RISE Finance Manual

Date adopted: 06/04/2021

Contents

1. Purpose of document

2. Ordering supplies and services

3. Authorising payments

4. Methods of payments

5. Handling cash

6. Salaries, payroll and freelancers

7. Income

8. Bank accounts

9. Books of account and records

10. Budget setting and monitoring

11. Role of the Treasurer

12. Role of Management (CO and CAO)

13. Role of the Board of Trustees

14. Role of the Finance Officer (FO)

15. Financial Records and archiving

Reference Policies

Financial Regulations Policy

Staff Expenses Policy

Standard Operating Procedure: End to end Management of Client Funds

Purpose of this document

1.1 This document defines the financial systems used by LDCVS and how they relate to all areas of LDCVS. It has relevance for Trustees, Management and Staff.

1.2 This document replaces the policy on Financial Procedures. It is regularly updated by the Treasurer with significant changes. Overall financial responsibility rests with the Board of Trustees.

Ordering supplies and services

2.1 Budget holders may place orders for goods or services within their budget areas. Orders will be placed by the Finance Officer. Purchase orders may be placed subject to the following considerations, limits and restrictions;

• Orders may only be placed for items that are within agreed budgets
• Orders of value >£100 must be authorised by the Chief Officer
• Orders of value >£500 must also be authorised by the Treasurer
• The Treasurer will refer all orders of value >£2000 to the Board of Trustees
• In all cases best value will be sought
• For orders >£500 a minimum of 2 quotations will be obtained
• For orders > £2000 a minimum of 3 quotations will be obtained
• All orders >£50 will be issued via Purchase Order (Sage)

1. Transactions which are other than one-time transactions e.g regular supply, leases, rental agreements must be authorised by the Treasurer and Finance Officer.

1. Renewal of the contracts for services and infrastructure i.e. rental agreement, insurances, communications and utilities are the responsibility of the Chief Administration Officer. Contracts will be renewed or replaced at minimum one month prior to their end date.

Authorising Payments

3.1 All invoices presented must be authorised for payment by Management. Either directly or by delegation they ensure that invoices are accurate and conform to the order placed and that the services or goods have been received. 

3.2 All invoices must include; complete payment details, bank account number, date, name and address of the vendor, description and quantity of goods supplied, alternatively details of the service provided.

3.3 Invoices should be cross verified with the Purchase Order.

3.4 The FO must be informed should there be reasons to delay or withhold payment of an invoice. 

3.5 All incoming invoices are to be passed to Finance section as soon as they arrive.

3.6 Invoices will be recorded and once authorised as above, suppliers will be paid within the agreed timescale. In general LDCVS terms to settle an invoice are 30 days from the end of the month of presentation of the invoice.

3.7 All invoices and the online payment confirmation receipts are logged and archived by the Finance Officer and are stored separately in hard copy.

3.8 Refunds, overpayments or cancellations of orders are similarly processed by the FO. 

3.9 Payments for claims and compensations are considered exceptional items. These are exclusively authorised by the Board of Trustees.

Methods of Payment

4.1 The preferred method of payment is Bacs transfer. In exceptional cases the corporate debit card may be used for expenditures < £200.If available, cash may be used for expenditures <£20.

4.2 Ordinarily the FO prepares all Bacs transfers. In exceptional circumstances the CO or Treasurer may initiate a Bacs payment.

4.3 All Bacs payments must be authorised/confirmed by either the CO or, in exceptional circumstances, by the Treasurer. A reserve authority is also appointed from the Board of Trustees, typically the Chair of the Board of Trustees.

4.4 With the exception of salary payments or repayments of expenses, neither the FO nor the CO may initiate or authorise a payment to themselves.

4.5 The Corporate Debit card may only be used when the payee is unable to accept a Bacs payment. These transactions will be recorded and identified separately in the purchase ledger. The FO is the exclusive user of the Debit card and may decline its use on their own authority and discretion.

Handling of cash

5.1 The maximum amount of petty cash to be held is £200.We will accept cash payments for goods or services up to a maximum of £50 and make payments for goods or services up to a maximum of £20.

5.2 The FO will issue written receipts for cash payments received and retain receipts for cash payments made. 

5.3 Cash transactions are discouraged.

5.4 The petty cash balance will be reconciled on a monthly basis.

5.5 The Treasurer will audit the petty cash and the records quarterly.

Salaries and payroll

6.1 We are members of the Living Wage Foundation. At all times and in all cases we will respect a minimum payment level which is equal to the higher of the LWF minimum rate and that of HM Treasury. We do not issue contracts of employment without guarantee of minimum hours worked. We do not enter into employment arrangements which may be deemed “off-payroll”. 

6.2 Freelance contractors will only be taken on when authorised in accordance with section 1 above. With a few exceptions, they will be treated as self-employed, and contracts with such people must clearly indicate this. However, work in other areas of activity must be assumed to be employed by LDCVS and so subject to PAYE & NIC. Finance will obtain clarification of any unclear areas as needed.

6.3 LDCVS is required by HMRC to operate the PAYE system, and to make monthly and annual returns to the Inland Revenue. All people working directly for LDCVS, whether permanent or temporary, must provide a P45, or sign a P46 or student exemption certificate. Payroll records are held separately and in addition to other personnel records.

6.4 Payments for additional work over and above standard hours must be approved by the CO. Where an employee is working overtime hours routinely the CO must bring this to the attention of the board. Clear written authorisation and notice should be given to the FO such that the additional payments can be made in the following payroll. These overtime claims and authorisations claims are financial records and subject to our archiving provisions.

6.5 Should staff incur reasonable out of pocket expenses in fulfilment of the duties, eg travelling and subsistence, these will be reimbursed upon signature and authorisation by the CO or CAO. Claims should be supported by proof of payments. 

6.6 All payments of salary and reimbursement of agreed expenses will be made by Bacs payment to the employee’s nominated account. Salaries will be paid on the 20th of the month, or nearest working day.

Income

7.1 LDCVS Income falls into three categories;

• Grants 
• Fees for services provided
• Monies paid to Client accounts held by LDCVS for purposes of distribution to 3rd parties.

7.2 Invoices will be issued for service provision as soon as practical. 

7.3 Such invoices should be settled within 30 days of the month ending the date of the invoice. 

7.4 All invoices should be raised on LDCVS letterhead by the FO using the approved template. Receipts for grants received will be issued upon request of the donor. LDCVS is not at present registered for VAT.

7.5 For services which are regularly provided the CAO, FO and Treasurer will seek to establish a coherent and consistent pricing policy.

7.6 Outstanding invoice payments for fees will be followed up at least monthly by the FO.

7.7 Detailed information concerning grant income to Client accounts, particularly its purpose and all restrictions on its use, must be passed to the FO along with the cheque or remittance advice. The FO will record this as Restricted Income. Such sums will be held separately from LDCVS general funds and reserves.

Bank accounts

8.1 LDCVS banker is CAF Bank. The Governing agreement with CAF bank lists the Treasurer and two trustees as authorities on the account and the FO as the operator of the account. From time to time special holding accounts may be created eg GoodBox, however ordinarily LDCVS maintains a minimum of three accounts

• CAF cash account for payments, receipts and inter account transfers
• CAF Gold deposit account for general funds and reserves.
• CAF Gold deposit account for restricted funds held on behalf of clients.

8.2 All transactions require the involvement of a minimum of two parties.

8.3 The specific responsibilities of the FO in respect of banking are noted in section 15 below.

Books of account and records

9.1 Proper accounting records will be kept. The accounts systems is based around Sage and spreadsheets. Software backups are made daily and are supported by paper records where appropriate

9.2 At a minimum, the following records are kept current:

• Control accounts (i.e. bank control, petty cash control).
• Salary control account i.e. Payroll
• Monthly trial balances
• Monthly Bank reconciliation

9.3 The FO and Treasurer have read/write access to Sage. Management has read writes in Sage. Payments and receipts are entered within five working days. All corrections and adjustments will be clearly noted in the journals section of the accounts programme giving reasons for them, with supporting documentation where available.

9.4 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.

9.5 Asset Register: All fixed assets costing more than £250 (or such other level as may from time to time be agreed by the trustees) which are not fully depreciated by the end of the current accounting year 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.

9.6 Final accounts will be prepared within 3 months of the financial year end in accordance with SORP for charities and submitted for external examination. The accounts are approved by the Board of Trustees. They are presented to the AGM and submitted to Companies House and the Charity Commissioner at the appropriate time before the end of the relevant financial year.

Budget setting and monitoring

10.1 The annual budget and cashflow forecast are prepared by the Treasurer after consultation with the CO, CAO and FO. The budget is set and approved by the Board of Trustees at their May meeting.

10.2 A monthly analysis showing actual performance versus budget is prepared monthly by the FO as part of the management accounts.

10.3 The approved budget is used to construct a cash-flow forecast for the year, which is updated and reviewed quarterly.

10.4 Managers receive:

• Timely updates of financial position from the FO
• A monthly report of income and expenditure versus budget - within two weeks of month end.

10.5 Detailed monthly payroll reports are produced. Detailed cash-flow reports are produced as appropriate

10.6 Deviations and corrective action plans are presented in the monthly Finance report and noted in the minutes of Board meetings.

Role of Treasurer

11.1 The Treasurer works in close co-operation with, and provides support and advice to the FO.

11.2 The Treasurer is responsible to:

• Guide and advise the Board in the approval of budgets, accounts and financial statements, within the relevant policy and strategic framework.
• Inform the Board concerning its financial duties and responsibilities.
• Provide guidance to the Board with respect to strategic plans and key financial assumptions included in the annual budget.
• Confirm that the financial resources of LDCVS meet present and future needs, and alert the Board to any risks.
• Guide the accounting practices and key internal controls, so as to be able to assure the Board of LDCVS’s financial probity.
• Ensure that; the accounts are properly audited, that accepted recommendations of the auditors are implemented, and to meet the auditor at least once a year.
• Formally present the accounts at the AGM, drawing attention to salient points.
• Independently monitor LDCVS’s financial activity and performance.

Role of Management

12.1 Management are the Chief Officer (CO) and the Chief Administration Officer (CAO). They receive weekly monthly management accounts, detailing expenditures against budget and a cashflow forecast. They review financial performance in detail not less than once per month. They note deviations in performance against budget and act to overcome and correct such deviations.

Role of Board of Trustees

13.1 The Board of Trustees bears ultimate responsibility for the financial performance and regulatory compliance of the Charity. The Board: 

• Ensure that the Charity is carrying out its purpose as set out in the governing document. 
• Ensures that the assets of the charity are employed solely to fulfil its objectives.
• Approves the budget for the year.
• Approves exceptional items of expenditure.
• Approves the annual accounts and receives the auditor’s report.
• Monitors the financial position based on Finance reports, with advice from the Treasurer and/or the FO.
• Deals with cases of conflict of interest in the financial domain
• Approves the authorities on the bank accounts and any changes to banking arrangements.

Role of Finance Officer

14.1 The FO assists the Treasurer and Management in any financial matter connected with the organisation.

14.2 The FO will ensure that adequate security precautions are taken to safeguard financial and other assets.

14.3 The FO is responsible for:

• Paying each employee in accordance with the approved terms and conditions, and issuing payslips.
• Operating the PAYE system, keeping the required records, issuing P45s and P60s, and communicating with the tax office as appropriate.
• Making the correct deductions for Income Tax, NI, court orders and any other appropriate deduction authorised by staff; ensuring that deductions are paid to the correct body, and necessary returns made and copies retained.
• Administering the Statutory Sick Pay and Statutory Maternity Pay schemes, alongside any additional related benefits provided by the organisation.

14.4 In respect to banking the FO:

• Optimises interest earned by minimising funds in the cash account.
• After each electronic banking transaction, takes a printout showing details of the transaction and stores it as part of the accounting record.
• Ensures all computers with access to the online banking facilities are secure
• Ensuring all computers have up to date anti-virus, software and firewall software
• Changes passwords and PIN's periodically 
• Maintain list of staff and trustees who have access to the passwords and PIN numbers.

Financial Records and archiving

15.1 LDCVS will keep financial records in both soft and hard copy for a period of six years after the end of the relevant financial year. Payroll records for both direct employees and client employees (payroll services) will be retained for a minimum period of five years or for such period as may be determined from time to time by regulation.

Next review date

16.1 April 2024