Financial controls policy
This policy describes the financial controls for Leamington and Warwick Musical Society (LWMS).
Financial records and accounts
Financial records, including a record of all transactions, must be kept so that:
- LWMS meets its legal and other statutory obligations, such as those relating to Charity Acts, HMRC, and common law;
- The Trustees have proper financial control of the organisation;
- LWMS meets the contractual obligations and requirements of any funders.
Accounts must be drawn up at the end of each financial year, independently examined by an appropriately qualified person, presented to the next Annual General Meeting in accordance with the LWMS Constitution, and submitted to the Charity Commission in accordance with its requirements.
Prior to the start of each financial year, the Treasurer will prepare a budget for income and expenditure for the following year for review by the Trustees. The Treasurer will report to the Trustees, comparing actual income and expenditure with the budget whenever meetings take place.
Banking
LWMS will hold one or more bank accounts in the CIO's legal and/or working names. The bank mandate is a list of people who can transact on the CIO's behalf ('Signatories'). The mandate will always be approved and minuted by the Trustees, as will any changes to it.
LWMS will require the bank to provide statements every month and the Treasurer will reconcile these with the transaction record at least every three months.
Further accounts with any other financial institution, loans, or use of an overdraft facility in the name of the CIO will not be used without the agreement of the Trustees.
Income
All monies received will be recorded promptly and banked without delay. This includes sundry receipts such as payment for telephone calls, photocopying etc. LWMS will maintain files of documentation to back this up.
Expenditure
The aim is to ensure that all expenditure is on LWMS business and is properly authorised and that this can be demonstrated. The latest approved budget provides the Signatories with authority to spend up to the budgeted expenditure, not beyond it.
The Treasurer will be responsible for holding any cheque books and/or debit cards (including unused and partly used cheque books) which should be kept under lock and key.
Blank cheques will never be signed.
The relevant payee's name will always be inserted on any cheque before signature and the cheque stub will always be properly completed.
No payment should be authorised without appropriate documentation.
Payment documentation
Every payment out of the CIO bank accounts, whether by cheque, card payment or direct transfer, must be evidenced by an original invoice (never against a supplier's statement or final demand). That original invoice will be retained by the CIO and filed. The Treasurer should ensure that it is referenced with:
- Cheque number or transaction reference
- Date of cheque or transaction
- Amount of transaction
The only exceptions to payments not being supported by an original invoice are items such as advanced booking fees/deposit for a venue, etc, where a booking reference/quotation should be retained.
A float of petty cash may be maintained by the Treasurer for events. When that is more or less expended, a payment will be drawn for sufficient funds to bring up the float to the agreed sum, the amount supported by a complete set of expenditure vouchers, totalling the required amount, and analysed as required.
Expenses
The Treasurer will reimburse expenditure paid for personally by Trustees, Management Committee members, or other volunteers providing:
- Fares are evidenced by tickets;
- Other expenditure is evidenced by original receipts;
- No Signatory signs for the payment of expenses to themselves without oversight by another Signatory.
Reserves and investments
If LWMS undertakes investments, it will be in accordance with its Investment policy.
The term "reserves" is used to describe that part of a charity's income funds that is freely available for its operating purposes not subject to commitments, planned expenditure and spending limits. Reserves do not include endowment funds, restricted funds or designated funds.
The Trustees will consider the ratio of reserves to annual operating expenditure to ensure the long-term financial sustainability of LWMS, balancing the needs of current and future beneficiaries. This will be accomplished by:
- Reviewing cashflow, existing funds, reserves and investments;
- Reviewing committed expenditure, past trends and likely future changes in income;
- Assessing financial risks and how likely these are to materialise;
- Forecasting future expenditure on the basis of planned activities, needs, opportunities and risks.
LWMS will report on the value of its reserves and investments as part of its Annual Report to the AGM and Charity Commission.
Other rules
LWMS does not accept liability for any financial commitment unless properly authorised. Any orders placed or undertakings given which are likely to cost the LWMS in excess of £1,000 must be authorised and minuted by the Trustees or their delegated Management Committee.
In exceptional circumstances such undertakings can be made with the Chair's approval who will then provide full details to the next meeting of the Trustees. (This covers such items as the new service contracts, office equipment, purchase and hire).
All fundraising and grant applications undertaken on behalf of LWMS will be done in the name of LWMS with the prior approval of the Trustees or in urgent situations the approval of the Chair who will provide full details to the next Trustee's meeting.
When relevant LWMS will set up and maintain a fixed asset register stating the date of purchase, cost, serial numbers and normal location of assets. Additionally LWMS will maintain a property record of items of significant value, with an appropriate record of their use.
LWMS will adhere to good practice in relation to its finances at all times.
This policy was reviewed by the LWMS committee on 4 November 2024, and will be further reviewed at least every 2 years.