Charity Financial Controls Checklist for Boards

A missed approval, an unreconciled bank account or a payment made from an old supplier record can place unnecessary pressure on a charity. Most financial issues do not begin with deliberate wrongdoing. They arise when busy staff, volunteers and board members rely on informal processes that no longer suit the organisation’s size, funding arrangements or risk profile. This charity financial controls checklist helps boards and managers establish practical safeguards without creating administration that gets in the way of community work.

Financial controls are the everyday checks, approvals and records that protect an organisation’s money, assets and reputation. They support accurate reporting, meet obligations to funders and regulators, and give the board a clear view of the organisation’s financial position. Most importantly, they help ensure funds are used for the purpose donors, members, government agencies and communities expect.

Start with roles, authority and separation of duties

Good controls begin with clarity. The board is responsible for financial oversight, while management is responsible for applying approved processes and reporting back. Staff and volunteers need to know who can approve spending, process payments, access bank accounts, alter supplier details and review transactions.

Where possible, separate key duties. The person who creates a supplier in the accounting system should not be the only person able to approve a payment to that supplier. The person handling cash should not be the sole person reconciling it. Separation makes errors easier to identify and reduces the opportunity for inappropriate transactions.

Smaller charities may not have enough people to divide every task. In that case, an independent review is a sensible alternative. For example, a treasurer, director or external bookkeeper could review bank reconciliations, payment reports and changes to supplier bank details each month. Controls should be proportionate, but lack of staff should not mean lack of oversight.

Charity financial controls checklist

Use this checklist as a working document, then tailor it to your constitution, funding agreements, staffing structure and level of financial activity.

• Document financial delegations. Set clear limits for expenditure approvals, contract commitments, reimbursements, bank transfers and credit card use. Specify when board approval is required and record delegations in writing.

• Maintain an approved budget. The board should approve an annual budget that reflects planned programs, staffing, fundraising and reserves. Management should report actual results against budget regularly, explain material variances and recommend action where needed.

• Use two levels of payment authorisation. Require separate preparation and approval of payments, particularly for electronic transfers. Approval should confirm the expense is valid, within delegation and supported by an invoice or other evidence.

• Verify supplier details independently. Before changing bank details, contact the supplier using a known phone number or existing contact record. Do not rely only on an email requesting the change, even where it appears familiar.

• Reconcile bank accounts promptly. Complete bank reconciliations at least monthly, investigate unexplained items and ensure an independent person reviews and signs off the reconciliation.

• Control cash, cards and expense claims. Keep cash handling procedures simple and documented. Reconcile petty cash, set credit card limits, retain receipts and require timely review of staff and volunteer expense claims.

• Protect online banking and accounting access. Give each user their own login, use multi-factor authentication and remove access as soon as a staff member or volunteer leaves. Review user permissions at regular intervals.

• Keep a clear audit trail. Store invoices, contracts, approvals, grant acquittals, payroll records and board minutes in an organised and secure way. Records should allow someone else to understand why a transaction occurred and who approved it.

• Monitor restricted funds and grants separately. Track income and expenditure for each grant, appeal or restricted donation. This makes it easier to meet reporting conditions and avoid using funds outside their intended purpose.

• Report meaningful information to the board. Board reports should cover cash position, budget performance, significant commitments, debtor and creditor issues, grant obligations, payroll liabilities and emerging risks. A set of figures without explanation is rarely enough for sound governance.

Make approvals useful, not performative

An approval process only works when the approver has enough information to make a decision. A manager approving an invoice should be able to see what was purchased, whether it was received, which budget it relates to and whether the cost sits within their delegation.

The same principle applies to board oversight. Directors do not need to approve every routine transaction, but they should approve the financial framework that guides those transactions. This includes the budget, delegations, banking arrangements, reserves approach, major contracts and any borrowing. The board should also receive timely information when spending or income moves materially away from plan.

Be careful not to create approval bottlenecks. Requiring the chair to sign every small purchase may appear cautious, but it can delay essential program delivery and encourage people to work around the process. A better approach is to set sensible limits and reserve higher-risk or higher-value decisions for more senior approval.

Pay close attention to payroll and reimbursements

Payroll is often a charity’s largest expense and one of its most sensitive control areas. Ensure changes to pay rates, bank details, allowances, leave balances and termination payments are approved and documented. Reconcile payroll reports to the general ledger and review superannuation, PAYG withholding and other obligations by their due dates.

Reimbursements deserve the same care. A reimbursement policy should state what can be claimed, what evidence is required and who approves claims from the chief executive, finance manager or board members. No person should approve their own reimbursement. If a board member incurs a legitimate expense on behalf of the organisation, another authorised person should review it.

Build controls into the monthly routine

Controls are most effective when they form part of a regular cycle rather than being revisited only after a problem. Each month, close off reconciliations, review outstanding invoices, check cash flow, compare actuals to budget and prepare a concise report for management or the board.

Quarterly reviews can go further. Check user access, review credit card limits, confirm key policies remain current and look at whether grant-funded expenditure is tracking to plan. An annual review should consider whether delegations, insurance, fraud controls and financial policies still reflect the organisation’s activities.

Document exceptions rather than quietly ignoring them. A late approval, missing receipt or urgent payment may be understandable, particularly during an emergency response or staffing gap. Recording the reason, the authorisation and any corrective action protects the organisation and reveals whether an informal workaround is becoming routine.

Create a culture where questions are welcome

Financial controls are not a signal that staff or volunteers are untrusted. They are a shared way of caring for resources held on behalf of the community. Leaders can reinforce this by making processes clear, offering practical training and responding respectfully when someone asks why a payment, invoice or report does not look right.

A whistleblower or concerns process should be accessible and safe to use. People need to know whom they can approach if they identify suspected fraud, a conflict of interest or pressure to bypass a process. Concerns should be handled fairly, confidentially where possible and in line with the organisation’s policies.

For organisations managing rapid growth, multiple funding streams or limited internal capacity, an external review can provide useful perspective. NFP Business Services can work alongside internal teams to help clarify processes, strengthen reporting and establish manageable finance routines.

The aim is not a perfect folder of policies that nobody uses. It is a set of understood, consistently applied practices that give your people confidence to act responsibly and keep the organisation’s focus where it belongs: on its purpose and the communities it serves.