Charity Governance Majid Sadeghi, Partner Rouse Partners LLP Advise > Support > Grow Advise > Support > Grow www.rousepartners.co.uk/charity
Today’s Agenda • Governance • Risk Management • Trustee Responsibilities • Policies and Procedures • Review of Structure • Reporting/Internal Controls • Compliance • About us Advise > Support > Grow www.rousepartners.co.uk/charity
Governance • Risk Management • Fraud • Trustees responsibilities • Structure and Compliance • Finance Advise > Support > Grow www.rousepartners.co.uk/charity
Risk Management Process Assessment, Risk based Identification of management Risk reporting approach key risks and controlling risks Advise > Support > Grow www.rousepartners.co.uk/charity
Assessment Management and Control of Identified Risks • Risk Framework • Acceptable level of Risk • Impact on Charity’s reputation / financial position • Impact on objectives and activities • Likelihood of occurrence • Ranking • Strategies to mitigate • Reporting line, Sub committees, terms of reference Advise > Support > Grow www.rousepartners.co.uk/charity
Key Risks Governance Operational Financial External Compliance • Knowledge • Training , • Budgetary • Stakeholders • Risks base recruitment • Segregation • Sector associated • Conflict of • Policies and with of duties activities organisation’s interest Procedures • Authorisation • External status i.e. • Adequate and approval environment unincorporated Insurance procedures • Beneficiaries charity • Reporting • Charity Act 2006 • SORP 2005 • Trustees Report Advise > Support > Grow www.rousepartners.co.uk/charity
Fraud Risks • Charities are vulnerable • Resources are limited resulting in reliance on key individuals and lack of segregation of duty. • Volunteers and low earning staff • Rely on trust and goodwill • No or insufficient training to detect fraud • Cash transactions • Recent report published by NFA Fraud and financial crime affect all parts of the UK economy and this includes the charity sector. The National Fraud Authority's recent survey of 1,000 charities estimated that fraud in the charity sector accounts for 2.4% of total annual charity income, which represents 3% of all fraud in the UK. • Trustees responsibilities, Good Governance, Fraud Policy • Charity Commission Guidance - Protecting Charities from Harm Advise > Support > Grow www.rousepartners.co.uk/charity
Trustees Responsibilities • Trustees have a legal duty and responsibility under charity law to protect the funds and other property of their charity so that it can be used for its beneficiaries. Code of conduct and best practice. • The guidance on fraud and financial crime aims to highlight some of the types of fraud and financial crime to which charities are vulnerable and provide some practical advice for trustees and managers of all charities on how to tackle it. • Sound financial controls and good financial management are an essential defence for charities against fraud and financial crime. • They should be a core part of a charity's culture, and practised to the same degree of diligence as a charity's activities. Advise > Support > Grow www.rousepartners.co.uk/charity
Advise > Support > Grow www.rousepartners.co.uk/charity
Policies and procedures • Access to accurate and up to date financial information and monitor the charity's financial performance against its budget • Cheques and cash are kept securely, banked promptly and recorded in the accounting records • Cheque books are kept in a secure place - do not sign blank cheques • Proper controls in place to protect income received by post and bank it as soon as possible • Proper controls in place in relation to fundraising events, such as making sure two people handle and record the money received, that money is banked as soon as possible and that collection boxes are numbered and recorded Advise > Support > Grow www.rousepartners.co.uk/charity
Policies and procedures • Keep proper records when claiming gift aid - HMRC give advice on what should be recorded • Clear policy on paying expenses to staff and volunteers and make sure they are authorised by someone other than the claimant • Controls to ensure that all income from trading is recorded and received • Monitoring procedures in place to make sure grants have been used for the agreed purposes • Report any suspected fraud to the police and to the Charity Commission Advise > Support > Grow www.rousepartners.co.uk/charity
Benefits of effective procedures • Reduce risks and impact of fraud or errors • Less disruption dealing with fraud or errors • Greater likelihood of achieving charitable objectives • Early warning of problems • Better decision making • Better allocation of resources • More effective communication with stakeholders Advise > Support > Grow www.rousepartners.co.uk/charity
Review of Structure • Unincorporated • Company limited by guarantee • CIO A CIO is an incorporated form of charity which is not a company. It only has to register with CC and not Companies House. A CIO can enter into contracts in its own right and its trustees will normally have limited or no liabilities for debts of the charity. Advise > Support > Grow www.rousepartners.co.uk/charity
Reporting / Internal Controls Financial Information • Regular, reliable financial information • Appropriate, understandable format • Budgets and Variance analysis • Proper review procedure, discussions by board • Projections and forward thinking • Reserves policy • Investment decisions Advise > Support > Grow www.rousepartners.co.uk/charity
Compliance • Trustees report • Historic reporting as well as forward planning • Policies re financial and non financial issues • Trustees appointment, resignation in accordance with governing document • Trustees review of major risks to which the charity is exposed and procedures in place to mange them • Disclosures under SORP 2005 • Charity Act 1993, 2006 • Independent examination • Audit Advise > Support > Grow www.rousepartners.co.uk/charity
About us • We are one of Buckinghamshire’s largest independent firms of chartered accountants, auditors and tax specialists, providing all the advice and support you need from under one roof. • We help individuals and organisations across all industry sectors, but offer specialist experience and technical skills for charity and not for profit organisations including: • Charity auditing, accountancy services, payroll and advice - including book keeping, preparing accounts, governance, reporting and forecasting. • Complex tax planning and VAT implications for charities - such as Gift Aid, donations and grant funding, income from selling advertising space, charity shops and the sale of goods, fundraising events, income from social events and overseas donations. • Ensuring your compliancy with the latest changes in regulation – including The Charities Act 2006 and rulings from the Charity Commission. Advise > Support > Grow www.rousepartners.co.uk/charity
Thank you Majid Sadeghi, Partner t: 01494 683738 @RousePartners e: majid.sadeghi@rousepartners.co.uk www.rousepartners.co.uk Advise > Support > Grow www.rousepartners.co.uk/charity
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