Financial Regulations Policy & Procedure
1. Introduction
The context of these mandatory regulations
These financial procedures set out the financial systems and procedures to ensure the efficient and effective financial management of the Your Voice in Health & Social Care (YVHSC). They are to be determined by the Chief Executive Officer (CEO) under powers conferred by the Board of Trustees and these Financial Regulations. They provide guidance for all Board members and staff who have responsibility for the management of resources and the control of income and expenditure.
2. Financial Responsibilities
The YVHSC Board of Trustees is responsible for the effective and efficient use of resources, the solvency of the YVHSC and safeguarding its assets. The Board is also responsible for approving the annual budget and YVHSC’s financial strategic direction. This is based on regular analysis of financial information pertaining to both current and future funding, income generation and other opportunities.
The CEO is responsible to the Board of Trustees for preparing the annual budget for consideration by the Board and for the management of resources within estimates approved by the Board. Except when provided to the contrary, the CEO may delegate functions, but not responsibility, to other staff.
The YVHSC Treasurer oversees the work of the CEO for advising on the financial aspects of the YVHSC's policy, its financial administration, and for ensuring that the YVHSC has satisfactory systems of financial control and management.
The CEO is responsible for preparing regular statements of account as set out in these Financial Regulations. The accounts will be prepared in accordance with agreed format of the YVHSC, and conforming to SORP (Statement of Recommended Practice). They are to be presented to the Treasurer & Board Chair for approval before submission to the Board of Trustees for formal approval.
The YVHSC's auditors prepare a report on the YVHSC's activities in accordance with best audit practice, the provisions of the relevant Companies Act and with the directives and requirements of the Charity Commission. The YVHSC's auditors have the right of access to any minutes, books, documents or other information kept by the Charity, and also have the right of access to the Chairman of the Board of Trustees and any YVHSC's Officers. The YVHSC's auditors submit their report on the activities of the YVHSC to the Board of Trustees for formal approval and for signature by the Treasurer and Chairman.
YVHSC shall at each AGM appoint Auditors being a Chartered or Incorporated Accountant to hold this office until the next AGM.
Approval:The YVHSC Board of Directorswill approve the annual budget to the
3. The Budget
Preparation
The CEO is responsible for the preparation of the annual budget which defines the allocation for individual activities and projects This review will take account of expected changes in availability of finance, strategic planning objectives etc. The annual estimates shall be considered in detail by the Audit Committee before final approval by the Board of Trustees.
The annual budget shall be presented by the Treasurer to the Board in a form approved by the Board and in accordance with a timescale determined by them.
Budgetary control
(i) Requests to commit expenditure will be reviewed against the relevant free budget.
Purchase requests will be made on a signed order form duly authorised by a member of Staff to the CEO (or in the case of the CEO to the Chair or Treasurer) before the expenditure is committed. A copy of the order will be issued by return, authorising the expenditure.
Should there be a significant change in circumstances after the annual budget is set, consideration may be given to move new funds to the appropriate budget heads.
(ii) Each month, the Treasurer will receive details of actual transactions made compared with budget.
Where adverse variances are incurred these will be identified and, if the variances are material, an appropriate explanation must be given with the aim of establishing the appropriate corrective action.
Monitoring of expenditure and income against targets
The CEO shall be accountable to the Board of Trustees for effective budgetary control within the approved budget.
A summary of financial activity within the restricted funds held on behalf of YVHSC projects will be made available to the Board of Trustees.
4. Expenditure
General
The CEO is responsible for all payments made by or on behalf of YVHSC. The CEO and Board shall approve all payment procedures.
Orders and contracts for goods and services
Goods and services purchased by YVHSC should be obtained expeditiously and economically. Budget holders shall ensure that purchases are made at the most favourable rate by obtaining estimates on the basis that the acceptance of any estimate other than the lowest is not permitted except in exceptional circumstances.
The procedures for obtaining estimates shall be as follows:
Value of order Requirements Up to £1,000 / The CEO, (budget holder) shall use good sense and obtain the most advantageous price from the supplierFrom £1,000 to £5,000 / Two quotations are required.
These are minimum requirements and should not prevent budget holders from exercising appropriate due diligence for orders up to £1,000.
5. Purchasing
Expenditure: All orders shall be on sequentially numbered forms. Each order must clearly indicate the nature and quantity of the supplies and services required, the quoted price including VAT and any agreed discounts and other relevant details. Order forms should be submitted to the Finance Office prior to ordering, to establish free budget and for authorisation. Staff must not proceed without signed authorisation.
Once authorisation has been received, the goods may be ordered and purchased and the appropriate order number should be given to the provider.
Value of order Authorisation Up to £2,000From £2,000 - £5,000
Over £5,000 / CEO
CEO and Chair or Treasurer
CEO, Chair and Board
All invoices that do not correspond with the existing order details shall require authorisation by the relevant budget holder in advance.
Payment will normally be made on the next available cheque run following receipt of authorised invoices at Community House. Every endeavour will be made to pay invoices within the terms agreed with the supplier. BACS payments will be used whenever possible.
6. Signing cheques
All YVHSC cheques require two authorised signatures. A register of those authorised to sign cheques will be kept by the CEO & Treasurer.
7. Recruitment
YVHSC’s policies on recruitment and equal opportunities should be adhered to when recruiting. Expenditure associated with recruitment procedures must be authorized in advance by the CEO or Board as per delegated authority.
8. Time records
Time records or other pay documents shall be in a form prepared by the CEO.
Remuneration for posts will take into account the responsibilities and qualifications required to fulfil the duties required by the post. Where a scale is attached to individual posts, increments may be paid annually until the top of the scale is reached. These increments are discretional and subject to a satisfactory annual post appraisal
The Board of Trustees will use their best endeavours to award an overall increase in rates annually, provided it is prudent to do so.
Note - in all cases Employee’s contract of Employment takes precedence
9. Expense claims
Staff
Claims for expenses incurred by YVHSC staff in carrying out official duties must be submitted on monthly expense claim forms. Staff will be informed of cumulative mileage monthly.
Expense claims shall be authorised by the appropriate line manager and paid by BACS. If individual members of staff require earlier payment, a cheque will be drawn up after approval by a relevant member of SMT
Volunteers
Payments to volunteers working on YVHSC projects for legitimate expenses will be made subject to the normal Inland Revenue rules and paid by BACS whenever possible. Claims for expenses incurred by volunteers must be submitted on YVHSC expense claim forms.
10. Changes to payroll
Discretionary changes in the remuneration package of employees must be approved in writing by the CEO. Where changes are proposed in the remuneration of the CO,
the prior approval of the Board must be obtained.
Non-statutory deductions from pay
The CEO & outsourced payroll agency will be responsible for issuing individual statements of any non-statutory deductions from pay with the last pay slip of the preceding year.
Employees will be required to authorise non-statutory pay deductions before the 19th day of April each year. No deduction will take place without such direct authorisation
11. Pensions
Employee and Employer contributions to the preferred pension scheme shall be held until paid over to the pension provider by direct debit
12. Petty cash
There is no petty cash account at YHSC. The CEO is responsible for providing emergency cash for small items as required the CEO will reclaim these expenses on monthly claim forms. Members of staff are requested to whenever possible use the expenses claim system to make out of pocket expenses
13. Income
General
The CEO shall be responsible for the security and prompt banking of monies received. All monies received on behalf of the YVHSCC shall be banked as soon as possible
Monies due to the YVHSC from external organisations shall be requested on sequentially numbered YVHSC invoices.
A list of "aged debtors" will be produced monthly and the CEO will be responsible for ensuring that all overdue debts are chased.
14. Receipts
Every sundry remittance or sum of money received by an officer on behalf of the YVHSC will be acknowledged by the issue of an official receipt.
15. Post opening
All incoming post shall be opened by a member of staff.
Remittances received by post must be recorded on sequentially numbered income sheets as part of the post opening procedure. Cheques must be made out in the YVHSC's name.
16. Grants
The grants provided by funding bodies may be for a number of purposes. Virement within the expenditure of these grants will only be permitted in accordance with the restrictions imposed by the funding bodies.
The residue of grants and assets that may remain on completion of a community project or specially funded piece of work may;
(a) If agreement was obtained, either at the onset, or retrospectively, be treated as a donation to the YVHSC's general fund, on the clear understanding that the income
was not generated as a direct result of the YVHSC's involvement in the project, but simply as a new donation from the funder(s).
(b) Be transferred into a new project with the funder(s) agreement
(c) If required be realised, at the best possible price less realisation costs and returned to the funder(s): Capital grants / Realised amount apportioned directly to initial grant.Revenue grants / Funds balance apportioned in proportion to amount and date grant was received
17. Treasury Management
Investments
The Board of Trustees shall approve a policy statement outlining the strategy and parameters surrounding the investment of surplus funds.
The Financial Manager and one trustee shall have delegated power to invest funds on a day-to-day basis in accordance with this policy.
The Financial Manager shall report regularly to the Board of Trustees.
Fixed assets investments
Fixed asset investments will be reported at market value as required by SORP. Realised and unrealised gains and losses will be shown in the annual Statement of Financial Activities.
Borrowings
Any necessary short term borrowing for temporary revenue purposes shall be authorised by the CEO within limits determined by these Financial Regulations. The CEO shall report such short term borrowing to the Treasurer immediately and to the Board of Trustees at the earliest opportunity.
The limits set for short term borrowings shall be a maximum of 15% of the latest audited unrestricted reserves. Borrowing in excess of this amount, or for borrowings that are anticipated to be for more than three months shall require the authorisation of the Board of Trustees.
Banking
All arrangements with the YVHSC's Bankers concerning the YVHSC's bank accounts and the issue of cheques, shall be made by the CO on behalf of the Board of Trustees. Bank accounts may only be opened or closed with the approval of the Audit Committee.
No other budget holder or community project shall be empowered to operate a bank account in the name of the YVHSC and no cheques or financial instruments made payable to the YVHSC shall be endorsed and credited to any other account.
The appointed bankers shall be authorised to honour the signatures of duly appointed signatories on all documents relating to the Charities account. All cheque payments must be authorised by two signatories.
Any changes in authorised signatories shall be approved by the Board of Trustees.
The provision of banking services to the YVHSC should be subject to review every three years.
18. Payment via B.A.C.S
When the payments list has been prepared using the prescribed input form, the persons responsible for authorisation will check the accuracy of each amount. The authorisation may be done in batches but this control must be completed before any transactions are posted.
19. Taxation
Value Added Tax
YVHSC will be not be registered for VAT.
Corporation tax
The YVHSC or its subsidiary may be liable for corporation tax on any profit making activities that it undertakes. The CEO will be responsible for ensuring that any corporation tax liabilities are identified and reported accurately to the Inland Revenue.
PAYE & National Insurance contributions
The CEO will be responsible for ensuring that deductions in relation to payroll shall be remitted promptly to the Inland Revenue.
20. Managing the Charity's Assets
Assets
Register of assets
The CEO shall be responsible for maintaining proper security of all offices, furniture, equipment, and all other assets of the YVHSC and shall ensure all assets are recorded on a register or otherwise in such manner as may be required by the Board of Trustees, having taken account of directives, requirements and guidance issued by the SORP.
Capital items should be included in all inventories immediately on receipt and, they should be clearly and permanently marked as the property of the Charity.
It will be the responsibility of the Financial Manager to ensure that an annual check is made of all inventories.
YVHSC property shall not be removed from the YVHSC's premises other than in accordance with the ordinary course of business, or used other than for the YVHSC's purposes, except in 10 accordance with specific directions issued by the CEO. Any property removed shall be recorded in a schedule maintained by the Finance Office.
21. Capital expenditure
The minimum level of capitalisation will be set at £1000. Below this level, items will be treated as expenditure unless they form part of a larger project.
Depreciation of assets
It is policy that depreciation is calculated so as to write off the cost or valuation of an asset less its estimated residual value over the economic life of the asset.
Disposals
A disposal note must be obtained before any assets are sold. This note should be authorised by the Chair/Treasurer after the CEO has identified the book value of the asset (if available), and the profit or loss on disposal has been determined.
If the disposal would involve a material unbudgeted loss (over £2,500) the prior approval of the Board must be obtained.
22. Insurance
The CEO shall, within the policies determined by the Board of Trustees, effect such insurances as are from time to time considered necessary to cover risks to which the Charity is exposed and shall negotiate and recover claims.
The CEO shall keep a register of all insurances effected by the YVHSC and the property and risks covered thereby.
23. Computer software
Computer programs and files will at all times remain the property of the YVHSC. Back-ups will be taken at regular intervals. The previous days back up tape is to be taken off sit at the end of the day.
24. General Ledger and Reporting Structures
Chart of accounts
The CEO is responsible for ensuring that an appropriate chart of accounts incorporating the requirements of the SORP and those of the Companies Act 1985 and 2000 are taken into account.
Basis of apportionment of expenditure
Direct charitable expenditure includes all costs directly relating to YVHSC’s objectives, including costs involved in supporting that work.
Fund-raising and publicity costs include those costs incurred in inducing others to make contributions to YVHSC.
25. Management and administration costs include those costs connected with management of YVHSC's assets, organisational management and administration and compliance with constitutional and statutory requirements.
Staff costs are allocated on a basis of time spent on direct charitable work, community projects, fieldwork and support.
Premises costs are allocated to direct charitable support costs
Depreciation is allocated on the basis of used assets.
26. Reporting structure & frequency
The following procedures will be adopted: Yearly / i) Statement of Financial Activities and Balance Sheet in accordance with SORP requirementsEach Board of Trustees meeting / ii) Summary Income & Expenditure statements
A note of material adverse variances will also be reported
to members as necessary.
Monthly / iii) Spreadsheets to Treasurer covering all project income and costings. Summary to differentiate between restricted and unrestricted funds.
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