Do you know what they are? Does everyone follow them? Are they practical and easy to do? Are they working? If the answer is YES to all of these questions then you are probably in a good place. If, however, you are not sure then perhaps further scrutiny of your controls and your control environment would be a good idea.
Fraud is scary for many charities and with increases in cyber-crime, hacking and recent articles in the press regarding fraud - it is something that all trustees should be aware of and consider. Simple controls around expenses, bank authorisation and procurement can make a big difference to the fraud risk of a charity - as not everyone out there is as honest as we would like. Controls can help detect potential fraud, and if working well, can prevent it altogether.
Having a robust control environment doesn’t need to be complicated and ensuring simple things like making sure that cash is counted by two people, and that both people sign to show that they agree the balance before it is banked - can make a big difference. Having a third person complete the bank reconciliation and agreeing receipts back to supporting documentation can also serve as an important control. If you have the resources, ensuring that the bank reconciliation is also reviewed regularly by someone not involved in the process further improves the control environment.
For smaller charities, this may not be possible but having some basic controls like two people counting the cash, ensuring that two people authorise bank payments, and that expenses are checked and reviewed by more than one person - can really help to reduce the risk of fraud. This not only safeguards the assets of the charity but also helps to protect volunteers.
In one of our recent blogs we spoke about internal audit. This is one option for a charity to consider when looking at their control environment. If, however, this is out of your reach, then getting someone who is independent of your finance function to take a look at the controls in place to see if you can make improvements, and make it more efficient, may be a viable option. This may be particularly relevant if you are still relying on spreadsheets in preparing the accounts and that there is limited scope for regular reporting on the accounts of the charity.
The next step
If this sounds like something you may be interested in then please contact your usual UHY adviser to discuss ways in which they can help to support your charity, and improve the finance function. We have worked with a number of charities and corporate entities to improve their existing systems, put in additional controls, and to make the running of the finance function more efficient.
Should you have any queries in relation to any of the above, please contact Shona Munday or your usual UHY adviser.