Finance Procedures

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Revision as of 15:20, 25 Haziran 2024 by NotNowCraig (talk | contribs) (Added in the agreed process for end of year accounts (with notes on how FCA/Audit process plays into it))
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1. Financial Management

1.1 The Chairman, Financial Director and two other Signatories will be appointed by the Board as signatories on the bank account. When a Signatory ceases to be a Director they can, if necessary, continue as Signatory until a replacement Signatory is chosen from the Board and accepted by the bank. The time taken to enact this changeover should be minimised as far as possible. The other Directors will be responsible for authorising expenditure, and hold the Signatories to account. The Treasurer, whether a Board member or not, should always be a signatory.

1.2 Freegle Ltd will keep proper accounts, which will include bank and petty cash control accounts, which will be updated regularly.

1.3 The accounts will be kept electronically on a spreadsheet, which will be viewable by the Finance Director and on demand by the Board. A monthly PDF will be provided of the cashbook and summary, which will be submitted to the Board and available by link on Central.

1.4 Annual accounts will be prepared, audited and published on Central and to Members in line with the Finance Policy. Finance Reports

2. Bank

2.1 The bank mandate (list of people who can sign cheques on the organisation's behalf) will be approved and recorded by the Board as well as all changes to it. This will be by a copy of the mandate in PDF form on the Board’s discussion group, and a list of the authorised signatories in the files on Central. Any new signatory must be approved by the Board before the bank is notified. All cheques will require two signatures.

2.2 Electronic payments may be used. The accounts will record which signatories have authorised each payment.

2.3 The Freegle Ltd bank account will be reconciled to the accounts at least monthly, and the reconciliation will be available open to view by all Members as part of the accounts spreadsheet.

3. Receipts

3.1 All receipts will be recorded and banked not less than once each week. The make-up of each banking deposit transaction will be clearly recorded in the accounting records.

3.2 All relevant information relating to receipts must be passed to the Treasurer with the cheque and/or remittance advice. Lack of documentation will lead to such items being banked, but unavailable for expenditure commitments, until the validity of the receipt is established.

3.3 Payments due against specific income receipts will not be made until those receipts have been cleared.

4. Payments

4.1 All payments will require the pre-approval of the Board, in accordance with their decision making processes.

4.2 The Treasurer will be responsible for holding unused and partly used cheque books which should be kept securely, as should cheques that have been written out but not yet sent for signature.

4.3 Payments can be made either direct to the supplier of the goods or services, or to reimburse expenditure by individual Volunteers.

4.4 Every payment made by Freegle Ltd will be supported by an original invoice (see Invoice Information) or receipt, either as a hard copy or electronic documentation. Payments will not be made against a supplier’s statement or final demand. Signatories should ensure they have seen supporting documentation before they authorise electronic payment or sign a cheque.

4.5 The only exceptions to cheques not being supported by an original invoice or receipt would be for items such as advanced booking fees for a future course, donations to charity, etc., or when floats are issued, where a signed request form by the float holder will be used, or for third party payments.

4.6 From time to time opportunities arise for Volunteers to attend events and meetings to represent Freegle nationally. Reasonable travel expenses for the Volunteer may be reimbursable if there are sufficient funds and attendance and costs have been agreed in advance with the Board.

4.7 Signatories will never sign blank cheques, or cheques or authorise electronic payments made out to themselves. Cheques will be sent to the supplier by the last signatory, never to the person requesting the cheque, unless it is a reimbursement payable to them.

4.8 Cheques must be filled in completely (payee amount in words and figures and date and full cheque stub details) before being sent for signature.

4.9 The same person should not be responsible for ordering, processing and checking invoices/receipts as well as raising cheque requisitions, signing cheques, initiating or authorising electronic payments.

5. Floats and Petty Cash

5.1 Under certain special circumstances, the Treasurer, in accordance with authority of the Board (4.1) can issue up to £300 float to an individual for them to disburse within guidelines set down and agreed by the Board at that time.

5.2 Special circumstances may include but are not limited to Freegle Volunteers who anticipate incurring incidental costs associated or an event or activity on behalf of Freegle nationally, or work provided under and agreed within a Contract of Service where the Board agrees the contractor can receive payment in advance for specific activities and/or expenses.

5.3 This float will be the sole personal responsibility of the person to whom it is issued and all expenditure must be accounted for with a proper receipt. Receipts will be returned each month to the Treasurer and any unspent funds will be returned along with outstanding receipts to the Treasurer at the end of the agreed period of the float issue. Where the float is on a pre-paid debit card the float remains with the on-line statement returned showing remaining funds. It is the role of the Director of Finance to periodically review the spend on these cards with those who are holding them. Card holders will be encouraged to check with the board before they spend if they are not sure the spend is in line with pre-agreed categories. Should any spend be outside of agreed categories the board may ask the card holder to reimburse Freegle the sums not approved.

5.4 Recharging of the funds on the pre-paid cards will be done periodically in line with pre-agreed limits set out in section 5.1.

5.5 Freegle Ltd will operate a ongoing float via an authorised prepaid debit card subject to the rules above, it will not operate any ongoing petty cash system.

6. Third Party Receipts and Payments

In order to facilitate grants offered to affiliated communities that have no bank account or individuals doing specific work for Freegle centrally, the Freegle Ltd bank account can be used to enable payments under the following conditions.

6.1 The community should forward copies of any grant documentation showing:

  • what and who the payment is for
  • whether there are any conditions attached to the payment e.g. receipts need to be provided
  • whether any/all of the funding might need to be paid back if certain conditions are not met.

6.2 If conditions attached to such grants are too onerous, the Board reserve the right to not offer a third party service.

6.3 Any individual receiving funds in this arrangement must be a Freegle Volunteer. This status should be validated by at least 2 other Volunteers not on the same affiliated local community.

6.4 Payment must only be for funding Freegle local or central activities.

6.5 The payment to the individual will not be paid until the above criteria are satisfied and in accordance with section 4 Payments of this document.

6.6 All such arrangements will be clearly recorded in the accounts.

6.7 Payments will not be accepted if there is any concern as to the source so that there can be no risk of money laundering legislation being breached.

7. Accounts and Paperwork

7.1 The accounts spreadsheet will be updated at least monthly. Access to edit the accounts will only be by the Treasurer ID.

7.2 Back-up copies of accounts will be kept electronically and in paper form.

7.3 The accounts will record, for each payment made, the message number of the Board’s poll result which authorised the payment, and the name of the second authoriser - the submitter usually being the Treasurer unless there are special circumstances. There will also be a note of the beneficiaries set upon the bank account to receive payments, and the message number of the Board’s poll result which authorised them to be beneficiaries.

7.4 The Finance Director, in consultation with the Board and Treasurer, will prepare a Financial Report which will accompany audited accounts presented to Freegle Members annually.

7.5 Original receipts, invoices and other related paperwork will be held, filed and kept for seven years by the Treasurer, and passed on if the Treasurer changes.

8. Cheque Signatories and Cash Cards

8.1 Each cheque will be signed by at least two people. All cheque signatories will be appointed by the Board, and the authority clearly recorded. Holders of passwords to view the bank account on the Internet, or make electronic payments (subject to procedure 2.1) will also be appointed by the Board, and the authority clearly recorded on the accounts spreadsheet and in the form of a copy of the mandate sent to the bank.

8.2 The only card allowed to be used on the Freegle bank account is the Unity Corporate Multipay ( https://www.unity.co.uk/corporate-multipay-card/) under the following conditions:

  • Board approval is required for issuing the card.
  • Spending limits will be set by the Board, and linked to specific spend budgets.
  • The card must not be used for cash withdrawals.
  • The card can only be used for the card holder’s Freegle approved expenses, not for any other Freegle volunteer or contractor expenses.
  • Other conditions relating to use of the card will be as required in line with 5.3 and 8.3 of this document.

8.3 It is the role of the Freegle Finance Sub Committee to periodically review the spend on pre-paid and multipay cards with those who are holding them. Card holders should check with the Board before they spend if they are not sure the spend is in line with pre-agreed categories. Should any spend be outside of agreed categories, the Board will ask the pre-paid or multipay card holder to reimburse Freegle the sums not approved, or deduct the amount from payment of card holder invoices if appropriate.

9. Confidentiality and Conflict of Interest

9.1 The confidentiality of any volunteers’ financial circumstances will be respected at all times.

9.2 The Board and those involved in grant applications must declare any conflict of financial interest.

10. Other Rules

10.1 The Board will consider the level of reserves that is prudent for Freegle Ltd to have after the poll to accept the Annual Accounts. Consideration will be given to liabilities, lease agreements and any other significant factors that should be taken into account were Freegle Ltd to cease. The current policy is that Freegle will aim to keep a minimum of £1K reserves.

10.2 Where assets are purchased, or there are significant stock holdings of non-capital items, e.g. stationery, suitable records will be kept and the items checked at least annually at the financial year-end.

10.3 Any Volunteer - whether elected, active centrally, or not - can receive payment for services for Freegle Ltd, as long as everything is properly documented and the process is fair and transparent, and approved by the Board or Members as necessary.

11. Tendering

11.1 The Board will publish on Central each year the annual objectives with associated budgets, including where any funding is available or planned to be raised.

11.2 All paid work will be open to expressions of interest from any volunteer for delivering any of the objectives or wishing to be involved in raising required funding. Paying People in Freegle Guidelines refers. If and when budgets or priorities change, the Board will publish those amendments in advance of contracting paid work.

11.3 If a new piece of work or service exceeds payment of £11k, the Board will seek at least 2 quotes from interested parties, and if in excess of £22k will seek at least 3 quotes, including from external parties if practicable. These limits were set in April 2018 and will rise in line with consumer price inflation each year (see note 1). For renewal of an existing contract, the Board can extend the contract for the same value (plus inflation) without the requirement for new tendering. The Board will decide on the best person or company to deliver the work based on which is in the best interests of Freegle.

11.4 A contract Contract for Services will be set up for all paid work over £250 for new suppliers, and the smaller of £1000 or 10% of total current bank balances for suppliers with a pre-existing relationship. Directors will follow agreed procedures when discussing and deciding on paid work Conflicts of Interest Procedure.

Notes:
Note 1. CPI was 2% in the year April 2018 to April 2019 - https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/april2019

12. Approval of End of Year Accounts

12.1 At the April 2024 board meeting, the following process for approving the Year end accounts was agreed:

  • During the relevant Financial Year, the AGM votes to dissapply the need for an audit for that year's accounts
  • Shortly after the end of the Financial Year, a draft set of accounts are produced by the Treasurer and reviewed by the Finance Subcomittee
  • The draft End of Year Accounts are issued to the auditors who produce a report which is incorporated into the accounts
  • The draft End of Year Accounts and report are approved via a vote held at a Freegle Board Meeting
  • The approved End of Year Accounts are submitted to the Financial Conduct Authority
  • The approved End of Year Accounts are shared at the next AGM for information

Notes:
Note 2. Disapplying the need for an audit is done in-line with FCA rules 7.2.12 - 7.2.17 - https://www.handbook.fca.org.uk/handbook/RFCCBS/7/2.html
Note 3. FCA rules 7.2.21 - 7.2.24 require that even if a report is produced (as opposed to a full audit), it must be produced by a qualified auditor if certain criteria are met
Note 4. Freegle Rules 23a requires that the accounts are provided to the AGM



Relevant links:

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