Financial Management & Procedures Policy

1. Purpose

  1. The Board of Trustees will be able to ensure and demonstrate to funders, stakeholders and beneficiaries that the assets of CoSP are safely controlled and managed.
  2. Trustees and staff will not be put in a position where funds can be misused.
  3. The interests of the beneficiaries of the charity, its trustees and its employees will be protected.
  4. The relationship between the Board of Trustees and the staff in financial matters and their respective roles will be defined.
  5. Financial decisions will be implemented following satisfactory procedures.
  6. Accounting regulations, standards and legal requirements will be complied with.

2. Responsibilities

The Board of Trustees:

  • holds the assets of CoSP on trust for the beneficiaries of the charity and manages them on behalf of funders, ensuring that they are used to achieve the objects for which CoSP is established
  • approves all financial management and control policies and procedures
  • approves the bank signatories annually
  • approves an annual budget
  • monitors financial outcomes
  • determines policies for loans and investments and for borrowing money and approves borrowing
  • approves general arrangements for risk management
  • approves the annual audited accounts for presentation to the Annual General Meeting
  • approves all new posts
  • approves all company bank accounts and their signatories
  • approves items of capital expenditure over £200
  • monitors implementation of the Reserves Policy
  • considers the appointment of the external auditor and the audit fee

The Treasurer:

  • ensures that accurate and timely financial information is presented to the Board of Trustees
  • keeps abreast of any changes in financial legislation and regulations affecting CoSP, in particular with main requirements to charity and company law
  • formulates the annual budget for consideration by the Board of Trustees
  • monitors financial outcomes against budgets quarterly
  • liaises with the auditor to provide all information and documentation necessary for the audit of the annual accounts
  • ensures that all statutory financial returns are completed and filed by due dates
  • informs the Board of Trustees of any changes in financial legislation and regulations affecting CoSP, in particular the main requirements of company and charity law.

The Project Manager:

  • is accountable to the Board of Trustees for the financial activities of CoSP
  • ensures that accurate and timely financial information is presented to the Board of Trustees
  • keeps abreast of any changes in financial legislation and regulations affecting CoSP, in particular with main requirements to charity and company law
  • directs and co-ordinates financial strategies and plans, linking these to the annual work plan
  • ensures that the financial policies and procedures approved by the Board of Trustees are implemented
  • formulates the annual budget for consideration by the Board of Trustees
  • monitors financial outcomes against budgets quarterly or more frequently
  • monitors cash flow and alerts the Board of Trustees if reserves in the company fall below the level necessary to comply with the Reserves Policy and legal obligations
  • monitors cheques and BACs processes to ensure they are correctly authorised by delegated signatories
  • reviews and updates the charity’s risk assessment annually
  • liaises with the auditor to provide all information and documentation necessary for the audit of the annual accounts
  • ensures that all statutory financial returns are completed and filed by due dates
  • informs the Board of Trustees of any changes in financial legislation and regulations affecting CoSP, in particular the main requirements of company and charity law.

3. VAT

CoSP is not registered for VAT. VAT regulations in respect of charities are extremely complex. When considering any new activity, funding application, project, purchase or contract, advice on VAT will be sought, taking professional advice when necessary.

4. Contracts

A contract may be written or verbal; it is still legally binding.  Contracts may be entered into between CoSP and, among others:

  • employees
  • suppliers
  • consultants and professional advisers
  • purchasers
  • funders
  • grant recipients
  • trustees

It is therefore imperative that contractual relationships are recognised as such and that no employee or trustee unintentionally commits CoSP to a contract. It is also important that contracts with consultants and agreements with volunteers are clearly drafted to avoid creating a contract of employment. All agreements with volunteers should be drafted to ensure that no legally enforceable contractual relationship is created, unless this is intentional.

Contracts must be in writing and include:

  • the names and addresses of the parties to the contract
  • the total contract sum, broken down by financial years where applicable
  • a clear description of what is required from the parties (for brevity, this may refer to other documents e.g. tender specifications), including, where relevant, objectives, time periods, start and finish dates and payment schedules
  • purchaser’s rights in the case of non-performance

Except for contracts with employees, all new contracts for whatever value must:

  • comply with the general rules for approved expenditure or funding applications
  • be submitted to the Board (Resources) for checking and approval, until appointment of the Project Manager, at which point the Project Manager is responsible
  • be referred to the Board when deemed necessary by the Treasurer/Project Manager
  • All contracts with funders must be signed by the Chair of the Board. Other contracts must be signed in accordance with authority limits by the Project Manager

The Treasurer will maintain a register of contracts, to include signed copies of all contracts.  This role will be taken by the Project Manager once that person is in post.

5. Expenditure

All expenditure must be authorised by the Board of Trustees.  In all cases where a purchase will take expenditure over the agreed budget, the authorisation of the Board of Trustees must be obtained. 

For purchases of goods and services over £1,000, a minimum of three quotations should normally be obtained.

For purchases of goods and services including consultancy services over £5,000, (which may include a long-term contract for services where annual charges are less than £10,000) a formal tendering process should normally be used, unless there are special circumstances for which the Board of Trustees approves an alternative method.

6. Tenders

The Treasurer is responsible for overseeing the preparation, despatch and receipt of tender documents.  The Project Manager is responsible for drawing up specifications and, where appropriate, agreeing with trustees the names of firms invited to tender.

Normally a minimum of three contractors will be invited to tender. Tenderers will be advised if the tender will be judged on overall value, rather than lowest price (see Acceptance of Tenders).

The Treasurer will notify the acceptance of a tender in writing to the tenderer.

7. Payroll

The Scottish Council of Voluntary Organisations (SCVO) payroll section offers a payroll bureau service to CoSP; however legal responsibility for all payroll matters remains with CoSP.

Operational responsibilities:

  • SCVO has day-to-day responsibility for:
    • payroll calculation
    • preparing payroll reports, including employee payslips
  • The Project Manager has day-to-day responsibility for:
    • issuing and amending employment contracts
    • recording leave and sickness absences and arranging payments as necessary
    • recording grievance and disciplinary proceedings
  • The Treasurer is responsible for:
    • reviewing payroll reports prepared by SCVO
    • ensuring that tax returns and payments have been made as required
    • monitoring and updating Inland Revenue dispensations

8. Income

Preparation of Funding Applications:

  • the Board of Trustees will determine when an application is to be made
  • the most appropriate Trustees or members of staff will then undertake initial preparation of the application
  • the Board will approve the final draft before submission. Although this can be delegated by the board to at least two trustees.

The Treasurer and Project Manager will maintain a register of grants awarded, to include critical dates by which claims and reports must be submitted.

9. Banking

The Treasurer has overall responsibility for managing all bank accounts and making transfers between accounts.  The Treasurer has primary responsibility for recording transactions.  Bank accounts will be reconciled by the Treasurer (and Project Manager) and checked periodically by the Chair of the Board of Trustees.

Bank signatories will be approved annually by resolution at the first Board meeting following the Annual General Meeting.  Bank signatories will be drawn from the Chair, Vice Chair, Treasurer and Project Manager.  All cheques will be signed by two signatories.   No cheques will be pre-signed.  Cheques must not be signed by the payee.  The Treasurer is responsible for the security of blank cheques.

The Treasurer will:

  • maintain a record of bank mandates
  • complete new mandates
  • submit an update report every six months to the Board of Trustees
  • have two signatories on mandates where Bacs payment is used.

Cash and cheques received will be banked regularly, as often as is practicable.  Whenever possible, payments due to CoSP will be collected by direct transfer to the bank account.

10. Risk Assessment and Insurance

The Board of Trustees will review the risk register as a whole, annually.   The Treasurer and Project Manager will review insurance arrangements annually with CoSP’s broker and handle any claims arising for all areas.  All project applications will include a budget item for insurance costs.

11. Physical Assets

An inventory will be maintained at each location of all assets above £50 value, showing description, date of acquisition, purchase price, estimated replacement cost and serial numbers where applicable.

Inventories will be updated at the time of purchase/disposal of assets and will be checked annually.

Copies of invoices for assets purchased will be kept on the inventory, for use in the event of an insurance claim.

12. Monitoring and Review

The Board of Trustees will review the operation of this policy annually. 


Agreed by CoSP Trustee Board : 27th November 2018