- Financial regulations govern the way financial transactions are conducted, recorded, monitored and checked. They are the first defence against fraud.
- The regulations specify internal rules governing financial management and control, including delegated authorities. They should be carefully considered by the Co-op, formallyadopted and reviewed annually.
- These regulations define the role of the Committee, the Treasurer, Finance Group and staff in relation to the financial management of the Co-op, and shall be available to allco-op members so that they understand their individual responsibilities in ensuring compliance.
Rules - Audit and Annual Return
- The co-operative’s financial year will commence on the 1st April and expire on the 31st March each year.
- The Co-operative shall in accordance with sections 83 to 88 of the Co-operative and Community Benefit Societies Act 2014 (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 andattendance 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 atthe Annual General Meeting.
- Every year not later than the date provided by the Act, the Secretary shall submit the Annual Return to the Financial Conduct Authority (FCA) 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 provided by the Auditor for the period included in the return.
The Role of the Treasurer and the Finance Group
- 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.
- 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.
- The Treasurer bears the responsibility of ensuring that a draft Annual Budget and draft Rent and Service Charges are prepared for approval by a General Meeting or anExtraordinary General Meeting at least 38 days before the start of each financial year.
- If the Co-operative decides at this meeting that changes need to be made to the draft Annual Budget or to the draft Rent and Service Charges, then the Treasurer bears theresponsibility of ensuring that a revised draft Annual Budget and revised draft Rent and Service Charges are prepared for approval by a General Meeting or an Extraordinary GeneralMeeting at least 30 days before the start of the financial year.
- When the Co-operative has approved the Annual Budget and the Rent and Service Charges, the Treasurer shall present these to the members of the Co-operative at least 28 days before the start of the financial year.
- On a quarterly basis the Treasurer shall present a report of the financial position of the Co-operative in relation to income and expenditure to a General or Committee Meeting.
- The Treasurer shall be responsible for ensuring that the Co-operative's accounts are audited annually and that an auditor’s report is made available at the Annual General Meeting.
- he Treasurer will liaise with other co-ordinators over the budget for their areas of work to make sure spending is kept within budget, or where appropriate, to authorise overspends for specific budgets. Spending in excess of a budget provision must be authorised by either the Treasurer or a General Meeting.
- It is the Treasurer’s responsibility to ensure that all statutory Annual Returns are made at the end of each financial year.
- The Treasurer, is responsible for ensuring that the rules of registration are complied with in relation to financial matters.
- The Treasurer is responsible for ensuring that there are four cheque signatories for the Co-op’s current account and at least two signatories for any other bank accounts the Co-op may hold.
- The Finance Group shall maintain a 30-year Finance Plan that shall be updated at least once a year.
The Role of the Auditor
- 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.
- It is the duty of the Finance Group to ensure that the terms of the engagement are met.
- The Finance Group must ensure that an audit management letter is supplied following the audit and that the letter is addressed to the co-op.
- The audit management letter should be presented to a General or Committee meeting and the Chair or the Treasurer should sign a written response letter.
- The Co-operative should agree appropriate follow up action on the matters contained in the audit management letter and should monitor the progress of that action.
- The contract for the appointment of auditors should be re-tendered every three years.
Records and Reports
- 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.
- The bank balance shown on the bank statements must be reconciled to the cashbook at least once monthly.
- Rent and arrears monitoring reports will be produced on a quarterly basis for General or Committee meeting appraisal of targets and performance of the organisation.
- The Treasurer will present a report on the financial position of the co-operative on a quarterly basis to the General or Committee Meeting.
- 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.
Cheques and Internet Banking
- 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.
- The Treasurer is responsible for actively managing all Co-op internet banking transactions and safeguarding the associated passwords and hardware, or delegating these responsibilities to members of the Finance Group as authorised by General Meeting decision.
- Four co-op members, one of whom must be the Treasurer, will be authorised to sign cheques on behalf of the co-op.
- Cheques must be signed by two authorised bank account signatories. Where payments are made online, payments will be made by the Treasurer or a member of the finance group authorised to do so.
- Invoices shall be signed by one authorised bank account signatory and one relevant working group co-ordinator before an online payment is made. Should a relevant working group co-ordinator not be available, invoices may be signed by two authorised bank account signatories or by one authorised bank account signatory and the chair.
- Working Group Co-ordinators are authorised to sign and approve invoices for expenditure in relation to their working group. Where this is the case, only one further signature is required before payment.
- Signatories cannot authorise payments to themselves.
- Cheques may only be signed or online payments made if accompanied by an original invoice/bill. Where, exceptionally, no bill or invoice is attached, an explanation must be given in writing and filed in the invoice folder.
- All paid invoices must be separately marked as paid and filed in consecutive order in the invoice folder.
- Blank or un-addressed cheques are never to be signed.
- The Co-operative's cheques and internet banking keypads are to be locked away safely in the office at all times.
- All regular payments by bank standing order/Direct Debit should be checked and authorised in the same way as invoices and regularly monitored.
- Encashment of cheques in excess of £200 shall not be made.
- Petty cash will operate with a float of between £100 and £200 which will at all times be kept locked in a secure place.
- Only authorised members of staff may have access to the Petty Cash and borrowing is strictly forbidden.
- Petty cash should normally only be used for small items costing up to £75. Anything more than this should be paid for by cheque or via internet banking.
- All petty cash payments are to be made on sequentially numbered petty cash vouchers accompanied by an explanation and a receipt. Only in exceptional situations will petty cash payments be made without accompanying receipts.
- The Co-op Staff or Treasurer should counter-sign all petty cash vouchers and ensure that a correct balance in the petty cash is maintained at all times.
- Formal petty cash reconciliation should be done every month and kept on file. If there is a discrepancy when the Petty Cash is reconciled, the Treasurer will be informed and will sign to say they have been made aware of the problem.
- All receipts are to be stapled to the appropriate completed petty cash voucher and kept together with the monthly petty cash reconciliation on file.
- There must not be more than £200 in petty cash at any time.
- The petty cash book should be updated and reconciled on a monthly basis.
- Cash rent payments may never be received into petty cash.
- 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.
- Formal accounting records of gross salary payments, national insurance contributions, tax and other deductions must be kept up to date at all times.
- The Employment Group shall authorise the calculation of monthly salaries, wages, pensions, compensation and other earnings to all employees or former employees of theorganisation. Payment will only be made when these calculations have been authorised by an Employment Co-ordinator.
- Expenditure and Contract Authorisations
- Expenditure can only be authorised from an approved budget.
- In placing orders for goods and services (including repairs), two quotations should be obtained for orders over £1,000 and three quotations for orders over £5,000.
- Any maintenance expenditure costing up to £1,000 may be approved by Maintenance Co-ordinator without reference to a general or committee meeting.
- Maintenance expenditure between £1,000 and £2,000 may also be approved by a Maintenance Co-ordinator, who must then report such expenditure to the next General or CommitteeMeeting.
- Maintenance spending of over £2000 must be put to a General or Committee Meeting, and must be presented on the Agenda.
- When there is a clear need for emergency expenditure of over £2,000, this may be approved by either a Maintenance Co-ordinator or the Treasurer, and must be reported to thenext General or Committee Meeting.
- Any lease, hire purchase agreement or other contract involving expenditure will be subject to the same authorisation limits as above, with the appropriate expenditure amountbeing 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.
- Large contracts should not be entered into without adequate advice from the Co-operative's relevant professional advisors.
- New contractors can only be added to the approved contractor lists when they have fully satisfied the co-op’s criteria, which may be varied as and when required by GeneralMeeting.
- Spending policy for other working groups is outlined in the Spending Policy for Working Groups other than Maintenance.
- Rents charged to tenants of Argyle Street Housing Co-op Ltd can only be increased by a vote of approval at a General Meeting.
- All additional charges (extra rent) such as service charges, water rates, council tax etc as set out in the tenancy agreement, will be collected along with the rent.
- ervice charges will be reviewed and varied on an annual basis in accordance with service charge expenditure.
- Every week the rent workbook spreadsheet will be reconciled with the bank statement.
- Bad debts over £250 can only be written off by the approval of a General or Committee meeting.
- All fixed assets costing more than £2000 (or such level as may from time to time be agreed by the Committee) will be capitalised in the accounts and recorded in Fixed Assetsregister.
- 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 duecourse details of disposal.
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 financialstatements should be prepared in accordance with generally accepted accounting principles.
- The Co-op will arrange for the office workers to have company Credit Cards in their names. These will be used for making online purchases and in other instanceswhereimmediate payment is necessary.
- When a payment is made using the Co-op Credit Card, an authorisation must be signed by either the Treasurer or a relevant working group Co-ordinator
- Each Credit Card will have a spending limit of £2500
- The Credit Card statement will be reconciled on a monthly basis and will be approved by Treasurer before payment is taken from the bank.
- In order to ensure financial stability, the Co-op will set a minimum amount of money that must be retained in the bank at all times.
- This amount will be equal to three months running costs
- Three months running costs will be calculated by dividing by four the total expenditure of the previous full financial year