounting records will be kept. The accounts systems is based around computer facilities, using Sage and Excel, but manual/paper records will also be used if appropriate.

At a minimum, the following records will be kept:

• appropriate control accounts (i.e. bank control, petty cash control, VAT control).

• salary control account.

• monthly trial balances.

Petty cash and bank accounts will be reconciled at least monthly, and VAT returns produced on the required quarterly cycle.

Purchase Ledger, other cheque payments and banking sheets will be filed in the appropriate reference order, with any supporting documentation. All petty cash vouchers, cheque stubs etc. will be retained for audit and for statutory purposes thereafter.

All fixed assets costing more than £250 (or such other level as may from time to time be agreed by the trustees) will be capitalised in the accounts and recorded in a fixed assets register. This register will record details of date of purchase, supplier, cost, serial no. where applicable, description and in due course details of disposal.

Financial Monitoring and Audit

The Committee will receive appropriate, regular reports of income and expenditure against budget.

The Committee will receive:

• weekly snapshots of cash in hand, total creditors and total debtors.

• weekly report of cash in hand.

• monthly reports of income and expenditure versus budget - within two weeks of month end.

TAMHI financial year is from 1st April -31st March Annual accounts will be submitted for committee/audit at each AGM.

Role of Treasurer

The Treasurer works in close co-operation with, and provides support and advice to, (committee/chairman). Specific responsibilities are to:

• Guide and advise the Board in the approval of budgets, accounts and financial statements, within a relevant policy framework.

• Keep the Board informed about its financial duties and responsibilities.

• Confirm that the financial resources of TAMHI meet present and future needs.

• Understand the accounting procedures and key internal controls, so as to be able assure the Board of TAMHI financial integrity.

• Ensure that the accounts are properly audited, that accepted recommendations of the auditors are implemented, and meet the auditor at least once a year.

• Formally present the accounts at the AGM, drawing attention to important points.

Monitor TAMHI investment activity and ensure its consistency with policies, aims, objectives and legal responsibilities

SIGNED:_______________________Chairman

_______________________ Secretary

Date Adopted __________________________

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