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Complete the charity governance tool to self-assess the steps your charity is currently taking to manage finances, and to identify any areas of improvement.

Make notes of any discussion or action items, and discuss them at your charity's next board or committee meeting. You can print or save your answers.

Financial management

Financial management is the process of strategically planning, organising, directing, and controlling a charity's financial resources to pursue its charitable purpose. It involves making decisions about how to protect funds and assets and ensuring a charity is meeting reporting and record-keeping obligations.

A charity’s Responsible People have a duty to ensure the financial affairs of the charity are managed responsibly, and to not allow the charity to operate while insolvent.

Does your charity have documented policies, processes, or procedures to manage its finances?
Yes

Having a financial management policy helps ensure that your charity’s finances are managed responsibly. It is important that charity finances are managed with sufficient oversight and control, and that funds are used to achieve your charitable purpose.

A policy demonstrates a reasonable step your charity has taken towards good governance and financial management.

No

It is important to consider having a documented policy or process for handling your charity’s finances. A policy can help ensure your charity’s finances are managed responsibly with sufficient oversight. While your charity may currently have an informal approach to managing finances, adopting a formal policy provides a clear and structured framework.

Transitioning from an informal approach to a formal policy will provide a clear and structured framework, ensuring better financial management and accountability.

Your charity’s financial management procedures should include:

  • guidelines for monitoring income and expenses
  • authorities for decision-making, signing documents, and accessing bank accounts
  • processes for how expenditure and reimbursements are approved
  • fraud prevention – including responding to reports or suspicions of fraud
  • processes for how grant money is used (if applicable)
  • fundraising processes (if applicable).

Depending on your charity’s finances and operations, there may be other areas financial management that should be included in your policies and procedures.

You should add an action item to discuss implementing a policy.

Does your policy set out how income and expenditure is accurately monitored, recorded, and reviewed?
Yes

Having a framework that clearly outlines the steps for monitoring, recording, and reviewing income and expenditure is crucial in managing finances. It allows your charity to understand its financial position and ensure funds are spent in line with the organisation’s charitable purpose.

Charities also have an obligation to the ACNC to keep financial records.

No

Establishing a framework that clearly outlines the steps for monitoring, recording, and reviewing income and expenditure is a key step in managing finances. It allows your charity to understand its financial position and ensure funds are spent in line with the organisation’s charitable purpose.

Charities also have an obligation to the ACNC to keep financial records.

If your charity has an informal process for recording income and expenditure, consider formalising this into a policy or procedure. You should add an action item to discuss this.

Does your policy clearly explain who can make decisions, sign documents, and access your charity’s bank accounts?
Yes

Having a policy that sets out who has permission to approve decisions, sign documents and access your charity’s bank accounts is a reasonable process to adopt in a charity.

This ensures that financial transactions are properly authorised and monitored, reducing the risk of errors or fraud.

No

It is vital for an organisation to outline who can make decisions, sign documents, and access your charity’s bank accounts. Developing a policy would be one reasonable step to help your charity manage financial responsibilities more effectively. It also reduces the risk of errors or fraud.

If your charity has an informal process for this, consider formalising this in a policy or procedure. You should add an action item to discuss this.

Does your policy set out how expenditure and reimbursements are approved, including limits?
Yes

A policy should include steps for approving expenditure and reimbursements, including limits and out-of-pocket costs. This ensures that all financial transactions are properly authorised and expensed.

No

It is important to have a process for approving expenditure and reimbursements, including limits and out-of-pocket costs. This ensures that all financial transactions are properly authorised and expensed.

If your charity has an informal process for expenditures and reimbursements, consider formalising this into a policy or documented procedure. You should add an action item to discuss this.

Does your policy cover fraud prevention and how to raise and respond to allegations or suspicions of fraud?
Yes

Outlining comprehensive measures for fraud prevention in a policy helps ensure that your charity can effectively detect and address any fraudulent activities.

For information about what should be included in a fraud policy, see our guidance on protecting your charity from fraud.

No

Charities should have a fraud prevention policy in place to protect from fraud. You should add an action item to discuss including fraud prevention in your policy.

For information about what your charity should include in its fraud policy, see our guidance on protecting your charity from fraud.

Does your policy cover assessing and approving how grant money is used?
Our charity does not receive grants.
Yes

Implementing a policy that outlines the process for assessing and approving how grant money has been spent (acquittals) helps ensure that all grant-related transactions are carefully reviewed. This approach maintains financial accountability.

No

It is important to have a process for assessing and approving how grant money is spent (acquittals) when your charity receives or distributes grants for its operations.

An acquittal is generally required by the funder, so your charity should consider having a formal process to manage acquittals if it receives or distributes grants.

You should add an action item to discuss the steps your charity should be taking if receiving grants.

Does your policy cover fundraising, including online fundraising (if applicable)?
Our charity does not fundraise.
Yes

Having a process that covers fundraising activities, including online fundraising (if applicable), can ensure all fundraising efforts are conducted responsibly and in compliance with fundraising laws and principles.

Fundraising is regulated at a state and territory level, so check the specific requirements based on where your charity operates. You can find more information, including the regulators for each state and territory, on our Fundraising Hub.

No

If your charity fundraises, you should consider having a documented policy or process. You should add an action item to discuss this.

Fundraising is regulated at a state and territory level, so check the specific requirements based on where your charity operates. You can find more information, including the regulators for each state and territory, on our Fundraising Hub.

Does your policy cover how your charity will manage:
Where someone is paid for their role.
Where someone is paid a nominal fee for their role or for recognised work done.
For example, bills, loans, or GST owed to the Australian Taxation Office.
For example, receipts and invoices.
For example, inventory, land, motor vehicles, shares, or crypto assets.
For example, service providers, contractors, or partners.

Having a policy that outlines how monetary transactions are managed is a reasonable step to effectively manage and assess your charity’s finances.

Your charity should regularly review how it manages its finances to ensure appropriate measures are being taken.

If your charity does not have a documented policy or procedure that covers these aspects of financial management, please consider if your charity is effectively managing its finances.

Your charity may have an informal process, but a documented policy or procedure is recommended. You should add an action item to discuss the measures your charity should be taking.

Does your charity implement any of these reasonable steps to ensure financial reporting and accountability?
For example, in a treasurer's report or as a recurring finance agenda item.
For example, charity financials are reported at an annual general meeting (AGM).
Medium charities are required to have their financial reports reviewed or audited. Large charities must have their financial report audited. The ACNC does not require small charities to submit a financial report, but it may be required by its governing document to have a review or audit.

These are all good steps to ensure financial reporting and accountability.

Regular board reviews, external reporting, and seeking professional advice supports robust financial management practices.

Your charity should regularly assess how it manages its finances to ensure appropriate measures are being taken.

If your charity is not taking any of these steps, it may be missing critical safeguards for financial accountability and transparency.

Without regular board reviews, external reporting and professional oversight, there is a higher risk of financial mismanagement.

You should add an action item to discuss the measures your charity should be taking.

Does your charity take any of these reasonable steps to ensure that there are strong financial controls and procedures in place?

These are all good steps to ensure there are strong financial controls and procedures in place.

It is important to regularly review financial management policies, maintain required records, operate a separate charity bank account, and require multiple signatories for banking.

Your charity should regularly assess how it manages its finances to ensure appropriate controls are in place.

If your charity does not take any of these steps, please consider if there are sufficient financial controls in place.

Without taking any of these steps, your charity risks potential mismanagement and financial vulnerabilities.

You should add an action item to discuss the measures your charity should be taking.

Does your charity take any of these reasonable steps to manage and protect its assets and investments?

These are all good steps to ensure assets and investments are managed responsibly.

Charity assets should be recorded and regularly reviewed. If your charity has investments or works with third parties, there should also be processes to ensure sufficient oversight.

Your charity should regularly assess how it manages its assets to ensure appropriate measures are being taken.

If your charity does not take any of these steps, please consider if it is managing and protecting its assets responsibly.

Charity assets should be recorded and regularly reviewed. If your charity has investments or works with third parties, there should also be processes to ensure sufficient oversight.

You should add an action item to discuss the measures your charity should be taking.

Does your charity take any of these steps to regularly review projects and expenditure to ensure they align with your charitable purpose?

These are all good steps to ensure project finances are managed responsibly.

By regularly reviewing projects, expenditure, and financial reports, this can demonstrate a reasonable step that your charity is aligning its activities with its charitable purposes.

Your charity should regularly assess how it manages its project finances to ensure appropriate measures are being taken.

If your charity does not take any of these steps, please consider if projects and expenditure are being adequately reviewed.

Without regular reviews of projects and expenditure, your charity may miss opportunities to ensure activities are fully aligned with your charitable purpose.

You should add an action item to discuss the measures your charity should be taking.

Does your charity take any of these reasonable steps to promote a culture of good governance and ethical financial practices?

Any of these steps will help you create a culture of good financial management.

Regularly assess how your charity manages its governance and financial practices to ensure you are taking appropriate measures.

If your charity hasn't taken any of these steps, consider whether it is adequately promoting a culture of good financial management.

You should add an action item to discuss the measures your charity should be taking.

Does your charity send funds overseas?
Yes

Charities are vulnerable to the risk of having their funds misused for the purpose of terrorism financing. This risk may be elevated when charities look to send money overseas, even if your charity is working in line with its charitable purposes.

Your charity can refer to our guidance on protecting your charity from terrorism financing risks for more information and resources.

No

Charities are vulnerable to the risk of having their funds misused for the purpose of terrorism financing. Whilst the risk may be elevated when charities send money overseas, it is important to have strong financial controls and oversight even at a domestic level.

Your charity can refer to our guidance on protecting your charity from terrorism financing risks for more information and resources.

Does your charity work with third parties overseas (overseas partners)?
Does your charity have a policy relating to working with overseas partners?
Yes

A policy ensures that your charity has established measures to protect those connected to your work from harm, abuse, or exploitation.

It demonstrates one reasonable step your charity has taken towards good governance and funds are protected from misuse.

No

If your charity does not have a policy relating to working with overseas partners, it is important to consider implementing one. A comprehensive policy helps you identify and manage potential risks, ensuring funds are protected from misuse.

Your charity’s policy should include:

  • a definition of partner
  • the roles and responsibilities of key stakeholders
  • how partners will be identified and selected
  • due diligence and background checks
  • how partners are monitored, reviewed, and evaluated
  • terminating a partnership.

Your charity should also refer to guidance on how to meet the ACNC External Conduct Standards, which apply to all charities operating overseas.

You should add an action item to discuss implementing an overseas partner policy.

Does your policy include:
Such as a risk register or a partner vetting document or template partner agreements, contracts or Memoranda of Understanding (MoU)

These are all important items to be included in an overseas partner policy.

Implementing a policy that clearly outlines clear objectives, scope, process, legal requirements and consequences for non-compliance is important. Ensuring that everyone understands the duties and the expectations placed upon them helps to manage risks when working with overseas partners.

Your charity should regularly review its policies to ensure they continue to adequately manage work with third partners overseas.

If your policy does not include these items, please consider if it is adequate to manage charity work with overseas partners.

A robust policy should contain clear objectives, scope, process, legal requirements and consequences for non-compliance. It should also include key definitions and explain roles and responsibilities, so each stakeholder understands their duties and expectations placed upon them when working with overseas partners.

You should add an action item to discuss your overseas partner policy.

Does your charity take any of these reasonable steps to perform due diligence when deciding to work with overseas partners?

Check the Department of Foreign Affairs and Trade's Consolidated List

These are all good examples of due diligence when working with overseas partners, although this list is not exhaustive.

Due diligence is a crucial step to ensure that Responsible People have sufficient information to make informed decisions and therefore mitigating risks. What constitutes a reasonable level of due diligence will depend on your assessments of all the risks associated with your charity’s specific activities.

Your charity should regularly assess how it works with overseas partners, and how risks are managed.

If your charity does not take any of these steps, please consider if sufficient due diligence is done when working with overseas partners.

Due diligence is a crucial step to ensure that Responsible People have sufficient information to make informed decisions and therefore mitigating risks. The above list is not exhaustive. What constitutes a reasonable level of due diligence will depend on your assessments of all the risks associated with your charity’s specific activities.

You should add an action item to discuss the measures your charity should be taking when working with overseas partners.

Does your charity operate in a country that is subject to sanctions?
Yes

If your charity operates in a country that is subject to sanctions, there are high risks connected with your charity’s activities, and it is important your charity is aware of any legal obligations and requirements relating to operating in that country.

You should read the Department of Foreign Affairs and Trade’s (DFAT) guidance on sanctions to ensure that you are taking reasonable precautions, exercising due diligence to avoid contravening Australian sanctions law.

No

If your charity does decide to operate in a country that is subject to sanctions, you should read the Department of Foreign Affairs and Trade’s (DFAT) guidance on sanctions to ensure that you are taking reasonable precautions, exercising due diligence to avoid contravening Australian sanctions law.

Unsure

You should read the Department of Foreign Affairs and Trade’s (DFAT) guidance on sanctions to ensure that you are taking reasonable precautions, exercising due diligence to avoid contravening Australian sanctions law.

Does your charity take any of these reasonable steps to manage risks relating to the misuse of funds and prevent terrorism financing?

If your charity is not taking all of these reasonable steps, you should add an action item to discuss the measures your charity needs to take when operating overseas.

Charities must take steps to ensure their funds are not misused for the purpose of terrorism financing.

The Department of Foreign Affairs and Trade maintains a consolidated list of all individuals and entities subject to Australian sanctions, including targeted financial sanctions and travel bans. Listings for targeted financial sanctions are distinct from listings under the Criminal Code and impose separate legal obligations.

It is an offence to support terrorist organisations listed under the Criminal Code Act 1995 (Cth). See the listed terrorist organisations under the criminal code.

These are all reasonable steps your charity can take to ensure it has reasonable controls and risk management processes in place when working overseas and with overseas partners.

Charities must take steps to ensure their funds are not misused for the purpose of terrorism financing.

The Department of Foreign Affairs and Trade maintains a consolidated list of all individuals and entities subject to Australian sanctions, including targeted financial sanctions and travel bans. Listings for targeted financial sanctions are distinct from listings under the Criminal Code and impose separate legal obligations.

It is an offence to support terrorist organisations listed under the Criminal Code Act 1995 (Cth). See the listed terrorist organisations under the criminal code.

Does your charity take any of these reasonable steps to monitor and control its finances when sending funds overseas?
For example, progress reports, annual reports, copies of financial statements

These are all good steps to monitor and control charity finances overseas.

Any of these steps will help your charity to avoid the risk that funds are misused. However, this is not a comprehensive list of financial controls you can implement. What constitutes a reasonable level of financial control will depend on your charity’s size, number of staff, complexity, and other characteristics. You should regularly assess how your charity ensure oversight and control over funds sent overseas.

It is important to remember that how you send funds overseas will either increase or mitigate risks of misuse. Using cash has inherently higher risks than using a registered remittance provider or system, and both are likely higher in risk than electronic bank transfers.

If your charity uses cryptocurrency, it should consider seriously the associated risks. The ACNC has guidance on charities crypto-assets.

You can refer to our guidance on protecting your charity from the risk of terrorism financing.

You should also see AUSTRAC’s Remittance Sector Register and remittance registration actions and guidance on moving money across international borders.

If your charity hasn't taken any of these steps, you should consider whether it has in place sufficient controls and oversight to ensure charity funds are not being misused and that you are compliant with various legal obligations.

You should add an action item to discuss the measures your charity should be taking.

It is important to remember that how you send funds overseas will either increase or mitigate risks of misuse. Using cash has inherently higher risks than using a registered remittance provider or system, and both are likely higher in risk than electronic bank transfers.

If your charity uses cryptocurrency, it should consider seriously the associated risks. The ACNC has guidance on charities crypto-assets.

You can refer to our guidance on protecting your charity from the risk of terrorism financing.

You should also see AUSTRAC’s Remittance Sector Register and remittance registration actions and guidance on moving money across international borders.

Action items and topics for further discussion:

If your charity has identified any additional steps you should consider taking to manage conflicts of interest, list them here. You can bring these notes to your next board or committee meeting to discuss further.

Resources

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