Quick tips: Having strong financial controls

Having strong financial systems and controls is very important to help protect you and your charity, and ensure it runs effectively and can meet its debts.

What to do

  • Have a written financial procedure with financial controls that all staff and volunteers observe. One person should not be solely responsible for authorising, completing and reviewing your charity’s financial transactions. For example, you should always have two cheque signatories and, where possible, have two people involved in handling and recording any money received. Having these controls is your best defence against any claim of failing to protect your charity’s assets (including confidential information) and funds.
  • Know how much money your charity receives and what it is spent on. Plan ahead – consider how much money is likely to come in this year and whether you need to plan for or save funds for any unexpected expenses (such as new IT equipment) or gaps in donations or funding.
  • Monitor your charity’s performance against its budget. If you see a significant variation in expenditure or income, ask for more information. Some variations are unavoidable, but there should always be an explanation. If the question is complicated, it may take some time to get the information so remember to keep following up. Your governing body (e.g. board or committee) may want to seek independent advice if there is any serious discrepancy or uncertainty.
  • You should receive financial information at regular intervals before each board meeting. This information may include the latest financial accounts, a comparison of actual figures against the budget, an explanation of any variations from the budget, or details of cash flow and closing bank balances.
  • Establish clear financial delegations. Limiting authority to approve purchases and other transactions according to a set value will reduce the risk of loss or fraud.
  • Make sure your accounts are secure. Keep your passwords for online banking secure and know who has access to your bank accounts.
  • Make sure financials are presented in a way that is easy to understand for everyone involved in your charity – not just those on your board or experts at finance!
  • Develop a culture where board members are not embarrassed to ask questions about the accounts.

What not to do

  • Don’t leave financial information or cash unsecured. Try to reduce the opportunities that a potential thief might have to steal from your charity.
  • Don’t ignore early warnings about financial problems – they usually only get worse. Remember that there are options and people who can help you.
  • Don’t remove yourself from the process. Even if you have sound processes in place, stay involved: ask questions, always read financial reports thoroughly and when in doubt – ask!

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