These guidelines should help you with the implementation of good practice regarding control procedures and cash handling within our libraries.
- You can find more detailed guidelines here: https://www.gov.uk/guidance/managing-charity-finances.
- You may find this financial controls checklist useful: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/930555/Internal_financial_controls_checklist.docx
Individual Friends Groups have sole responsibility for the control of their own money and bank accounts, not Suffolk’s Libraries IPS Ltd. Suffolk Libraries is of course, always happy to provide advice and support regarding financial matters.
It is important that financial matters are discussed and reviewed on a regular basis so that any issues or problems can be detected early. It is also good practice for financial transactions, including bank statements, to be regularly viewed by more than one person as this will often help to identify any irregularities.
Banking arrangements and cheques.
It is recommended that bank accounts have at least two signatories who are not related.
Each cheque drawn must be backed up by supporting documentation, such as an invoice, letter, e-mail request or expense claim form. This documentation should be signed by the cheque signatories and filed in cheque number order for future reference.
Cheque books should be kept in a secure location.
On receipt of bank statements, each entry should be verified by the treasurer and any unknown entries brought to the attention of the Group.
Debit Cards/Credit Cards
Limits on cards should be set at the minimum amount needed for the operation of the Group.
The pin number should be kept separate from the card and only given to authorised bank signatories. It is important that the card is regarded in the same way as cash.
Verification of expenses
Expenses from one person should be signed off by another group member before being given to the treasurer for payment.
Change of Officers within the Group
If a bank signatory leaves the group, it is important to immediately notify the bank and new bank signatories should be appointed as soon as possible. All pin numbers for credit and debit cards should be changed. These measures will protect the group and the individual leaving.
Use of petty cash can be difficult to control but this can be minimised if planned in advance. It is usually not necessary to operate petty cash as expenses incurred by individuals can be reimbursed by cheque on production of a receipt. Our guidelines for managing petty cash are as follows:
- Set the amount of petty cash to be issued EG £50.00.
- All petty cash spend needs to be backed up with:
- Petty cash voucher (A petty cash voucher is a record which shows who the money was given to, the amount given, the date and is signed by the holder of the petty cash. Petty cash voucher books are widely available and inexpensive.)
- a receipt for the purchase, stapled to the petty cash voucher.
- A record of all petty cash should be retained
- The record of payments should show that the total amount paid out equals the difference between the remaining balance in the petty cash tin (£10.00) and the original £50.00. This proves that no money has been spent without proper consent.
- Money would then be drawn out of the bank (£40.00) to top up the petty cash back to the £50.00 limit.
Note that Suffolk Libraries do not operate a petty cash system. Staff can claim for reimbursement of appropriate and authorised expenses via Accounts.
Security of cash
It’s important to ensure the physical security of any cash collected, eg from fundraising events, or regular donations into collection boxes.
All collection boxes should be tamper proof and secured to the desk. When the library is closed the boxes should be stored in a secure location, e.g. a locked room or safe. The boxes should be opened with two people present and the amount contained should be recorded and signed by both parties regularly, i.e. at least once a week. The proceeds from the boxes should be banked at the earliest opportunity and the banking entry matched to the amount on the record by the treasurer.
If a cash float is given out, the money needs to be counted and verified by two people and signed for by the responsible person.
It would be advisable for the amount to be drawn out, ie 5 x £10.00 in one sum, and then this £50 paid back into the bank account after the return of the float (separate to the rest of the day’s collections).
Returning cash should be counted with two people present, the float amount deducted (as per above) and the surplus cash recorded. All cash needs to be banked and the statement checked back to the end of day receipts.
The treasurer needs to be able to check that all income generated has been deposited in the bank and that all payments made out of the bank are legitimate.
To enable this to happen all income and expenditure needs to be recorded and a note of the record sent to the treasurer. If no record is made then there is no way of identifying missing items.
How to manage / account for grants receiced
It is becoming more common for friend’s groups to win grant funding for projects which are undertaken by Suffolk Libraries. It should be remembered where money is received for a specific project – either through grants or through fundraising activities – the money must be spent on that specific project and cannot be diverted to something else. So, for example, if the library community group received a grant towards the cost of purchasing furniture for the children’s library, it must be used for that purpose.
It is usually best – unless work is done by volunteers – for Suffolk Libraries to place orders with contractors to do the work and for the community group to pass on the money to Suffolk Libraries as a restricted grant or donation to cover the cost. An invoice from Suffolk Libraries to the community group with backing invoices detailing the expenditure would be sufficient proof to the grant giver that the money had been spent according to the grant stipulations.
Scenario 1. Suffolk Libraries has a project on the go, and it is being funded by several sources including locality budget money awarded to a friend’s group. The easiest solution is for SL to invoice the friend’s group for the money and add the locality money to the ‘pot’. It would not be possible to say which part of the project was funded by the grant – but this should not be an issue if the purpose of the locality budget funding is clearly aligned to the overall project.
Scenario 2. The community group has been raising funds for a project over a period of time and they are awarded some locality money to add to their ‘pot’ – the whole of which is going to be spent on the project.
The contracts for the work would be placed by Suffolk Libraries under friends group purchases, and as supplier invoices are submitted to Suffolk Libraries an invoice to cover the cost would be sent to the community group for the donation to cover it. The entire project is covered by the community group (sometimes with a little addition for Suffolk Libraries).
A community group receives grant funds for a project and undertakes the work itself, and needs to demonstrate that the work has been done. Documentation of the income and expenditure would be needed, but this does not need to be of a complicated nature and a simple spread sheet with related invoices would suffice. The money can be kept in the friend’s group bank account along with normal funds and at the AGM it can be expressed separately.