Guidance on financial controls and financial governance

Financial controls and financial governance means the way your organisation’s finances and records of financial transactions are set up and run. This covers:

• the procedures
• policies
• documents
• management arrangements

in place for the way you carry out and control the finances of your organisation. It includes evidencing your expenditure on delivering what your organisation has been set up to do.

As our grant funding is public money, we must ensure that you are able to give us evidence of your organisation’s ability to adequately manage public funds and show us that you’ve done so, where we ask for this. It is essential that you can show us that you’ve appropriate financial governance in place to ensure that your organisation can successfully manage and deliver the project you want to be funded by us (whether wholly or in part).

Our grant conditions on financial controls and financial governance

As part of the Fund’s grant terms and conditions, we ask that your organisation:

• hold the grant in a UK-based bank or building society account
• make sure that this account is in the legal name of your organisation
• make sure that the account is managed by at least two unrelated and authorised individuals in your organisation
• have effective financial controls and review processes so that no single individual, nor two or more related people, have sole responsibility for any single transaction from authorisation to review and completion
• keep accurate and full records about your project both during the project and for seven years afterwards
• give us when we ask for them copies of those records and evidence of expenditure of the grant, such as original paper or electronic receipts, invoices and bank statements
  follow our guidance on financial controls and financial governance.

Further guidance on financial controls and governance

1. You must make sure that the bank or building society account in which you hold our grant funds is regulated either by the Prudential Regulation Authority (PRA) or by the Financial Conduct Authority (FCA) and that it is safeguarded by the Financial Services Compensation Scheme (FSCS).
2. We know that organisations are looking for more accessible ways to manage their money and make payments. This might mean using an e-money account. Where you use an e-money account, you need to ensure that the account is safeguarded by The Electronic Money Regulations 2011.
3. It is important that your organisation keeps an up-to-date record of all transactions made. This includes things like receipts and invoices for all goods and services which you’ve bought or provided, details of any cheques used and accurate payroll records for staff costs, even those below £250.
4. We may ask your organisation for more information. This could be a request for all bank statements showing expenditure using our grant funding, from the date the grant funds were received into your bank account to the date that the grant funds were spent by your organisation. This includes any money that has been moved into another bank account. Any bank accounts our funding has been moved into must meet our requirements set out in our grant terms and conditions and in this guidance.
5. We may ask your organisation to provide evidence that your internal financial controls and banking arrangements meet our requirements at any stage of the grant.
6. We know that some organisations may prefer using cheques as a form of payment. If your organisation chooses to use cheques, please ensure you keep accurate details of all cheques issued, so if we do request evidence of your expenditure, we can clearly see who is being paid and what they are being paid for.
7. We know that for smaller organisations a full financial authorisation process may not always be practical, but we do expect, as a minimum, that the trustees, directors or the management committee of your organisation put in place processes to regularly review transactions and carry out checks on financial controls.
8. We know some organisations may find it easy to use cash to pay for certain services, but you should not make cash withdrawals or cash payments of over £100 when making payments from our grant funding.
9. We are entitled under our grant terms and conditions to suspend or terminate the grant and/or require you to repay all or any of the grant if you provide us with false or misleading information about the bank or building society account you hold and/or your financial governance.

Links to external guidance

NCVO knowhow financial management
Gov UK managing charity finances