Balance Rec Ltd

People contribute to charities because they are inspired by stories of their work, which instils a desire in you to want to help that work to continue.

Nobody picks a charity to support simply because of its finances.

However....

a bad audit report

falling victim to a fraud due to weak controls

negative press, perhaps associated with how funding has been spent; or

simply an inability to provide detailed information on spending to a funder
..... can very quickly lose your charity support.

Good financial management is crucial to minimise the risk of these examples happening, and to maintain the trust of your supporters.

Good financial management looks like:

✅ having an effective accounting system that records what has been spent, on what and from which fund

✅ having controls in place, such as two person bank authorisation for payments, to minimise risk of fraud/error

✅ trustees regularly reviewing detailed financial information to make informed, good decisions for the charity

✅ seeking professional help if ever in doubt

How would you rate your charity's financial management?

Does your charity hold investments? Investment property? Listed investments? Loans receivable?

Trustees are responsible for safeguarding these investments. If you have not already put controls in place, these are the things your charity should be considering:

✔️ trustees setting an investment policy, outlining what can be invested and what types of investments are acceptable.

✔️ consider the suitability and diversification of investments, including investments in cash, to ensure that the failure of one investment does not have a major impact on the charity.

⚠️ seek professional advice where trustees do not have that expertise. This is particularly important when considering selling investments. ⚠️

In recent years the Charity Commission have investigated charities and have been critical of charity property being sold cheaply as a result of professional advice not being sought, resulting in the charity missing out on millions of pounds.

✔️ undertake regular reviews of investment performance

✔️ maintain records of all investments held (including details of those sold or purchased) by the charity

✔️ implement accounting controls to ensure all dividends, rent or interest payments due, are received

Please note the changes in the Coronavirus Job Retention Scheme which came into effect on 1 August.

The changes you need to be aware of are:

🔸 The level of the grant is beginning to reduce gradually each month, until the scheme will eventually close on 31 October 2020.

🔸 From 1 August, the grant will no longer cover Employer NICs or employer pension contributions. These will need to be covered by employers.

🔸 The Government grant will continue to pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough.

🔸 Beyond August, a furloughed employee will still receive the same 80% of salary. However the Government contribution will decline to 70% in September and then 60% in October.

How would you rate your charity’s accounting system?

Chances are, if you feel any pain or frustration about your finances, the accounting system will likely to be to blame.

Common pains I have seen include:

- Frustration about the time taken to keep accounting records up to date

- Lack of/or limitations of reporting function, making it difficult to get financial information quickly to support grant applications

- Trouble with real time monitoring of how much of the restricted funds have been spent.

The truth is, the bigger your charity, the more painful it will be for you if your accounting system is not a good one.

The weaknesses in the system will have been there when the charity was small, but as it’s grown, the no. of transactions and the demand for better financial reporting have increased, magnifying those weaknesses.

Can you relate to any of these pains?

If so, it may just be time to consider upgrading your accounting system.

How do you stop overspending on restricted funded projects?

How do you ensure restricted funds are limited to only the purposes for which they were given?

Keeping track of restricted funds is a key issue that I see charities encountering.

To help meet this important challenge, some options you may want to consider are:

⭐ Ensure that your accounting system is set up to correctly track all restricted income and expenditure transactions

⭐ Invest in an accounting system that makes reporting by restricted funds quick and simple

⭐ Set up budgets for each restricted project, to reduce the risk of overspending (needing vital unrestricted funds to meet any shortfall)

⭐ Review purchase controls; ensure authorisation of expenditure from the fund is required as part of the purchase process

⭐ For long term restricted funding projects, you may even wish consider operating a separate bank account for the fund.

If you would like further detail on any of the points, please comment or send me a message.

When your charity or company is audited, you will likely want to feel that its finances have been thoroughly examined.

However, how do you achieve this same feeling when the auditor cannot physically visit you?

In our opinion, this is where incorporating data analytics software into the audit approach becomes important.

This is part of the reason we choose to incorporate the use of Inflo Limited's data analytics software tool into our standard audit approach.

This software is great for helping to improve the quality of our audit work, by allowing the quick and detailed review of 100% of our client’s data.

It then becomes possible to quickly identify trends, unusual transactions and take a closer look at the data to identify if they might indicate an issue.

Making it possible to deliver a quality audit, despite the distance.

Please feel free to reach out to us if you would like to know a little bit more about how this approach works.

Is your charity doing everything it should to keep control over reimbursement of expenses?

Controls over expense payments are important for charities and should be applied to all hose involved with the charity, be they trustees, staff (including senior management) or volunteers.

Even small charities should be applying these within your organisation:

✔️ ensure you have a clear written expense policy, which outlines the completion of expense claims and retention of receipts.

✔️ make sure the aforementioned policy is shared with all trustees, staff and volunteers

✔️ the expense claim should contain a self-declaration that the claim is accurate and in accordance with the charity’s policy

✔️ expense claims should be authorised by someone other than the claimant and checked for accuracy before payment.

✔️ any mileage rate paid for car travel to be paid at the HMRC rates

AND, do not forget the need to complete P11d forms detailing expense payments and benefits received for each staff member.

Nobody works in the same way, and therefore the approach to each audit needs to be tailored to each client.

For a small or medium size company/charity, using a traditional audit approach, the audit will likely involve one to two consecutive weeks of onsite audit work, followed by several short, follow up finalisation meetings.

However, this does not need to be the only approach.

A flexible alternative approach might be to:

🔹 The interim audit 🔹

The concentrated nature of the traditional audit approach can prove tough for client’s staff who still need to get the day job done, whilst dealing with the stream of audit queries.

An alternative could see some of the audit work completed up to 3 months prior to the year-end through an interim audit. The interim work might include reviewing the systems and controls in operation during the year, whilst allowing for effective planning of the remaining audit work to be performed after the year end.

Bringing some of the work forward, can reduce the length of time needed for the audit work after the year end.

🔹 Dare to think differently about the approach to your audit. 🔹

Does your charity make a lot of purchases by debit, credit or charge card?

To protect against the risk of fraud & error you should consider making sure you have the following controls in place:

✔️ ensure you have a clear policy for the use of these cards covering who can use them, spending limits and security (including what to do if a card is lost).

✔️ make sure the aforementioned policy is thoroughly documented and is shared with both trustees and staff

✔️ establish a procedure for ensuring receipts/invoices are matched to the card payments, and stored. These need to be kept as they form part of the charity's accounting records.

To check whether your system is up to scratch, select a random purchase transaction (from your system or statements) and try to find the corresponding receipt. If the receipt is easy to find, then this is a sign of a good system.

✔️ conduct periodic reviews of the expenditure on the cards for consistency with the policies.

Usually monthly is best, as this will correspond with the frequency that statements are received.

And finally,

✔️ ensure cards are cancelled and destroyed immediately following the card holder ceasing to work for the charity

Nobody works in the same way, so why should the audit approach be the same?

Each audit should be tailored to the client.

A traditional audit approach may consist of one to two consecutive weeks of onsite audit work, followed by several short follow up finalisation meetings.

However, this does not need to be the only approach.

Instead, a flexible audit approach could be used to:

🔹 Spread the audit fieldwork 🔹

The advent of digital technology creates exciting opportunities to be creative with the approach to our audit work.

The traditional approach will see an audit team spend 5/10 consecutive days in your offices, however is this actually necessary?

Historically, financial systems and records could not be accessed easily remotely. Hence the need for onsite audit work.

However, as accounting technology has progressed, detailed financial records can easily be shared digitally, securely and with little disruption.

Consequently, there exists the possibility to perform an audit in stages.

One benefit of this approach could be to potentially reduce some of the strain on your staff, by no longer having to deal with every audit query during a single visit.

🔹 Dare to think differently about the approach to your audit. 🔹

If what we think about can affect how we feel ⬇️

How we feel can affect the actions we take; and ⬇️

What actions we take can dictate how successful we are in the future ⬇️

Then, ensuring that our thoughts are positive can be important to motivate us and to take the actions today that will help us be successful in the future. ⭐

Delighted to share that we are now QuickBooks Online Advanced Certified ProAdvisor's.

Taking the time to invest in further training is incredibly important to us. Without it, it would be difficult to offer a great service to our clients.

We are excited to continue sharing the benefits this software can offer.

For anyone who has not used QuickBooks Online before, it is a cloud accountancy software that we find is easy for clients to use, which saves them time in managing their finances and is cost effective.

The software is suitable for a broad range of organisations including:

🟢 Charities
🟢 Private limited companies
🟢 Partnerships
🟢 Sole traders

We have found the software to be a particularly helpful solution for charities in allowing them to easily manage their restricted funding.

If you are interested to learn more about the software and how we might help you realise its full benefits within your organisation, please get in contact we us.

You can drop us a DM or use the contact form on our website at:

www.balancerec.co.uk/contact

Ever worry about your organisation's risk of falling victim to a fraud? If you run a charity or business, implementing the following within your organisation can help you reduce your risk to fraud:

⭐ Restrict the number of people who have access to your organisation's bank account. Keep it limited to the finance team and/or senior individuals, and never less than 2 people.

⭐ Two person authorisation of payments - one person creates the payment, but requires a second to approve the payment. A feature widely available from most banks.

⭐ Introduce approval levels for purchase invoices - second approval for expenses above set thresholds reduces the risk of false invoices being created and submitted for payment.

⭐ Double check any requests to change supplier bank details. Criminals can intercept e-mails and falsely redirect supplier payments to their own accounts

⭐ Immediately remove anyone from your bank mandate when they leave the organisation

⭐ Keep your financial records organised and review them regularly. Well organised records make a fraud harder to perpetrate.

Today marks the first day of change for the Government’s largest support package, the Coronavirus Job Retention Scheme.

The changes you need to be aware of are:

🔸 Employers can now bring staff back to work any amount of time and any work pattern. Furlough can be claimed for the hours they do not work.

🔸 Employers will need to pay employees for the hours they work. The grant will only cover the hours furloughed

🔸 Wage caps are proportional to the hours an employee is furloughed, meaning if they are furloughed for 60% of their usual hours, then the employee is only entitled to 60% of the £2,500 cap.

🔸 No new staff can be furloughed

Whilst it is highly unlikely that audits will ever be known as something that you will find relaxing, it should not be a stressful experience.

A simple step we take to reduce some of the hassle is by using an online portal to manage all audit queries.

📧 Gone are the days of exchanging e-mails back and forth, which can be very difficult to keep up with.

🔒 Instead, a single, secure, online portal allows you to:

🔹 Quickly see every request which has been made
🔹 Simply, and easily respond directly to each query, adding comments and documents which are instantly shared with me
🔹 Check how the audit is progressing, as the queries are checked off as completed

Public trust in Charities is on the up according to the Charity Commissions latest research published this week.

Great to see charities are now seen as more trustworthy than the “ordinary man/woman in the street”
@ Canterbury, Kent

Excited to announce that the new Balance Rec website has launched today!! 🚀

I am particularly proud as I built it all myself, which is not something that I have any prior experience in doing.

Employees on parental leave will be eligible for furlough, even after the 10th June.

Need extra time to file your accounts? Companies House link: beta.companieshouse.gov.uk/extensions

Is your charitable company filing the correct accounts at Companies House? .

Is your based in ? Canterbury Council have just opened applications for their discretionary grants which may be of help to you

Is your facing significant financial in the wake of the pandemic?

We have produced a free guide aimed at helping Trustees and Management:

- Quantify the size of the financial challenge facing the charity

- Provide ideas and strategies which the charity can implement to help manage the charity’s finances through this pandemic

- Give clarity on the details of the Government reliefs which have been announced that your charity may be able to benefit from.

Visit our website today to download your free copy.

And if you you are worried about the impacts of the current crisis for your charity, please feel free to get in touch.

Stay safe.

Do you consider the environmental credentials of your accountant? You may be surprised what impact on the environment, just reducing reliance on paper can make.

https://balancerec.co.uk/environmentally-friendly-accountant/

The Environmentally Friendly Accountant Have you ever considered how enironmentally friendly your accountant is? This should be considered in your charity's plans to become more sustainable

Maximising the impact of your charity's trustee report is an important part of a charity's communication with their supporters, of how the charity is making a difference through its work.

We share our top 5 tips to consider when writing your next annual trustee report.

https://balancerec.co.uk/trustee-report-impact/

5 tips for increasing the impact of your charity’s trustee report - Balance Rec Although the Trustees' annual report is a legal requirement for a charity, it can also be a great opportunity to share the impact your charity is having.