You must set up financial controls to ensure you meet your legal duties, protect your assets and make informed decisions about your financial position.
These financial controls should cover:
- All aspects of how your charity handles its resources and assets, including its money.
- How you store personal data in line with the UK General Data Protection Regulation (GDPR).
The financial controls should include how expenditure is authorised and how you check what money has gone in and out of the bank.
You should also set a budget at the beginning of the financial year, setting out your expected income and expenditure. Trustees should approve this as they have overall responsibility for finance. Management accounts are updates on the financial position, which can be run quarterly or monthly. They show how well you are doing against the budget and set out the reason for any differences.
You should set out how you buy things (e.g. making sure you get several quotations to ensure good value for money), separation of duties when purchasing and approving payments, management of cash/credit cards/ cheques/online banking, as well as setting out procedures for claiming expenses. UK charities must follow the same anti money laundering regulations as businesses.
The Charity Commission gives more information about fnancial controls here including a financial controls checklist.