Protect Your Charity’s Money – Internal Financial Controls

Fraud Top TipsAs a trustee you must take steps to make sure that your charity’s money is safe, properly used and accounted for. Every trustee has to do this. Even if your charity has an expert to manage its finances, you are still responsible for overseeing your charity’s money.

Protect your charity’s money

Make sure that money is only spent on what is allowed by the charity’s governing document and policies. If it is not, you and the other trustees need to put it right.

Use the Internal financial controls checklist (MS Word Document, 31.6KB) to help you know you are doing this properly. This will help you make sure that money coming into the charity is:

  • secure and recorded
  • only spent on your charitable purposes
  • at less risk of theft, fraud or cyber crime

National Living and Minimum Wage Rates Increase April 2021

WagesThe Government announced at the end of  November 2020 the National Living Wage (NLW) and National Minimum Wage (NMW) rates which will come into force from April 2021.

It accepted in full recommendations made by the Low Pay Commission at the end of October 2020

The National Living Wage, ie for those aged 25 and over, will increase by 2.2 per cent from £8.72 to £8.91, and will be extended to 23 and 24 year olds for the first time.

For workers aged under 23, Commissioners recommended smaller increases in recognition of the risks to youth employment which the current economic situation poses.

Rate from April 2020 Rate from April 2021 Increase
National Living Wage £8.72 £8.91 2.2%
21-22 Year Old Rate £8.20 £8.36 2.0%
18-20 Year Old Rate £6.45 £6.56 1.7%
16-17 Year Old Rate £4.55 £4.62 1.5%
Apprentice Rate £4.15 £4.30 3.6%
Accommodation Offset £8.20 £8.36 2.0%

You can read the Low Pay Commission 2020 summary of findings here

The Legal Status of Volunteers

VolunteersYour charity could get into legal problems if you don’t clearly distinguish between its paid staff and volunteers.  It’s possible for volunteers to claim they have the same rights as employees, including claiming unfair dismissal for example.

A written role description for your volunteers can help make it clear what the boundaries and expectations are.  It’s important that the role description could not be confused with an employment contract or job description.  For example it must not require volunteers to work particular hours.

Insurance to cover volunteers

Make sure your charity’s insurance covers your volunteers.  Even if your charity doesn’t employ staff, you may still decide to take out employers’ liability cover for volunteers.

Check whether your insurance policy:

  • includes volunteers
  • covers the activities volunteers will be doing
  • states any age limits for volunteers

Expenses for volunteers

Volunteers aren’t paid for their time but should be paid for any out-of-pocket expenses. These expenses could include:

  • travel
  • postage and telephone costs if working from home
  • essential equipment, such as protective clothing

Volunteers should provide receipts for any expenses they incur.

If a volunteer receives any type of reward or payment other than expenses, they may see this as a salary and they could be classed as an employee or worker. This then gives them some employment rights.

Criminal records checks

If your volunteers will be working with children or vulnerable adults, by law you can get a Disclosure and Barring Service check (DBS, formerly the Criminal Records Bureau) on them.

The DBS will search police records to identify people who are unsuitable for certain types of work, especially work involving children and vulnerable adults.

DBS checks are free for volunteers.

Appointing An Independent Examiner

AccountingHaving opted for an Independent Examination of their charity’s accounts, the  trustees may find it helpful to draw up a set of questions to ask their proposed examiner to help them check that the person has the skills and experience needed. You should ask:

  • all examiners  to confirm that they have read and understood the Charity Commission’s Directions and guidance
  • professional examiners to provide proof of membership of one of the professional bodies listed here and that they meet that body’s requirements for acting as an independent examiner.  In particular, the examiner is likely to need a practising certificate or licence, although if he or she is not charging a fee to carry out the independent examination this may not be necessary.  This check can be done using each body’s on-line member search tool, or directly if the body does not have this facility
  • non-professional examiners to explain their skills and experience and why this makes them competent to carry out the work.  For example, the examiner may work in a role that involves financial management, such as setting and managing budgets and reviewing financial reports, or that requires knowledge of accounting systems, such as maintaining financial records and internal controls

The trustees’ decision to appoint a person to act as the charity’s examiner should be in writing and recorded in the charity’s minutes.  The examiner should confirm their appointment and this can be done by an exchange of emails.  Professional examiners may issue a letter of engagement, setting out the terms of their appointment including their fee.

The process of finding and appointing an examiner can take time and so should not be left until the trustees’ annual report and accounts are due for filing.