Finance Policy

 

Governance

WPS Children’s Centre CIC Directors are collectively responsible for the overall direction of the nursery and its strategic management and has a responsibility, not only to be effective, but seen to be effective. The Directors shall comply with the requirements of The Companies Act 1985 and any other applicable law as to keeping financial records, the audit or examination of accounts and the preparation and transmission to the Registrar of Companies of annual reports and accounts.

 

Subject to the paragraph below the Company’s statutory books and accounting records shall be open to inspection by the Members during usual business hours.

 

The Company may, in a general meeting, impose reasonable restrictions as to the time at which and the manner in which the statutory books and accounting records of the Company may be inspected by Members.

 

The Company affairs will be managed and administered in accordance with high principles which are as follows: –

 

 

Nominated Person: The Company will nominate a Director to become a ‘Financial Director’, who will oversee the financial aspects of the business

 

Register of Business Interests

The Company Directors and nursery staff have a responsibility to avoid any conflict between their business and personal interests and affairs and interests of the nursery. A register of business interests will be maintained for both Company Directors, and Nursery Manager, and will be freely available for inspection by Company Directors, staff and parents.

 

The register will include all business interests such as directorships, share holdings and other appointments of influence within a business or other organisation, which may have dealings with the nursery.  The disclosures should also include business interests of relatives and other individuals who may exert influence.  The Company Directors will ensure that the register is kept up to date and complete, includes all Company Directors and relevant staff and in this regard, signed and dated.  

 

Financial malpractice

The Company believes that staff should be able to properly raise concerns, in confidence and without prejudice to their personal positions.  Where appropriate this will include an opportunity to raise concerns outside the line management structure, and an indication of the proper way in which concerns may be raised outside the organisation if necessary.  A ‘Designated person’ has been nominated as a contact point for queries of a confidential nature arising from the financial work of the nursery/Company. 

 

Designated person: Company Chair Person (or Company Secretary if the Chairperson is also the Financial Director).

 

Tax Year: the tax year is 1st April to 31st March each year.

 

Good and services for private use

The Company will avoid practices such as obtaining goods and services that may include an element of private use for Company Directors and staff.  Company Directors and staff will also avoid accepting excessive hospitality, entertainment or other services from existing or prospective suppliers. 

 

Roles and Responsibilities

The Nursery Manager is authorised to spend a maximum of £1000, in each Tax Year, in partnership with the Nursery Teacher/Foundation Stage Leader for purchasing resources for the Foundation Unit. Beyond this level the approval of the Company will be required. 

 

Effective Operation of the Finance Function

The Company is responsible for ensuring the effective operation of the finance function.  The Company will ensure that:

·         The roles of each member of staff are clearly defined and the duties of staff concerned with financial transactions will as far as is practicable be distributed to ensure that key tasks are assigned to separate members of staff and that appropriate systems of internal check exist.   

 

Separation of duties

In order to reduce the risk of error or intentional manipulation, the Company will ensure the separation of those responsibilities or duties which would, if combined, enable one individual to record and process a complete transaction.  Wherever possible duties will be separated in accordance with the following criteria:

·         authorisation – of a transaction such as a purchase order or payment;

·         execution  -  the placing of an order, receiving of goods and services;

·         custody – the holding of goods and services;

·         recording – the completion of accounts and records.

 

For the nursery this will be:

·         orders raised – Budget Holder

·         orders processed – Finance Administrator

·         orders authorised – Financial Director

·         goods and services checked in – Administrator

·         payments processed or returns made – Finance Administrator

·         payments authorised – Financial Director

 

Systems are in place to ensure that financial control is maintained at all times including procedures in the absence of key staff.  Arrangements for such a situation are as follows:

·         Finance Administrator – Nursery Manager

·         Nursery Manager – Finance Administrator

 

Appropriate documentation of transactions is maintained to specify standards. 

 

Financial Planning

Financial planning is a key part of good financial management and gives a clear view of how the Centre intends to use its finance. 

 

Costings

Company Directors should ensure that the nursery budget is based on realistic estimates of all expected expenditure and income, including Sure Start revenue/grant income, so that planed expenditure does not exceed the available budget.  Company Directors should also ensure that any new initiatives are carefully appraised in relation to all likely costs and benefits and their financial sustainability, before being formally approved. 

 

Budgeting

The budget is the system for planning income and expenditure throughout the year.  The Company Directors will be responsible for preparing the budget in sufficient detail to enable the effective management of the available funds.  The Finance Administrator will provide regular monthly budget reports to the Directors at each full meeting.  As a minimum standard this should include:  

·         Budget monitoring statements.  The statement should show a comparison of expenditure to the approved budget, the forecast year end position and its relationship to contingencies or reserves. 

·         As a matter of best practice a written report will accompany financial statements providing details of major variations, future planned expenditure and virements made between budget headings. 

 

The Financial Director is responsible for insuring that quality controls are in place so that reports are of a sound standard and where budgets are managed by budget holders to ensure the reliability of the information. Company Directors will periodically review the provision of financial information to ensure that what is provided remains appropriate and timely.

 

Contingencies/reserves

Due to the uncertainty of financial projections and the probability that changes will be required to the budgets during the year, a contingency will be set aside in the budget.  The contingency will be shown as a single explicit figure rather than being spread across a number of budgets.  The level of this contingency will be kept to a minimum and in part will be determined by local knowledge, and by experience gained over previous years.  This experience will be gained from the process of reviewing actual expenditure against budgets on a regular basis.  The carry-forward will therefore exist as a discrete amount appearing as a separate budget line.  

 

 

 

Purchasing

The Company Directors are responsible for ensuring procedures are in place for testing the market, placing of orders and paying for goods and services in accordance with financial regulations.

 

Value for money 

Written competitive quotations will be obtained for expenditure exceeding £500 and the Nursery Manager will obtain quotations for expenditure not exceeding this sum, where appropriate, unless exceptional reasons prevent this. At least four written quotations will be obtained for expenditure exceeding £1000 and procedures for advertising submission, receipt and opening and recording of tenders must conform to standing orders.  The Nursery Manager has delegated authority to accept the lowest quotations for all expenditure below £500.  In instances where the lowest quotation is not accepted this should be reported to the Company Directors and the reasons for the decision recorded in the minutes of the meeting.  For quotations above £500 the approval of Company Directors, through the Chair must be sought.

 

Sealed tenders should be submitted to the Nursery Manager by the set date.  Where Company Directors seek tenders from companies these must be given to the Chair Person without discussion about other tenders.  The Chair Person will not discuss the value of other tenders with any person prior to the meeting to discuss the received tenders protecting all concerned from allegations of nepotism or favouritism.  The Company Directors would normally accept the lowest tender of the work unless there are specific circumstances. All tenders MUST be on the same standard and specifications as each other.

Orders for Goods and Services

Orders will be raised on receipt of an Equipment Request Form signed by the relevant Budget Holder.  Any telephone orders must be followed by a confirmation order within 24 hours.  The Equipment Request Form should be retained with the copy order.

Payment of Accounts

Invoices will only be paid when the budget holder has shown approval that goods or services have been received and are of the quality expected.  Payment should be made within reasonable limits and discounts taken for quick payment where appropriate and in the case of small suppliers the provision of the Late Payments of Commercial Debts Act 1998 must be observed.  This is where a supplier employing less that 15 can claim interest on late payments.

Goods Returned

Generally invoices are kept in an appropriate file awaiting payment.  Until payment is made they remain here.  Where items are returned a letter detailing the reasons is sent and a copy kept on file.  Items received on approval are recorded separately with returns catalogued and filed.  This procedure ensures that replacements or credits are received of all returns and a clear trial is left of orders and transactions.

Petty Cash

The Nursery Manager is responsible for the operation of the petty cash account, which should only be used for small items of expenditure.  Every time money is taken out, a petty cash receipt or voucher is written out and signed when the money is handed over. This procedure must be followed no matter how much money is withdrawn. The receipt for the goods must be attached to the petty cash voucher. The vouchers must be recorded in the petty cash book in chronological order. The limit or ‘float’ for the petty cash system is £50.00. When the float is low, the vouchers are added up and cash, equal to the sum of vouchers, is made out to bring the float back to the original amount. Again this action is recorded in the cashbook.  

 

Physical Security

Petty cash will be kept in the safe.  The Company should ensure that their insurance cover is compatible with the amounts of cash held in the nursery on a regular basis and secure the cash in a safe where required under the policy.

 

Access to cash, cash records and forms should be restricted to authorise personnel.  Secure safes and containers should be provided for cash, records and valuables.

 

There should be regular independent checks on petty cash holdings and records.  The Financial Director, who is not involved in recording petty cash transactions, will carry this out and sign as evidence of this. 

 

Income, Cash Handling and Sundry Debtors

 

Income

The Finance Administrator is responsible for the correct accounting of all income due to and cash collected for the nursery. Where possible, the Directors will ensure the responsibility for determining sums due to the nursery is separated from the responsibility for collecting and banking such sums.

 

Where invoices are to be raised, the nursery will do so promptly using authorised arrangements.  Where cash is collected a receipt will be issued.

Cash and cheques collected will be kept secure until the time of banking.  Income collected will be banked in its entirely as promptly as possible and will not be used to cash personal cheques or for other payments.

 

Sums received will be reconciled to the sums banked.

Sundry Debtor Accounts and Debt Recovery

All debtor accounts will be raised in a timely manner and clear guidance given to the debtor regarding settlement dates and payment required.

Debt Monitoring

·         All debts will be monitored at regular monthly intervals.

 

The following recommended timescale and actions will be applied in respect of debt monitoring. 

Outstanding

Required Action

Day 1 – debt is raised

Debtor has 28 days to clear debt, and should be settled by the last working day of the month.

Day 28

If debt is still outstanding, reminder sent to customer. Customer must respond within 7 days

Day 35

If debt is still outstanding, a further letter is sent, customer has 14 days to respond to the letter

Day 50

If debt is still outstanding, issue proceedings to formally recover the debt

 

 
Debt Recovery/Write off

The decision to recover a debt will be made by the Company.  Factors to consider would be the amount of the outstanding debt in relation to the cost of recovery and the likely success of proceedings.

 

Changing of Fees 

The Company Directors will be responsible for setting and changing of standard fees. At least two months notice should be given to parents/carers of any increase in fees.

 

 

Opening of Accounts

The opening of all accounts should be authorised by the Company Directors who should set out, in a formal memorandum, the arrangements covering the operation of accounts, including any transfers between accounts and cheque signing arrangements.  The operation of systems such as Bankers Automatic Clearing System (BACS) and other means of electronic transfer of funds should also be subject to the same level of control.  The bank should be advised that the account must not become overdrawn.

 

Deposits

The Company should ensure that particulars of any deposit are entered on a copy paying-in slip, counterfoil or listed in a supporting book.  The details should include:

·         The amount of the deposit and date of receipt

·         A reference, such as the number(s) of the receipts(s) or the name of the debtor

 

Payments and Withdrawals

There should be robust controls over all ways in which funds may be drawn from accounts, including such operations as standing orders, direct debits mandates, BACS payment and salary payments. 

 

Bank Account Withdrawals

The Company should implement the following controls, ensuring that:

·         approved by non-signatories (who need not be Company Directors) in respect of every cheque signed.

·         Restrictions are in place on the signing of cheques so that, as a minimum requirement, there is a mandatory limit on a cheque signed by one person and, over that value, dual signatures must be used.

·         A maximum of three people are authorised to sign cheques.  Those authorised are: Nik Salter (Company Director), Nursery Manager, Rachel Hustwayte (Finance Administrator).  All must be kept up to date with current procedures.

·         Mandates are held on the Company’s bankers detailing the arrangements on the above points with clear instructions that the Company’s bank account must not become overdrawn.

 

Administration

The Company should ensure that bank statements are received regularly and that all reconciliations are performed at least on a monthly basis and that all bank accounts are reconciled to the cash book and adjustments that arise are dealt with promptly.  These reconciliations are checked and discussed at Company meetings. 

 

Insurance

The Company will review the insurance needs of the nursery annually and liaise with the LEA where appropriate to ensure that specific arrangements remain appropriate.  Following the approval of the Company Directors, the Nursery Manager will ensure the agreed arrangements are in place.  The Company Directors will periodically consider whether to insure risks that are not covered by an existing policy arranged by the LEA or other body.  The cost of premiums for any additional cover will be met from the Company budget. All insurance purchased must follow the guidelines set out previously under ‘Value for Money’.

 

The Nursery Manager will be responsible for ensuring that Company Directors are made aware of all new risks and all incidents which may give rise to an insurance claim (e.g. accident, theft etc) are reported immediately to the insurers, the Authority or their agent.

 

Computer Systems / Data Protection

The Company Directors will ensure that the nursery is registered in accordance with the Data Protection act. The Finance Administrator will ensure that effective backup procedures are in place.  A backup set must be held off site in the event of backup sets being damaged in the nursery/Centre).

 

Access to nursery management computer systems will be limited to authorised staff and Directors.  These staff and Directors will use passwords that should not be disclosed and should be changed regularly.  Only authorised software will be used to prevent the import of computer viruses.  Staff will only have access to those modules appropriate to their duties.

 

Security of Stocks and Other Property

The Nursery Manager is responsible for the safe custody of cash, the security of other property and for stock control.  The Finance Administrator will ensure that inventories are maintained and in an approved format. Inventories will be checked at least annually by the Chair of Directors and any discrepancy shall be investigated.  Discrepancies over the amount of £50 shall be reported to the Company Directors.

 

An inventory should:

·         Form an important part of the nursery procedures for ensuring that staff take responsibility for the safe custody of assets.

·         Enable nursery management to undertake independent checks on the safe custody of assets, as a deterrent against theft or misuse.

·         Help the nursery to manage the effectiveness utilisation of its assets and to plan for their replacement

·         Support insurances claims in the event of fire, theft or other losses.

 

It is good practice to ensure that items particularly at risk should be permanently and visibly marked as the nursery property and there should be a regular, annual count by someone other than the person maintaining the inventory.  This will be an administrator. 

 

Discrepancies between the physical count and the amount recorded in the inventory should be investigated promptly when reported to the Company Directors.  

 

Safes and similar storage facilities will be kept locked and keys removed to be held by the key holder who will be nominated by the Company Directors.  Normally key holders will carry keys on their person and keys must not be left on the premises overnight except in another safe.  A list of key holders will be maintained by the Company and loss of any keys must be reported to the Chair of Directors.

 

Disposal/Loan of Assets

Any transfer of assets must be carried out in line with the Articles of Association of WPS Children’s Centre CIC.

 

Property should not be removed from the nursery without the appropriate delegated authority from the Nursery Manager.  A record of any loan should be recorded in the appropriate book by the Nursery Manager and the record updated when the asset is returned. If assets are on loan for extended periods or to a single member of staff on a regular basis the situation may give rise to a benefit-in-kind.  This has implications both for tax purposes for the individual concerned and for the proper use of public funds.  Loans should therefore be kept under review.

 

Personnel and Payroll

The Company Directors will, where possible, allocate duties to ensure that an appropriate division or separation of duties exists, in the area of completing, checking and authorising of all documents and claims relating to appointments or terminations of employment and expenses. These roles must not be the sole responsibility of one person.

 

Payroll transactions will be processed only through the payroll system. Payment for employment will not be made to staff etc through any other mechanism. 

 

Staffing of the Finance Function

The appointment of staff should be made with due regard to the qualifications and capabilities commensurate with their duties.  Inevitably, the proper functioning of any system depends on the competence and integrity of those involved with the financial arrangements.  

 

Consequently, the Company Directors should establish procedures to ensure that:

·         Personnel are competent, suitably qualified and trained to perform that a level commensurate with their responsibilities.

·         Clear statements of criteria for personnel selection and formal job descriptions are maintained.

·         The finance staffing levels are adequate.

·         There are effective arrangements to deal with the absence of key financial personnel.

 

Training/Development

Particularly for those with financial responsibilities, the Company Directors should keep under review any training needs and opportunities.  Training is available through a number of organisations both in relation to general financial principles and procedures and more specifically in relation to the accounting requirements of Company.

 

 

© 2010