This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.

These websites for each chapter update the 3rd edition of The Russell-Cooke Voluntary Sector Legal Handbook by James Sinclair Taylor and the Charity Team at Russell-Cooke Solicitors, edited by Sandy Adirondack (Directory of Social Change, 2009). The websites are not intended as a comprehensive update and should not be treated as such.

To order a copy of The Russell-Cooke Voluntary Sector Legal Handbook, print out the order form at www.sandy-a.co.uk/bookserv.htm or send an email order by clicking . It costs £60 for voluntary organisations or £90 for others, plus 10% p&p.

Chapter 53
FINANCIAL PROCEDURES AND SECURITY

FINANCIAL PROCEDURES AND ACCOUNTING RESOURCES

Added 1/4/12. This information updates chapters 53 & 54 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
Most basic guidance for businesses on financial procedures and record keeping is also relevant for charities and voluntary organisations, but is likely to need to be adapted to ensure the systems can comply with charity requirements, such as tracking restricted income and related expenditure, and separating taxable and non-taxable income. New or recently updated guidance which may be useful includes:

• Keeping records for business: What you need to know. A basic guide with a list of where to get more information.
  www.hmrc.gov.uk/factsheet/record-keeping.pdf


• A general guide to keeping records for your tax return. Detailed guidance on record keeping covering the records you may have to keep, common problems and examples.
  www.hmrc.gov.uk/sa/rk-bk1.pdf


• Set up a basic record keeping system. Examples of spreadsheets and information and setting up a record keeping system.
  www.businesslinks.gov.uk/recordkeeping


• Find out what records you should be keeping. The records you need to keep, and how to assess how well you are keeping them.
  www.businesslink.gov.uk/recordkeepingcheck


• Internal financial controls for charities (CC8). The main points of financial management, planning and control in the context of charity law and good practice, including electronic banking and other recent changes, and how to safeguard against fraud.
  www.charitycommission.gov.uk/Publications/cc8.aspx


• Understanding reports on charity financial statements. First in a series of short guides from the CIPFA (Chartered Institute of Public Finance and Accountancy) charities panel, intended to help accountants and non-accountants understand charity accounting and reporting.
  tinyurl.com/3yu4hlj


• Updated guidance and resources from Mango (Management Accounting for Non-Governmental Organisations), to help charities delivering emergency aid to manage their finance.
  www.mango.org.uk

HODGSON RECOMMENDATIONS ON EX GRATIA PAYMENTS BY CHARITIES

Added 21/8/12. This information updates s.53.3 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
An ex gratia payment is one which an organisation feels morally obliged to make even though it has no power or contractual obligation to do so and the payment cannot be justified as being in the interest of the organisation. An ex gratia payment might be made, for example, when an organisation receives, through an oversight or technicality, a legacy intended for another beneficiary. A charity may make an ex gratia payment only with an order from the Charity Commission, court or attorney general.

In his review of the Charities Act presented to Parliament on 16 July 2012, Lord Hodgson made the following recommendations in relation to ex gratia payments, and the government commented on some of them in its interim response on 3 November 2013. The government's full response will include consideration of the Public Administration Select Committee's report on its inquiry into the Charities Act 2006 and the regulation of charities, which was published on 6 June 2013.

• Trustees should be given a power to delegate to the chief executive the consideration of making ex gratia payments and the making of the approach to the Commission for permission. [Appendix A recommendation 5]


• Trustees should be given a power to make small ex gratia payments themselves, below a certain threshold [not specified]. [Appendix A recommendation 5]

SANDY ADIRONDACK
Governance and legal training and consultancy
for the voluntary sector
39 Gabriel House, 10 Odessa Street, London SE16 7HQ
Tel 020 7232 0726; fax 020 7237 8117
Email:
Web: www.sandy-a.co.uk