The need for good financial governance and appropriate systems has never been more important.
As governance and regulation have evolved it is important to ensure that your charity or other nonprofit organisation has the appropriate financial management systems in place.
In other words, does your organisation have the necessary checks and balances to manage your finances securely?
Proportionality is also important – a series of excel spreadsheets might well be adequate for a small organisation whereas a much more elaborate system would be required for a larger organisation.
The key considerations to bear in mind when reviewing the appropriateness of your systems might include:
- Authorisation protocols/division of duties to ensure adequate controls and sign-off
- Approval of expenditure including requisition process and invoice/expense/cost authorisation
- Processes around annual budgeting and reporting
- Income identification and controls especially for organisations engaged in fundraising
- Adequate accounting systems to record and report activities
- Systems to meet requirements of reporting to funders
- Systems for reporting to management, sub-committees and board/trustees.
Financial Controls Guidelines from the Charities Regulator
An extremely useful guide called Internal Financial Controls Guidelines for Charities, has been issued by the Charities Regulator. This can easily be used by trustees (even those without a financial background) as a checklist to ensure consideration is given to the appropriate controls/processes required, regardless of the size of organisation.