1. Purpose and Scope
This Finance Policy outlines the principles and procedures governing the financial management of Parapluie FLAM, a charity governed by its Constitution with trustees as the only voting members.
This policy ensures transparency, accountability, and adherence to sound financial practices. It complements other policies of Parapluie FLAM, including the Whistleblowing Policy, Data Protection Policy, Safeguarding Policy, and Volunteer Management Policy, and adheres to the Parapluie FLAM’s Code of Conduct.
2. Budgeting
2.1 Annual Budget:
The trustees shall annually approve a comprehensive budget that aligns with the charity’s objectives. The budget shall include projected income, expenses, and cash flow.
2.2 Budget Monitoring:
Regular monitoring of budgeted versus actual financial performance will be conducted, and any significant variances will be reported to the trustees for review and action.
3. Financial Reporting
3.1 Frequency:
Financial reports summarising income, expenses, and financial position will be provided to trustees on a quarterly basis to ensure more frequent oversight.
3.2 Financial Statements:
Annual financial statements, prepared in accordance with the Charities SORP (Statement of Recommended Practice) or relevant accounting standards, will be presented to trustees and made available to members.
4. Expense Reimbursement
4.1 Policy:
Trustees and authorised individuals may be reimbursed for reasonable and necessary expenses incurred in the performance of their duties, subject to submission of appropriate documentation and approval.
4.2 Approval Process:
Expense claims must be submitted promptly, approved by an authorised person, and processed in accordance with the guidelines provided in the Charity Commission’s guidance on expenses and Parapluie FLAM’s policies.
5. Financial Controls
5.1 Segregation of Duties:
- Roles and Responsibilities: The roles and responsibilities of individuals involved in financial management, including trustees, staff members, and volunteers, will be clearly defined. Specific tasks, such as approving expenditures, handling cash, reconciling bank statements, and preparing financial reports, will be assigned to appropriate individuals.
- Authorization and Approval: No single individual will have complete control over all aspects of financial transactions. For instance, the person responsible for approving expenditures will not be the same individual responsible for processing payments. This separation of duties aims to prevent unauthorised or fraudulent transactions.
- Receipt and Payment Controls for Small Teams: Ideally, responsibilities for receiving funds and making payments will be separated. However, when the Parapluie FLAM team is very small and only one person handles bookkeeping and payments, additional controls should be implemented:
- Regular Review: Trustees should regularly review the bank statements, financial records, and transaction reports to ensure accuracy and legitimacy.
- Dual Authorisation: For larger payments above a specified threshold, dual authorisation from two trustees or a trustee and the CEO should be required.
- External Audit: Engage an external auditor to periodically review the financial records and controls to provide an independent assessment of financial integrity.
- Monthly Reconciliation: Ensure monthly bank reconciliations are performed and reviewed by a trustee or an independent party not involved in daily transactions.
- Expense Approval: Require all expense claims to be reviewed and approved by someone other than the individual processing the payment, even if this is done retrospectively.
5.2 Conflict of Interest Considerations:
- Avoiding Conflicts: Segregating financial duties aims to minimise conflicts of interest by ensuring that individuals responsible for financial decision-making are not in a position to benefit personally from those decisions.
- Transparency: Clear lines of responsibility and accountability in financial operations will promote transparency within the organisation. This transparency is essential for maintaining the trust of members, donors, and the public.
- Ethical Conduct: The separation of financial duties supports ethical conduct by reducing the temptation or opportunity for individuals to engage in fraudulent activities. It establishes a culture of integrity and accountability within the organisation.
5.3 Recordkeeping:
Accurate and complete financial records shall be maintained, ensuring compliance with the Charities Act 2011 and facilitating effective financial management. Records should be kept for a minimum of six years, as per statutory requirements.
6. Transparency and Accountability
6.1 Public Accessibility:
Financial information, excluding sensitive details, shall be made available to the public, promoting transparency and accountability in accordance with the Charity Commission’s guidelines.
6.2 Annual Report:
An annual report highlighting the charity’s financial performance and achievements shall be produced and made available to members and the public as per the reporting requirements outlined in the Charities Act 2011.
7. Compliance
7.1 Legal and Regulatory Compliance:
The charity shall adhere to all relevant laws, regulations, and reporting requirements governing financial management for charitable organisations, including compliance with the Charities Act 2011.
7.1.1 Charities Act 2011:
Compliance with the Charities Act 2011 is foundational to our operations. This includes meeting the legal requirements for charitable status, maintaining accurate and up-to-date records, and submitting annual reports and financial statements to the Charity Commission in accordance with prescribed timelines.
7.1.2 Other Relevant Legislation:
In addition to the Charities Act 2011, Parapluie FLAM will stay informed about and comply with other relevant legislation impacting financial management. This may include tax laws, data protection regulations, and any other laws directly affecting the financial affairs of charitable organisations.
7.1.3 Documentation and Record-Keeping:
Parapluie FLAM will maintain comprehensive documentation to demonstrate its compliance with legal and regulatory requirements. This includes keeping records of financial transactions, meeting minutes, and other relevant documentation to support transparency and accountability.
7.1.4 Periodic Reviews:
Periodic reviews will be conducted to ensure ongoing compliance with all relevant laws and regulations. These reviews will be part of our commitment to continuous improvement, and any necessary adjustments will be made promptly to address changing legal landscapes.
7.1.5 Legal Advice:
Parapluie FLAM will seek legal advice and guidance as needed to stay informed about changes in laws and regulations affecting financial management. This proactive approach ensures that the charity remains well-informed and able to adapt to evolving legal requirements.
7.1.6 Stakeholder Communication:
Members, donors, and other stakeholders will be informed about Parapleui FLAM’s commitment to legal and regulatory compliance. This information will be made available through public communications, Parapluie FLAM’s website, and relevant documentation, fostering trust and confidence in the organisation.
7.1.7 Corrective Action:
In the event of any identified non-compliance, Parapluie FLAM will take prompt corrective action. This may include implementing internal controls, conducting additional training, or seeking legal advice to rectify the non-compliance and prevent its recurrence.
8. Review and Amendments
8.1 Review:
This Financial Policy shall be reviewed regularly to ensure its effectiveness and relevance to the charity’s financial management needs.
8.2 Amendments:
Amendments to this policy may be made by a resolution of the trustees and shall be communicated to all relevant stakeholders in compliance with the procedures outlined in the charity’s Constitution and the Charities Act 2011.
9. ESG and ESD Integration
9.1 ESG Criteria:
Parapluie FLAM is committed to Environmental, Social, and Governance (ESG) criteria. This Finance Policy supports the social aspect of ESG by ensuring transparency, accountability, and ethical financial practices within the organisation.
9.2 ESD Principles:
In line with Education for Sustainable Development (ESD) principles, Parapluie FLAM promotes financial practices that support sustainability and responsible resource management. This includes adopting environmentally-friendly practices and ensuring that financial decisions align with the broader goals of sustainability and ethical governance.
10. Other Relevant Policies and Code of Conduct
10.1 Whistleblowing Policy:
Encourages reporting of any financial misconduct or unethical behaviour.
10.2 Data Protection Policy:
Ensures the handling of financial data complies with legal standards.
10.3 Safeguarding Policy:
Protects vulnerable individuals and ensures financial resources are allocated responsibly to support safeguarding measures.
10.4 Volunteer Management Policy:
Outlines the financial procedures for managing expenses related to volunteer activities.
10.5 Code of Conduct:
Sets the standard for ethical behaviour and financial integrity expected from all trustees, staff, and volunteers.
11. Insurance
11.1 Federation Liability Insurance:
Parapluie FLAM has liability insurance to cover safeguarding risks within its operations.
11.2 Member School Insurance:
Member supplementary schools are advised to obtain appropriate liability insurance that covers safeguarding and financial risks.
Effective Date: 5 January 2024