Who's on the make?

Monday, 21 March 2011 00:00

The recent jailing for fraud of a self-styled 'general secretary' of a charity who was neither its secretary nor a trustee has once again highlighted the need for trustees to be alert to any attempt to misuse charity funds. A Charity Commissionreport has condemned as 'unacceptable' the fact that the trustees had left him with financial control and failed in their duty to keep proper accounting records or to exercise management and control of the charity.

Control is usually achieved by 'segregation of duties' which means never allowing the same person to both begin and end a task unless additional controls are put in eg one person should record money coming in while another spends it.

That is easier said than done in a small charity. But you can see the risk that trustees take if, say, a treasurer counts the cash on his own after a fund-raising event and is left to pay the suppliers, perhaps in cash too. Much better to involve trustees or volunteers in at least part of the process. This also helps if later an officer falls ill, as too often a small charity can rely very heavily on one person who 'knows everything' but does not share or record it!

So the trustees should consider: does the officer have enough support? Is he or she doing too much? Is more training needed? Are budget variations properly explained? In short, is the charity at risk?

And consider spot checks. This is not about 'big brother'; it is more a protection for an officer against false accusation if something does go missing.

You may also have read of a well known orchestra charity that failed to notice unusual outgoings because it was operating away from its normal home during building works. Tighter monitoring of plans and budgets would have picked up the fraud and enabled the trustees to take action sooner.

Finally, we at Tozers are on tenterhooks about CIOs. After previous deadlines came and went, the long-awaited Regulations were promised for March but the Office for Civil Society is still dragging its feet. The Charity Commission is poised to issue its guidance on CIOs, and may even release its model constitutions without waiting for the Regs. Find out more at our seminar on 5 April.

This article was produced for DACVS newsletters.