The UK’s three independent regulators of charities have issued an alert to charities to advise them of the need to ensure they use bank accounts in the regulated financial sector, particularly when trustees may be moving money overseas, in order to ensure good governance
The Charity Commission for England and Wales, Office of the Scottish Charity Regulator and Charity Commission for Northern Ireland say that all charities need to have access to, and use, a bank account in the charity’s name in the regulated banking system. Trustees need to be able to use banking facilities, where they are available, to safely receive, hold and move charity funds.
The alert points out that appropriate use of a bank account is a good way for trustees to demonstrate audit trails for the receipt and movement of money, and that they are discharging their legal duties to keep funds safe and meeting key elements of good governance and prudent financial management.
The charity regulators say they would be concerned if a charity did not have a bank account in its name. If a charity does not have access to a secure bank account, then its funds would be at greater risk and the steps that trustees must then take to safeguard those funds, and ensure that the necessary records of income and expenditure are held, are likely to be more difficult and create a disproportionate extra burden on the trustees.
If charities use cash and other methods to transfer and move funds, the trustees must be able to show that this is a reasonable decision in the circumstances, and the risks have been appropriately managed. Trustees must also ensure that proper due diligence has been carried out, other safeguards including appropriate financial controls are in place, and all records and documentation in connection with their use are kept.
In a joint statement Helen Stephenson, David Robb, Frances McCandless, the CEOs of the charity regulators said: ‘The financial services provided by banks and financial institutions provide safe, responsible, efficient and transparent way for charities to conduct their financial affairs. Every charity should have a bank account in its name to help keep its funds secure.
‘It is in the best interests of charities to hold and move funds through the regulated financial sector where it is available – if other methods to hold or move funds are used they involve higher risks and in some cases can result in slowing down charitable assistance to beneficiaries.’
The Charity Regulators say they expects trustees to make sure that any problems which may arise with the use or movement of charity funds are reported to the relevant charity regulator.
Report by Pat Sweet
