Are your Internal Financial Controls effective?
11 Key Steps for Trustees, 1 Giant Leap for your Charity: Month 2
The second step in our governance guide for trustees takes a look at the effectiveness of your internal financial controls. This might not seem the most exciting part of a charity’s world, some may say even restrictive and prohibitive sometimes. However, having a thorough and transparent review system in place can create opportunities, help to control risks and focus on areas that can sometimes be left behind.
Step 2: Internal Financial Controls
How often do you carry out a review to challenge the effectiveness of your internal financial controls? Hopefully, it’s at least once a year, an indication hinted at annually when you complete the charity’s annual return and are faced with a similar question.
Did you know: The annual cost of fraud to UK charities has now reached £2 billion.
As trustees with a legal responsibility to protect the charity’s assets and mitigate identified risks, having the right set of checks and balances in place at all times is crucial. If you have been fortunate enough not to have suffered any fraudulent activities or theft, breaches or override of controls, or good old human error, this does not mean it will never happen. Or that your existing controls continue to be adequate in an ever-changing world.
As your charity grows, relies on technology, or becomes more perceptible to outside threats, if financial controls
don’t evolve, they may well create the opportunity for loss.
If you missed it, you can also read month one of our guide: Finding New Trustees.
If you require further advice on financial controls, please contact our Charity and Not for Profit team on 01903 234094.