Guide to internal controls, financial controls, and fraud prevention for UK charities. Protect your charity from financial loss.
Strong internal controls protect charity funds from loss through error or fraud. Trustees have a duty to ensure adequate controls are in place and working effectively.
Controls should be proportionate to the charity's size and complexity. Even small charities need basic controls like segregation of duties and proper authorisation procedures.
Review controls regularly and update them as needed. Consider having an external review of financial controls to identify any gaps.
Separate responsibilities for authorising, processing, and reconciling transactions. No single person should control the entire financial process.
Set clear limits for who can authorise payments. Require appropriate approval for different levels of expenditure.
Reconcile bank statements regularly (at least monthly). Investigate any discrepancies promptly and thoroughly.
Trustees should receive regular financial reports and review them carefully. Consider audit or independent review of accounts.
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