Manual of Fiancial & Internal Control Procedures - Diocese of ...

MANUAL OF FINANCIAL AND INTERNAL
CONTROL PROCEDURES OF THE
DIOCESE OF NOTTINGHAM
The Finance Office is always happy to receive helpful comments about this and other
manuals.
Diocese of Nottingham Manuals:
The complete set of Manuals for use in the Diocese are downloadable from the
diocesan website, www.nottingham-diocese.org.uk.
Parishes:
Parish Administration Manual
Curia:
Financial and Internal Control Procedures
Diocese (both Parish and Curia):
Personnel
Insurance (see also CCIA website User name: Nottingham Password: Anicetus)
Health and Safety
Priests:
Vade Mecum (password protected)

FINANCIAL AND INTERNAL CONTROL
Generally the Charity is a large one. However the number of people employed at any
one office is not usually large, making internal control more difficult. In this case
there is a particular duty on department heads to ensure that special care is taken over
financial matters in particular when authorising and approving expenditure.
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THE BOARD OF DIRECTORS
1. The running of the Charity is the legal responsibility of the Board of Directors
of the Company. (Until 31 st March 2010 it was the responsibility of the
Trustees). This Company is referred to as the charity or the Diocese in this
manual.
2. The Board delegates the responsibility of keeping proper books and records to
the Finance Office. The Annual Report & Accounts and the budgets are
prepared by the Finance Office and are formally approved by the Diocese.
3. The Company has the power of appointing new Directors and the Bishop has
an effective veto over the decisions of the Board. A new Director indicates
the formal taking up of responsibilities by signing the notification to
Companies House.
4. The Board meets formally at least four times per annum.
5. Each office, department or service, or by whatever name it is known, is under
the formal control of the Board.
6. Independent professional advice is available to the Directors.
7. The Directors’ liabilities are insured.
Segregation of Duties
8. Where possible key duties are segregated. A person having access to cash or a
cheque signatory should not also be responsible for accounting records.
9. Unless otherwise authorised by the department head incoming post should be
opened by two people.
10. A separate record will be maintained of money due into the charity, for
example when legacies have been notified, or for Gift Aid and other
donations. Follow up checks are then made to ensure that it has been received.
Cash and Bank Balances.
11. A list of bank accounts, their signatories (which will always include the
Bishop, the Moderator of the Curia, the Chancellor, both Vicars General and
the Financial Secretary) and their purpose will be recorded in the Finance
Office. Accounts may be opened and closed only on the authority of the
Finance Office.
12. It is the policy of the Board that, where possible, new accounts are not opened
and that all transactions take place through the main Diocesan account.
13. The policy of the Diocese is that all cheques for payments above £5 thousand
require two signatures, one of which will be one of those mentioned in the
previous paragraph. No signatory may sign a cheque payable to him or
herself. It is obviously not permitted to avoid the second signature on cheques
above £5,000 by making out a series of cheques for under £5,000.
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14. Incoming cheques should be banked daily. If this is not possible they should
be kept in a safe and banked as soon as possible and in any case at least
weekly. Where they are banked by post full details should be kept (eg by
photocopying) so that if mislaid replacement cheques can be obtained.
Banking of cash should be gross and cash not held back for petty cash
15. The charity’s money must be kept quite separately from personal money.
(However this does not prevent expenditure being incurred originally in a
personal name with a view to reimbursement at a later stage by the charity).
16. Checks of cash books and the paying-in slips and cheque payments should be
made from time to time by someone separate from the person originally
recording the transaction. Bank reconciliations should be carried out each
month, then independently checked and reviewed.
17. Accounts may not go overdrawn without prior approval.
18. When making payments, expenditure must be properly authorised and
presented with the supporting documentation to the cheque signatories.
19. Means of payments such as cheque books, building society passbooks and
bank mandate forms must be kept in a safe with access limited.
20. If possible the preparation of documentation for authorisation should be
undertaken by someone other than the person authorising the payment. The
person authorising should ensure that the goods or service being paid for have
been ordered. The authorisation should be of original invoices only, if
possible, (in order to ensure that an invoice is not paid twice). It should be
stamped PAID with the date (or marked in some way in order to prevent its
being paid twice) which should be in red. The authorisation is of the invoice
and not the statement, again to avoid payments being made twice. Be
particularly careful to avoid double payments where invoices have been
emailed and can be downloaded and authorised twice in error.
21. An order shall only be placed with the approval of the department head. If
over £300 this will need to be written. Continuation of the following authority
limits were determined by the Board at its meeting on 28 th September 2011.
£300- £1000 Head of Department
£1,000 - £5,000 Financial Secretary/ Moderator of the Curia
£5,000 - £50,000 (£100 thousand having consulted the Board) Management
and Finance Committee
£5,000 - £250,000 (£650 thousand having consulted the Board) Building and
Sites Committee – property transactions only.
Above these limits Board of Directors.
22. The record placed of orders should allow for the amount of outstanding orders
to be ascertained.
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23. Under no circumstances whatsoever are blank cheques to be signed in
advance. In the words of the Charity Commission guide, “It is a
dangerous breach of financial controls” and “the practice of signing
blank cheques would be regarded as neglecting the duty of care owed by
the charity”.
24. Cheque expenditure is to be recorded in the cash book with details of the date,
payee, cheque number and amount. Cheque book stubs are to be completed at
the time of payment (as they form part of the charity’s accounting records).
Where, exceptionally, a card has been provided for use for charity expenditure
a separate account will be associated with it to assist with control of that
expenditure.
25. Cash payments are to be kept to a minimum because of the difficulties of
internal control over them.
26. Proper supporting independent documentation for all payments and remittance
advices for receipts must be retained and kept in the designated files and be
available for internal check or external audit however the payment or receipt is
made.
27. Payment for expenses to be reimbursed should be submitted in a reasonable
time, normally monthly, authorised independently (normally by a department
head) and properly supported in the usual way as noted above.
Accounting Records
28. There will be proper records kept, enabling an audit trail from the original
documents to the final accounts.
29. Allocation of expenses to the right account is important, particularly where a
restricted fund is to be charged.
30. Budgets will be set in discussion with each department and agreed by the
Trustees. Underspending against budget in a year cannot be carried forward
or transferred to another account without approval of the Finance Office.
31. It is intended that a fixed asset register will be prepared. Nothing is
capitalised in the accounts unless its value is greater than £5,000. This does
not prevent a fixed asset register record of details of items with lower values
but they will not be treated as capital expenditure in the accounts and
depreciated.
32. Each person for whom a computer is provided is responsible for their own
computer housekeeping routines, including back up, remote back up and other
housekeeping routines such and also for ensuring that back up media are
physically destroyed when no longer required. A department head is
responsible for ensuring the same for the department’s network server and also
for ensuring that hard drives of computers are destroyed when no longer
required. A remote back up should be taken at least monthly.
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Guardianship of Assets
33. Assets are generally held in the name of the Company. Where the strict
requirements of legislation are followed, whereby the beneficial ownership of
the assets is beyond doubt, they may held in other names.
34. The Board is responsible for the Investment Policy, a copy of which is
available from the Finance Office.
35. Investment performance is the responsibility of the Management and Finance
Committee of the Board and is to be brought to its attention.
36. The opening and closing of bank accounts are to be authorised by the charity.
Dormant accounts should be reviewed from time to time and closed if
necessary.
37. The fixed asset register needs to be checked to the fixed assets themselves
from time to time. The condition of the fixed asset should be noted at that
time.
38. A proper register is maintained of land and buildings. This should be
expanded to include data relevant to their maintenance and insurance. It
should also include, for leased property, details of the terms of the lease. A
proper diary system is to ensure that the relevant notices are given at the
correct time for leased property.
39. Generally, where a property is let, the Diocese as landlord should insure and
then pass the cost on to the tenant through the lease.
40. The disposition (including selling or leasing) or charging of land is subject to
the special requirements for them under the Charities Acts.
41. Protection of the documents of title are the responsibility of the property
department. That department will also have responsibility for other legal
documents. It is essential that a receipt is always obtained for legal
documents which leave the building.
Special Computer Procedures
43. All Curia departments must:
a) ensure that personal data held is secure.
b) this includes physical security – doors which protect rooms which provide
access to personal data should be kept locked.
c) password protection should be used to control access to information and
encryption if appropriate for very secure data.
d) ensure proper arrangements for back up.
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e) train its staff on procedures including not using the personal data other than
for use for the Parish.
f) provide records as necessary so it is clear who has had access to personal data.
44. Use of antivirus software is compulsory.
45. Physical controls are important and a server with sensitive data on it should be
locked physically as should the back- up media.
46. Installation of new software will require the approval of the head of
department. All software must, of course, be properly licensed.
Miscellaneous
47. Meeting notes should be circulated within 7 days of a meeting. It takes no
longer to prepare them in good time as at a later date and preferable to have
them while the meeting is fresh in the minds of those attending.
48. While the Diocese is in principle happy to support those who wish to take part
in national activities connected with the Church, this requires the prior
approval of the Board. There are two aspects to this. The first is that the
priority over an employee’s duties is the responsibility of the Diocese. The
second is that there can be cost implications, for example for additional
support. The approach should give details and the approval of the head of the
relevant department will also be required.
49. The Diocese is under a duty under certain circumstances to make a report to
the Charity Commission if a serious incident takes place. In practice such a
matter will be associated with a possible insurance claim and the advice of the
Diocese’s insurers will be sought before a report is made.
50. The Management and Finance Committee will consider requests for mobile
phones to be provided to Curia employees who travel on Diocesan business
widely.
51. Loans may not be made to members of staff for cars or otherwise (policy
confirmed by the Board 28 th September 2011).
Adopted October 2011.
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