Policy agreed on: April 2023
Date for review: 01 Jan 2024
Reference: ICYE UK – Reserves Policy
ICYE UK Finance Policy
1. Introduction and Aim
The purpose of the Finance Policy (FP) is to define the finance systems and controls to be used by ICYE UK. These systems and controls are necessary to mitigate against fraud and risk, to clarify good practice and responsibilities and to ensure that ICYE UK satisfactorily fulfils its financial obligations to statutory bodies and to stakeholders.
The Board of Trustees will be responsible for ensuring that this policy remains up to date by working once each year (between January and March), with the Office Manager, both to check procedures are satisfactory and to revise them as necessary based on auditor’s recommendations, good practice or Board requirements.
This version of the FP has been approved at a time when ICYE UK’s staff and finances are small. Therefore a number of sections normally found in a Manual (see section 20 below) have not been included. In 2023 a section was added on payment cards in the section about petty cash and other sections should be considered for inclusion during future annual updates.
2. Roles and Responsibilities
The Office Manager and the Treasurer are the roles most closely involved in ICYE UK’s finances. Their job descriptions, along with this document, detail their roles and responsibilities.
The Board of Trustees is accountable for the overall financial performance (in relation to reporting to statutory authorities and to achieving the mission by approving budgets). The Office Manager has responsibility for the day-to-day financial performance of ICYE UK. The Treasurer has responsibility for ensuring that systems are in place for regular reporting, consultation and risk assessments and to provide the Office Manager with support and advice as required.
ICYE UK’s financial year is from July 1st to June 30th. A twelve monthly income and expenditure budget will be prepared by the Office Manager and Treasurer, in time for final approval by the Board in May/June.
There are no separate departments or budget-holders in ICYE UK so it is the Office Manager’s responsibility to ensure every planned activity is covered by the budget.
The approved budget will be used to construct a cash-flow forecast for the year, which will be updated throughout the financial year.
The Office Manager and Treasurer will prepare a re-forecast budget in December/January, to reflect the various actual scenarios within the year. This shall be presented to the Board in January.
4. Maintaining Accounts and Records
All income and expenditure information will be recorded in a timely manner on an online bookkeeping or accounting system. Monthly reports, against the budget, should be available to the Office Manager and the Treasurer if required.
All corrections and adjustments will be clearly noted in the online system, with notes added where necessary.
All purchase invoices, staff expense forms and payment documentation will be filed in date order to match the online bookkeeping system.
All income and expenditure information including petty cash receipts, cheque stubs, paying in slips, payroll records, debit card receipts etc. will be retained for audit and statutory purposes thereafter (see section 19 below).
5. Financial monitoring and audit
ICYE UK’s financial year is from 1st July to 30th June. Annual accounts will be submitted for audit, as required under the Companies Act, charity regulations and any grant conditions, prepared in accordance with SORP for Charities and UK GAAP. The final draft for independent assessment shall be ready by the end of November as the audit will normally take place in December to be approved and signed off at the Board meeting in January
Independent Assessors are to be (re-)appointed yearly at the Annual General Meeting (AGM)
Quarterly management accounts are to be produced, which show ICYE UK’s performance against the budget. These will be reviewed by the Treasurer and Office Manager and presented to the Board, highlighting variances and risks. There should be quarterly reports in early October, early January, early April and at the end of the financial year.
ICYE UK’s reserves policy (including level of restricted and unrestricted reserves) will form part of budgetary planning and be reviewed together with the budget and projected cash flow on a yearly basis by the Board of Trustees.
7. Ordering supplies and services
Expenditure is committed when an order is placed on behalf of ICYE UK and not when payment is requested. It is therefore important to ensure that all purchases provide value for money to ICYE UK and are within agreed budgets.
ICYE UK’s main purchases are airfares and venue bookings. We rarely commission external consultancies or purchase items of higher value so the tendering procedure can be simple.
- For any purchase of goods or services which costs over £2,000 (in one payment or over the course of a year) at least three providers must be asked for their quotations/proposals. One Trustee (usually the Treasurer) must be provided with the reasons for the final decision by the Office Manager. The Office Manager must confirm to that Trustee that any selected provider who has previously provided goods or services to ICYE UK provided high quality and relevant goods or services on those previous occasions.
- The Office Manager can approve, alone, any other expenditure already budgeted.
- All payments to the ICYE UK account with the International Office can be carried out solely by the Office Manager as they cover transactions entirely within the ICYE network.
8. Bank accounts and making payments:
- Bank accounts: The Treasurer will have an annual conversation with the Office Manager about the suitability, value for money and performance of ICYE UK’s bank accounts. If a change is required the Treasurer will support ICYE UK staff in making the change.
- Signatories: Signatories will only be drawn from senior staff and Trustees, and any new signatory must be approved by the Trustees before the bank is notified. Bank mandates regarding signatories should always be kept up to date when an employee or trustee leaves.
There should be a minimum of three signatories for any accounts used for payments. At least one must be a Trustee.
For all payments where Trustees are a signatory ICYE UK staff must provide and retain proper paperwork explaining the payment.
- Current bank accounts held by ICYE and their signatories are:
- HSBC Current account- – £3,000.00 daily limit – Cat Udal & Dan Milway
- HSBC Savings account – Daily limit
Note, two signatories required for all transactions except online banking.
- Chequebook signatories and associated bank accounts are as follows:
- Cat Udal
- Dan Milway
Use of cheques is to withdraw cash from HSBC current account
- All bank accounts must have a minimum of two signatures/ authorisations required for all payments, except for internal transfers. At least two people must have active log-ins for each online account.
- Internal transfers: The Office Manager is authorised to make transfers between ICYE UK accounts, without a second authority/signature, including to and from the ICYE UK account held by the International Office.
- Payments (electronic or cheque): The Office Manager is authorised to set up direct debits and bank transfers, and write cheques (following the procedure in section 3 above where required). For any payment over £1,000 (except to the ICYE UK account at the IO) one of the authorisers must be a Trustee.
9. Petty Cash and Payment Cards
There should be one ICYE debit card for use with small expenditure on the camps. The office staff should have access to this card and there should be a limit of £200 per day expenditure. All receipts should be kept and the debit card should be used in the same way as petty cash as we move to a cashless economy.
Petty cash is sometimes required for regular purchases and for camps, where travel is reimbursed and food must be purchased. Receipts must be retained. Excel spreadsheets must record expenditure and the totals must be entered in the correct budget line in the bookkeeping software.
Petty cash and debit card expenditure should be reconciled after every camp and otherwise every other month.
Use of petty cash and debit card can be authorised by any staff member with reconciliation done every 2-3 months (or after a camp if petty cash or the debit card was used).
Cash and the debit card when it is not in use will be kept in a properly locked metal petty cash box.
ICYE UK will operate the PAYE system, and make annual returns to the Inland Revenue. All people working directly for ICYE UK, whether permanent or temporary, must provide a P45, or complete a ‘starter checklist’ (which replaced the P46 form or student exemption certificate. All salary payments will be made by immediate bank transfer only.
The Accountant is responsible for ensuring that all PAYE and NI is calculated each month so that the Manager can submit returns to the Inland Revenue in time both on a monthly basis and at year end. The Office Manager is responsible for setting up, and when necessary amending, BACS debits for staff salaries.
Pay scales and annual salary increases will be approved by the Board following discussions, during the budget-setting period, between the Chair, Treasurer and Office Manager. Discussions and actions should happen every 2 years and approval for salary changes must be minuted in Board meetings.In an exceptional period of inflation salaries may be adjusted between the two year reviews.
ICYE UK’s TOIL policy states that there is no paid overtime.
Any paid freelance consultants must be issued with a contract which makes clear they will be treated as self-employed.
11. Contracts Authority
Currently the Office Manager is the designated representative (LEAR – legal entity appointed representative) for signing contracts with the EC (for ERASMUS and European Solidarity Corps Projects). The Office Manager is also authorised to sign any contract under £1000, while permanent hosting or sending programme coordinators may sign contracts with volunteers and projects.
For any other contract, the Chair must be consulted about who should have the authority for agreeing and signing a contract, and their decision recorded in Board minutes.
12. Expenses reimbursement
- The following will be entitled to receive reimbursement for reasonable actual expenditure incurred by them in connection with activities in relation to ICYE UK:
- Volunteers working at the ICYE UK office may claim travel and lunch to the amount agreed by the Office Manager;
- Trustees may claim for expenses incurred when carrying out assignments for ICYE UK (eg travel costs, organising an event or attending an international meeting) but only up to the limit allowed by the Chair of the Board of Trustees in conjunction with the Office Manager. All potential expenses of this nature must be budgeted by the assigned trustee and presented to the Chair of the Board and the Office manager for approval before the assignment is carried out. Travel to the ICYE office by staff will not be covered.
- Employees may claim for work-related travel and associated expenses, as well as for goods required for work which cannot be pre-ordered or paid by petty cash/debit card.
- All claims shall be made with presentation of proof of payment and therefore be retrospective.
- All claims must be related to an agreed budget line.
b. Allowable expenditure: these apply to employees and Trustees primarily.
- Travel (e.g. airline, train) will be at economy or standard class;
- where public transport is not considered appropriate for the journey, or is not available, or is more expensive, then use of a private vehicle is permitted – mileage reimbursement will be made at the current rates recommended by the Inland Revenue;
- taxis will only be reimbursed when warranted by the number of people, the length of time taken by public transport, the baggage being carried or other justifiable circumstances;
- medium-rate hotels, including breakfast and evening meals.
- Hosting drinks or a meal will be an exception rather than a rule and will be limited to occasions where there are volunteers or visiting NC representatives;
- Mobile phones: Where work mobile phones have not been issued staff using personal mobile phones for work may claim using their itemised bills. Staff using their personal phones a lot for work may negotiate with the Office Manager (or Treasurer in the case of the Office Manager) a set figure per month claim-back.
c. Claims procedures:
Reimbursement forms must be completed to detail all of the relevant expenditure and receipts should be attached. The Office Manager approves these forms.
13. Whistle blowing
Reference should be made to the approved Whistleblowing Policy.
14. Fraud, terrorist financing and money-laundering
ICYE UK is committed to the prevention of fraud and to the promotion of an anti-fraud culture. We operate a zero-tolerance attitude to fraud and require staff, Trustees and volunteers to act honestly and with integrity at all times and to report all reasonable suspicions of fraud.
We will investigate all instances of actual, attempted and suspected fraud related to ICYE activities committed by staff, consultants, suppliers and other third parties and will seek to recover funds and assets lost through fraud. Perpetrators will be subject to disciplinary and/or legal action and ICYE UK will treat attempted fraud as seriously as accomplished fraud.
Fraud is used to describe a whole range of activities such as deception, bribery, forgery, extortion, corruption, theft, conspiracy, embezzlement, misappropriation, false representation, concealment of material facts and collusion. Generally, however, fraud involves the intention to deceive a person or organisation in order to obtain an advantage, avoid an obligation or cause loss.
The term also includes the use of information technology equipment to manipulate programs or data dishonestly, the theft of IT equipment and software, and the intentional misuse of computer time and resources.
- The Trustees are responsible for:
- Ensuring that effective controls to help prevent or detect fraud are in place;
- carrying out vigorous and prompt investigations if fraud occurs;
- taking appropriate disciplinary and/or legal action against perpetrators of fraud, including volunteers and partners;
- taking disciplinary action against staff where their failures have contributed to the commission of the fraud.
- Staff Responsibilities
The Office Manager, with the Treasurer, is responsible for the prevention and detection of fraud by ensuring that an adequate system of internal control exists within the organisation, and these controls operate effectively to prevent and detect fraud. This system and controls should be considered regularly, both during Trustee discussions of risk management and when the Office Manager and Treasurer assess the FP each year.
Every member of staff and ICYE UK volunteer has a duty to ensure that public funds, ICYE UK reputation and its assets are safeguarded and should alert the Office Manager or Treasurer where they believe the opportunity for fraud exists or when they suspect fraud has taken place.
Suspected financial fraud should be reported to the relevant authorities. As per Charity Commission guidelines this should be to Action Fraud.
ICYE UK has no terrorist funding plan nor anti-money-laundering procedures in place as all financial dealings with other countries (bar the EU) are channelled through the International Office’s bank accounts, and all NCs have been through a vetting process before joining the network. Should ICYE be approached by someone wanting to donate over £1000 or to pass funds through our account then the Treasurer must be consulted and agree appropriate checks.
ICYE-UK is expected to:
- take reasonable steps to ensure the premises, assets, staff, volunteers or other resources cannot be used for activities that may, or appear to, support or condone terrorism or terrorist activities
- take immediate steps to dissociate the charity from any activity that may give, or appear to give, support to terrorism or terrorist activity
- take all reasonable steps to ensure the charity’s activities are open and transparent so these cannot be misinterpreted
- exercise proper control over ICYE-UK’s financial affairs and safeguard its assets
Any person connected with ICYE, whether a trustee, employee, volunteer, or beneficiary, should deal with the concerns of a charity’s possible links with terrorism responsibly. These must be reported immediately to the police and should also be reported simultaneously to the Commission.
15. Fixed assets
The annual accounts detail ICYE UK’s approach to capitalisation of fixed assets.
All fixed assets which have not been depreciated must be noted in a register which records:
- The asset’s serial number(if any)
- The asset description
- The asset number
- The asset location
- The original cost of the asset
- The annual depreciation charge set against each asset.
The existence of a fixed asset must be verified on at least an annual basis. Any variances from the recorded details must be explained to the Treasurer.
Loss of assets must be notified to the Office Manager for an insurance claim. Disposal of a fixed asset must be approved by the Office Manager and must be carried out so that the disposal provides proper value.
Where the asset being disposed of is a computer, sufficient steps must be taken to permanently remove all data relating to ICYE UK from the machine in line with ICYE UK GDPR Policy. Particular attention must be given to removal of confidential information such as names and addresses of individual partners or employees in such a way that it cannot be recovered. Where this is uneconomic the storage media should be physically destroyed.
The Office Manager will be responsible for ensuring that ICYE’s assets and activities are adequately insured. Any insurance claim will be lodged and followed up by the Office Manager.
Currently all ICYE UK insurance is brokered with Towergate Insurance (underwritten by various insurers through Towergate Insurance each year) and is renewed each October. All insurance for volunteers is managed through the International Office.
ICYE UK follows the auto-enrolment regulations for all employees at the minimum contribution levels, currently 3% from the employer and 5% from the employee. All ICYE UK employees will qualify for the pension following a successful probationary period. All pensions are with ICYE UK’s chosen provider, currently NEST.
Where individuals wish to contribute over and above the 5% gross salary amount, this will be provided for upon the request being submitted and approved by the Office Manager (or the Treasurer in the case of the Office Manager).
Monthly direct debit payments will be made to the pension provider. Following salary reviews, the Office Manager will re-work the contributions and the direct debits.
18. Risk Management
The Treasurer will be responsible for ensuring that the Risk Register records and shows control and mitigating factors for financial risks to the organisation.
19. Document Retention
Financial reports and documentation will be kept for a minimum period of 6 years.
20. Sections commonly found in an FP and not currently included in ICYE-UK’s
- Payment authorisation and Purchase Ledger:
- Tendering procedures
- Income received as cash
- Bad debts
- Dealing with foreign currency
- Childcare vouchers.