Financial Controls and Reserves Policy

Al-Waris Foundation is committed to safeguarding charitable funds and maintaining appropriate financial controls.

The charity will manage its finances in a way that is:

The Board of Trustees retains ultimate responsibility for the financial affairs of Al-Waris Foundation.

Operational financial duties may be delegated, but trustees remain responsible for ensuring that appropriate controls exist.

This policy establishes the framework for:

This policy applies to:

It applies to financial activity in:

The Board of Trustees is ultimately responsible for:

Trustees do not need direct operational access to every financial system to fulfil these duties.

They must, however, receive sufficient financial information to exercise meaningful oversight.

The Board may delegate routine financial administration to authorised persons.

Delegated responsibilities may include:

Delegation should be clear and proportionate.

No person may exercise authority beyond that delegated to them.

Where reasonably practicable, significant financial processes should separate:

For a small charity, complete segregation may not always be practical.

Where one person performs multiple functions, compensating controls should be used, such as:

Bank accounts must be held in the name of Al-Waris Foundation where they are charity accounts.

Personal bank accounts must not normally be used to receive or hold charity funds.

Where exceptional circumstances require another arrangement, it must be:

Bank access should be limited to authorised persons.

Access rights should reflect actual operational need.

The charity should maintain an up-to-date record of:

Access must be removed promptly when authority ends.

Users with financial access must:

Bank credentials must not be stored in public repositories, documents or unsecured messaging.

Online payment processors may be used for donations and other legitimate charity activity.

Access should be limited to authorised personnel.

The charity should maintain appropriate controls over:

Production payment credentials must not be exposed in client-side code or public repositories.

Donation records should identify, where applicable:

Donation records should reconcile to the underlying payment or bank records.

Where a donor validly restricts a donation to a particular purpose, those funds must be used only for that purpose unless a lawful alternative becomes available.

Examples may include donations designated to:

Restricted funds must be separately identifiable in the charity's records.

Trustees must not knowingly use restricted funds for unrelated operating costs.

Unrestricted funds may be applied to any lawful activity within the charity's purposes.

This may include:

Use of unrestricted funds remains subject to proper financial controls.

Where donors are offered an optional contribution toward operational costs, the charity must present it clearly and separately from designated charitable giving.

The donor should be able to understand:

Operations contributions should be recorded consistently and treated according to the wording presented to donors.

The charity must not invent or alter a donor's designation after payment.

Where historical records do not contain a clear designation, the charity should not retrospectively fabricate one.

Any correction to an allocation must be:

Failed, cancelled, refunded or disputed transactions should be recorded accurately.

A donation must not be counted as received if it did not successfully settle.

Refunds should be:

Cash should be subject to enhanced controls because it is less traceable than electronic payments.

Where cash is collected:

Cash should not be retained unnecessarily.

Public and street collections must comply with applicable permits and conditions.

Financial controls should address:

Collectors must not remove money from collections for personal expenses unless a separately authorised and properly recorded process exists.

All material income should be recorded accurately and promptly.

Income categories may include:

Records should permit trustees to understand where the charity's money came from.

Charity expenditure must:

Charity funds must not be used for private expenditure unrelated to the charity.

The Board may establish financial approval limits.

The level of approval required should reflect:

Material or unusual expenditure should receive greater scrutiny.

Expenditure should normally be supported by appropriate records such as:

Where standard evidence is unavailable, the reason and alternative evidence should be documented.

Material purchases should follow the Procurement and Purchasing Policy.

Factors should include:

Lowest price alone does not necessarily represent best value.

For material expenditure, multiple quotations should be obtained where reasonably practicable.

The number of quotations required may depend on:

Where competitive quotes are not obtained, the reason should be documented for significant purchases.

Payments involving:

require careful conflict management.

Any such arrangement must:

See the Conflict of Interest Policy.

Project expenditure should be identifiable by project or programme where reasonably practicable.

Records may include:

This supports transparency and monitoring.

Water projects should normally maintain records including:

Where contractors charge according to depth or other variable specifications, final costs should be reconciled against actual verified work.

Food and essential-aid distributions should maintain proportionate evidence such as:

Bulk purchasing and repackaging should be recorded sufficiently to demonstrate quantities and costs.

Before significant payments are made to a new contractor, proportionate due diligence should be completed.

Depending on the work, this may include:

For repeat project work, initial pilot projects should be considered before substantial batches are awarded.

Advance payments should be limited where reasonably practicable.

Where an advance is commercially necessary, the charity should consider:

Higher-risk contractors should not automatically receive full payment in advance.

Material projects may use staged payments linked to:

This may reduce financial exposure.

Grant payments must follow the Grant Making Policy.

Financial controls should include:

Overseas payments require proportionate controls.

These may include:

Unusual payment instructions should be independently verified.

Where transactions involve foreign currencies, the charity should record:

The charity should use a consistent and reasonable accounting method.

Cash payments overseas should be avoided where safer traceable methods are reasonably available.

Where cash is necessary, enhanced controls may include:

Trustees, volunteers and other authorised persons may be reimbursed for reasonable costs genuinely incurred on charity business.

Expenses should be:

See the Expenses Policy.

Where an authorised person pays a legitimate charity expense personally, reimbursement may be made where:

Personal payment does not convert the expenditure into a donation unless the individual expressly waives reimbursement.

Where a trustee or connected person advances funds to meet legitimate charity costs, any resulting liability must be:

Interest must not be paid unless properly authorised and lawful.

The charity must distinguish between:

Historic expenses or amounts allegedly owed to trustees or connected persons should not be recognised automatically.

Before recognition or repayment, the charity should consider:

Material claims should be approved by unconflicted trustees.

Where the charity uses a payment card:

Cash withdrawals should be limited and documented.

Recurring financial commitments should be reviewed periodically.

Examples include:

The charity should cancel services that are no longer required.

Material contracts should be documented.

Before entering a significant commitment, the charity should consider:

The charity must maintain accounting records sufficient to explain:

Records should allow statutory accounts to be prepared accurately.

Bank accounts should be reconciled regularly against accounting records.

Discrepancies should be investigated.

Reconciliations should not simply be marked complete where unexplained differences remain.

Online payment processors should be reconciled against:

Material discrepancies should be investigated.

The Board should receive financial information proportionate to the charity's size and activity.

This may include:

Trustees should be able to understand the charity's financial position without requiring direct access to transaction systems.

Where appropriate, the charity should maintain an annual or project-based budget.

Budgets may include:

Material variances should be considered.

The Board should consider future cash requirements before committing to material expenditure.

Forecasting should consider:

Reserves are unrestricted funds that are freely available for the charity's general purposes, excluding amounts already committed or designated where appropriate.

Al-Waris Foundation will maintain reserves according to its actual financial risks and needs.

There is no automatic requirement to hold a fixed percentage of annual income.

Reserves may help the charity:

Reserves should not be accumulated indefinitely without a clear charitable rationale.

The Board will determine an appropriate reserves target based on factors including:

The target may therefore change over time.

Where unrestricted reserves are below the desired level, the Board should acknowledge this and take proportionate steps to improve financial resilience.

The charity should not present a target reserve as though that amount has already been accumulated.

Restricted funds must not be counted as freely available general reserves where they cannot lawfully be used for general operating purposes.

This distinction should be maintained in financial reporting.

The Board may designate unrestricted funds for a particular future purpose.

A designation is an internal decision and normally does not create the same legal restriction as a restricted donation.

The Board may reconsider a designation where appropriate.

Use of reserves should be authorised appropriately.

Reserves may be used where doing so is:

Material use of reserves should be reported to the Board.

The Board should review the reserves position at least annually.

The review should consider:

Financial controls should aim to prevent and detect fraud.

Controls may include:

See the Anti-Fraud, Bribery and Corruption Policy.

Unexpected or suspicious transactions should be investigated promptly.

Examples may include:

Significant financial incidents should be escalated promptly.

Immediate action may include:

Significant financial loss, fraud, unauthorised trustee benefit or material misuse of charity funds may require consideration under the Serious Incident Reporting Policy.

The Board must assess whether Charity Commission reporting is required.

Financial transactions must comply with applicable sanctions and terrorist-financing requirements.

Higher-risk overseas payments may require additional due diligence.

See the Sanctions and Terrorist Financing Policy.

The charity must not knowingly permit its accounts, projects or fundraising activities to be used for money laundering.

Unusual or suspicious arrangements should be escalated.

Where appropriate, Al-Waris Foundation should maintain an asset register for significant property and equipment.

This may include:

Low-value consumable items do not need to be individually recorded.

Significant charity assets must not be disposed of improperly.

Disposals should consider:

Any personal data must be securely removed before disposal of relevant equipment.

The Board should consider appropriate insurance for significant financial and operational risks.

Insurance should be reviewed periodically.

Insurance does not replace effective financial controls.

Financial records must be retained for the appropriate legal and operational period.

The Records Retention and Disposal Policy should specify detailed retention periods.

Records should be securely disposed of when no longer required.

The charity's annual accounts must be prepared in accordance with applicable requirements.

Trustees must take reasonable steps to ensure that accounts are:

Financial information included in the Trustees' Annual Report must be consistent with the charity's records and statutory accounts.

The charity must not fabricate:

Where an independent examination or audit is legally required, the charity will arrange it appropriately.

The Board may also seek independent financial review where it considers this beneficial even if not legally required.

Financial records should be accessible to:

Access should remain proportionate and secure.

Sensitive financial information should be handled in accordance with:

Public transparency does not require publication of:

Breaches of financial controls may result in:

Deliberate misuse of charity funds will be treated seriously.

This policy should be read alongside:

This policy will be reviewed:

Version: 2.0 Status: Approved Approved by: Board of Trustees Approval date: 25/08/2026 Next scheduled review: 24/08/2027