Financial Regulations and Procedures

 

  • Foreword

    1. Financial regulations govern the way financial transactions are conducted, recorded, monitored and checked. They are the first defence against fraud.
    2. The regulations specify internal rules governing financial management and control, including delegated authorities. They should be carefully considered by the co-op, formally adopted and reviewed annually.
    3. These regulations should clearly define the role of the Committee, the Treasurer, Finance Group and staff, and should be simple and clear and available to all co-op members so that they understand their individual responsibilities in ensuring compliance.

 

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  • Rules

    Audit and annual return

    1. The co-operative’s financial year will commence on the 1st April and expire on the 31st March each year).
    2. The Co-operative shall in accordance with sections 4 and 8 of the Friendly and Industrial and Provident Societies Act 1965 (The Act), appoint in each year one or more auditors, to whom the accounts of the Co-operative for that year shall be submitted for audit as required by the Act and who shall have all such rights in relation to the notice of and attendance and audience at all General Meetings, access to books and the supply of information and otherwise as are provided by the Act. Every such auditor shall be appointed at the Annual General Meeting, and in the case of any Auditor so appointed who is a qualified Auditor under Section 7 of the Act the provision of Sections 5 and 6 thereof apply to her or his place.
    3. Every year not later than the date provided by the Act, the Secretary shall send to the Treasurer the Annual Return in the form provided by the Chief Treasurer of Friendly Societies relating to its affairs for the period required by the Act to be included in the return together with:
      • A copy of the report of the Auditor on the Co-operative’s accounts for the period included in the return.
      • A copy of each balance sheet made during the period of the report of the Auditor on that balance sheet.

 

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  • Roles

    The Role of the Treasurer and the Finance Group

      1. There shall be at least three people in the Finance Group, including the Treasurer who is responsible for overall financial management and control of the organisation.
      2. It is the Treasurer’s responsibility to ensure through delegation to co-op staff and relevant working groups that the organisation is operating in accordance with generally accepted accounting principles and within sound financial controls.
      3. The Treasurer bears the responsibility of ensuring that a draft Annual Budget is prepared for approval by the Management Committee and Annual General Meeting at least two months before the start of each financial year.
      4. On a monthly basis the Treasurer should meet with the co-op staff and Rent Co-ordinator and inspect the books of account and underlying records. He should also receive an overview accompanied by supporting documentation of the performance to date and financial position of the organisation.
      5. The Treasurer will present quarterly management reports to the Committee Meeting and will be responsible for ensuring that the Co-operative’s accounts are audited annually and that a financial report is made available at the Annual General Meeting.
      6. The Treasurer is responsible for ensuring that all statutory Annual Returns are made at the end of each financial year.
      7. The Treasurer, in conjunction with the Secretary is responsible for ensuring that the rules of registration are complied with and that any changes to the rules are registered with the Registrar of Friendly Societies within one month of the Annual General Meeting at which they were voted through.

    The Role of the Auditor

    1. A formal engagement letter should be signed annually. The engagement letter will set out the respective responsibilities of the Auditor and the Finance Group and will lay down the co-op’s expectations of the Auditor.
    2. All Committee Members and staff should be familiar with the terms of the engagement. It is the duty of the Finance Group to ensure that these obligations are met and reported back to the General Meeting.
    3. he Finance Group should be involved in the planning of the audit and in monitoring the progress of the audit.
    4. The Finance Group must ensure that a written audit management letter is supplied following the audit and that the letter is addressed to the co-op.
    5. The audit management letter should be presented to a meeting of the Committee and the Chair or the Treasurer should sign a written response letter.
    6. The Committee should agree appropriate follow up action on the matters contained in the audit management letter and they should monitor the progress of that action.
    7. The contract for the appointment of auditors should be re-tendered every three years.

 

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  • Procedures

    Records and Reports

    1. All the Co-operative’s books of account, bank statements, cheque books, paying in books and other financial information (including computer files) will be kept in the Co-operative’s office, and are to be kept up to date at all times.
    2. The bank balance shown on the bank statements must be reconciled to the cashbook at least once monthly.
    3. Rent and arrears monitoring reports will be produced on a quarterly basis for Committee appraisal of targets and performance of the organisation.
    4. The Treasurer and Finance Group will be responsible for drafting an annual budget for approval by the General Meeting at least two months before the start of each financial year.
    5. The Treasurer will present a report on the financial position of the co-operative on a quarterly basis to the Committee Meeting.
    6. The Treasurer and the Finance Group will ensure that the Co-operative’s accounts are audited annually and a financial report made available to the Annual General Meeting.

 

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  • Cheques

    1. The Co-operative will maintain one main current account, through which all payments and receipts will be made. Any additional accounts (such as deposit accounts) will operate by transfer into or out of this main account.
    2. Four co-op members, one of whom must be the Treasurer, will be authorised to sign cheques on behalf of the co-op.
    3. Cheques or their equivalent should be signed by at least two of the authorised signatories.
    4. Signatories cannot sign cheques made payable to themselves.
    5. Cheques may only be signed if accompanied by an original invoice/bill. Where exceptionally no bill or invoice is attached, a full explanation must be given in writing and filed in the invoice folder.
    6. All paid invoices must be separately marked as paid and filed in consecutive order in the invoice folder.
    7. Blank or un-addressed cheques are never to be signed.
    8. The Co-operative’s cheques are to be locked away safely in the office at all times.
    9. All mandates to set up regular payments by bank standing order should be checked and authorised in the same way as invoices and regularly monitored.
    10. Encashment of cheques in excess of £100 shall not be made.

 

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  • Petty Cash

    1. An Imprest system will be used to operate a float of £150 which will at all times be kept in a locked petty cash box in a secure place.
    2. Only authorised members of staff may have access to the Petty Cash and borrowing is strictly forbidden.
    3. Petty cash should only be used for small items costing up to £25. Anything more than this should be paid for by cheque.
    4. All petty cash payments are to be made on sequentially numbered petty cash vouchers accompanied by a detailed explanation and a receipt. Only in exceptional situations will petty cash payments be made without accompanying receipts.
    5. The authorising officials should counter-sign all petty cash vouchers and the nominated official should ensure that a correct balance in the petty cash is maintained at all times.
    6. Formal petty cash reconciliation should be done every month and kept on file.
    7. All receipts are to be stapled to the appropriate completed petty cash voucher and kept together with the monthly petty cash reconciliation on file.
    8. There must never be more than £150 in petty cash at any point in time.
    9. The petty cash book should be updated and reconciled on a monthly basis.
    10. Cash rent payments may never be received into petty cash.

 

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  • Staffing Matters

    1. The payment and level of all salaries, wages, pensions, compensation and other earnings to all employees or former employees of the organisation shall be made under arrangements approved and controlled by the General Meeting, following advice from the Employment and Finance Groups.
    2. Formal accounting records of gross salary payments, national insurance contributions, tax and other deductions must be kept up to date at all times.

 

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  • Expenditure and Contract Authorisation

    1. Expenditure can only be authorised from an approved budget.
    2. In placing orders for goods and services, two quotations should be obtained for orders over £500 and three quotations for orders over £1,000.
    3. All repair expenditure costing over £500 but not exceeding £1,500 may be approved by the Treasurer, following appropriate discussion with the Maintenance Co-ordinator(s) and Finance Group. The Treasurer will report back such expenditure to the next General or Committee Meeting, which will be recorded in the minutes.
    4. All repair expenditure costing over £1,500 must be approved by the either the General or Committee Meeting and be shown clearly in the minutes. Any emergency expenditure over these limits must be approved by at least one officer preferably the Treasurer and a member of the Committee.
    5. Any lease, hire purchase agreement or other contract involving expenditure will be subject to the same authorisation limits as above, with the appropriate expenditure amount being the total committed expenditure over the period of the contract or, where the contract is open ended, over the first 12 months of the contract.
    6. Large contracts should not be entered into without adequate advice from the Co-operative’s relevant professional advisor(s) (e.g. Finance and IT Manager, Solicitor, Surveyor etc.)
    7. New contracts can only be taken into the contractor lists after they have fully satisfied the co-op’s set criteria, which may be varied as and when required and has been approved by the General or Committee Meeting.

 

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  • Rents

    1. Rents charged to tenants of Argyle Street Housing Co-op Ltd can only be increased by a vote of approval at a General Meeting.
    2. All additional charges (e.g. service charges, water rates, council tax etc.) associated with a property will be collected along with the rent, as enshrined in the tenancy agreement.
    3. Service charges should be reviewed and varied on an annual basis in accordance with service charge expenditure unless tenancy agreements state otherwise.
    4. Every week rent received should be reconciled from the bank statement to the rent ledger.
    5. Bad debts over £50 can only be written off by the approval of a General or Committee, following advice from the co-op’s auditors.

 

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  • Fixed Assets

    1. All fixed assets costing more than £100 (or such level as may from time to time be agreed by the Committee) will be capitalised in the accounts and recorded in Fixed Assets register.
    2. The Fixed Assets register will record details of dates of purchase, supplier, cost, serial number where applicable, depreciation and net book value, description and in due course details of disposal.

 

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  • Accounting Standards

    1. The Co-operative’s audited financial statements should be presented to the Co-operative’s Annual General Meeting within six months of the close of the financial year. The financial statements should be prepared in accordance with generally accepted accounting principles.