AREA FINANCES

Background

Areas and Area funds, unlike individual Societies and their funds, belong to The Arts Society centrally.

The accounts for each Area are consolidated and included in the Group Financial Statements for the Charity and its subsidiaries. The total Area income and expenditure is usually shown in note 2a to the Financial Statements and all Area funds are treated as Designated Funds. These are audited as part of the annual audit process, and although an Area will wish to present its annual financial position to its local Societies, there is no requirement for any form of independent examination: no expenses should be incurred for such an examination at Area level.

Accordingly, ultimate responsibility for the management and control of these assets (funds), rest with the Trustee Board. As with any charitable funds:

• they must only be used for purposes that are consistent with the charitable objects which all Area Support Teams should make sure they are familiar with. If Area Support Teams have any doubt whether particular proposed expenditure is consistent, they should immediately seek advice from the Finance and Resources Director;

• they must be managed and controlled in the same way as any other significant asset or expenditure of the Charity.

Financial Year

The financial year for The Arts Society and therefore all Areas is 1 January – 31 December.

Banking

Areas are required to operate one bank account which should be in the name of the Area. An imprest system operates for Area funds and any funds over and above the amount agreed with the Finance and Resources Director will be held in a ringfenced designated fund on behalf of each Area.

Should the balance in the Area held bank account fall below the agreed imprest amount then a request should be made for a transfer of funds from the ringfenced designated fund. Similarly, if income is received which increases the balance to above the agreed imprest level then a transfer should be made to the centrally held designated fund.

Record Keeping

It is a legal and regulatory requirement for financial records to be maintained and kept for 6 years.

The Area Treasurer (or equivalent) will be responsible for maintaining the financial records and reporting on the financial position to the Area Support Team and local Societies.

• As a minimum, a cash-book or computerised equivalent must be kept for the bank account maintained by an Area. These must record all payments whether by internet transfer, cheque, direct debit or standing order and all cash banked or credited direct, with appropriate analysis or explanation. It is vital to save back-up copies of computerised records, and financial records legally must be held for a minimum of 6 years.

• All payments should be supported by invoices or equivalent documents. Authority for any expenditure, which is not part of the core budget, must be authorised in advance by the Area Support Team (AST) in consultation with local Societies and evidenced by a minute.

• It is recognised that documentary support for cash received can be more difficult than for expenditure, but independent verification should be used wherever possible. Cash received should be reported gross; it should not be used for paying expenses or topping up a petty cash float.

• Bank mandates should normally specify that cheques require two signatures, and that internet payments require two separate authorisations. Single signatures may be used in exceptional circumstances where reasons of practicality dictate. The AST is recommended to appoint at least three signatories for the bank account. The Finance and Resources Director should be added to the account as a back-up and to deal with the checking of balances by the Auditors

• Wherever possible, payments should be made by cheque or bank transfer. Where it is necessary to maintain a petty cash float, this should not exceed an appropriate limit set by the AST. The same principles of record keeping apply as for bank accounts.

• An appropriate system for the independent approval of the reimbursement of personal expenses of AST members (travel, telephone costs, postage, subsistence etc) should be established whereby no individual is in a position to approve and pay their own expenses.

• Under no circumstances may monies due to The Arts Society paid into a private bank account.

• The bank account must be reconciled regularly and these reconciliations must be documented and retained.

Core Area Operational Costs

On an annual basis an activity programme of core operations will be agreed with Areas. This is likely to consist of 2 meetings and travel to undertake support activities within the Area. A budget will be agreed between the Area Treasurer (or Chair of the AST) and the Finance and Resources Director on how much will be required to deliver the core activities including travel and subsistence within the Area to provide effective support to local Societies.

The Finance and Resources Team will provide support and template documentation as required for this process (Appendix 1).

Recharging Of Costs To Societies In A Local Area

The core operational costs will be recharged to the local Societies in each Area on behalf of the AST centrally by the central Finance department on the basis that has been agreed by the Area with its Societies. The funds will be collected and held centrally within the Designated Fund or transferred immediately to the Area bank account depending on what is required.

The Area Treasurer (or equivalent) will be responsible for recharging any costs to local Societies over and above the core operational costs in line with what may have been agreed locally with those Societies. The agreement will need to be documented by way of minutes of the meeting and although a majority of those in attendance would be sufficient, in the spirit of inclusivity unless a clear majority of above 75% is reached, then the AST may wish to revise or curtail the proposal.

Events

Area events should always be planned in pursuance of the charitable activities of, or to promote the Arts Society and its local Societies, not with the sole aim of raising funds. Therefore, in budgeting and pricing events the aim should be for the event to breakeven. If a surplus does arise this can be used with the agreement of local Societies for purposes such as:

• funding grants (in accordance with the agreed criteria);

• local volunteering activities;

• supporting local Societies in recruitment and retention activities.

Income and expenditure for any Area events will be collected / paid by the Area Treasurer (or equivalent).

Surplus Funds

Where an Area generates a surplus in a financial period or holds higher reserves than is necessary it can consider the following uses:

• subsidising events;

• supporting Societies;

• awarding grants;

• developmental / strategic events and activities.

These considerations should only be made once a surplus is confirmed, i.e. once the accounts have been approved after the end of the financial year. It may then be committed in the current financial year, e.g. a surplus generated in 2021 can be committed in 2022, after the approval for the 2021 accounts.

Grants

There is no expectation for Areas to award grants. In the event that an Area is in a financial position to consider grants, they must be given in accordance with the Grant Giving policy of the Arts Society which is available at https://theartssociety.org/grants. The overall purpose should solely be to raise awareness, generate positive publicity and thereby ultimately and demonstrably support the local Societies in that Area.

Details of any grants which have been considered by the Area Support Team should be submitted to the Membership Director who will seek approval from the Chief Executive. This also ensures that the details are recorded so as to generate publicity and allow inclusion in activity reports.

Where a grant is approved the Area Treasurer (or equivalent) will be responsible for making the payment and the AST should seek to receive reports of how the grant was utilised and whether it supported the original purpose of the award.

Meetings

On an annual basis each Area will be encouraged to hold a meeting solely for Society Treasurers in that Area. This will be attended by the Finance and Resources Director if required and will provide a useful discussion forum alongside the centrally held Treasurers Networking Sessions.

At least once each year the Finance and Resources Director will convene (via Zoom) a meeting with all Area Treasurers (or equivalent) as a forum to share ideas and information.

Reserves

Areas should regularly review the level of their reserves to ensure that they are only passing on costs / levying charges to local Societies that are actually required. If reserves are significantly higher than what they deem a suitable level then they should consider reducing the annual levy or liaising with their Societies about specific area projects to avoid simply holding excess monies.

The reserves policy should be agreed with local Societies and a copy passed to the Finance and Resources Director to hold on the audit file. No Area should hold more than 6 months of ‘free reserves’ (being reserves not earmarked for a specific project or purpose).

Any reserves which are not required can be held in the Patricia Fay Memorial Fund. Partnerships

In this context, partnerships are very widely defined and encompass any form of agreement (whether legal or informal) with an outside organisation to further The Arts Society’s charitable objectives; any agreement which does not seek to further the charitable objectives is a misuse of charitable funds and must not be entered into under any circumstances. If an AST has any doubts as to whether an agreement/arrangement that they are contemplating entering into would constitute a partnership for the purposes of this section they should consult at the earliest opportunity, and certainly before any commitment of any sort is given, with the Chief Executive or Finance and Resources Director.

Year End Accounts

The introduction of an imprest system in 2020 has allowed more visibility and removes the requirement for Area Treasurers (or equivalent) to provide a detailed annual return.

This will be replaced by a one-page financial summary from 31 December 2021 detailing income and expenditure, a summary of assets and liabilities, and a reconciliation of the locally held bank account.

Audit And Examination

As Area accounts form part of the Arts Society annual accounts there is no requirement for Areas to have their accounts independently verified.

The accounts form part of the annual audit (currently undertaken by Moore Kingston Smith during the first week of February each year). During the audit three Areas will be selected (either at random or based on financial materiality) and asked to provide some supporting information as part of the audit fieldwork.

Changes to the audit requirements means that the auditors are now required to independently verify the balance of bank accounts at year end. To speed this up the Finance and Resources Director should be added as a user to online banking facilities.

Budget Template

Budget for the period to 31 December 202x

Delegated Powers

This section describes, in summary, the powers delegated by the Board of Trustees, via the Chief Executive, to the volunteers on the Area Support Teams. Delegating authority empowers and enables timely and effective action by volunteers and staff working in partnership for the benefit of the charity and its beneficiaries. The Board retains the right to revoke, at its sole discretion, any or all of the powers it delegates if, for example, the Board is concerned that:

• delegated powers are not being used effectively in the interests of our charitable objects and beneficiaries;

• the use of delegated powers is damaging the interests or reputation of the organisation;

• delegated powers are being used against the letter or spirit of the organisation’s agreed policies and procedures.

Since operational leadership and management of staff and volunteers as well as arrangements for volunteering and volunteers (other than for Trustees) are delegated to the Chief Executive, the delegated powers listed are monitored by the Chief Executive. The delegated powers are:

Support For Societies

• Hold meetings in line with the agreed budget and time table;

• Visit Societies;

• Attend Society events;

• Contact Societies to carry out support activities, as agreed with the Support Team and the Centre;

• Facilitate networking between Societies, including ‘clusters’;

• Field queries from societies about problems and issues and refer these to appropriate resources within The Arts Society centrally.

Finance

• Set budgets for Areas;

• Incur expenditure up to a spending limit, as agreed with the Director of Finance and Resources;

• Commit funds, as approved by the Centre;

• Generate income from events;

• Generate income from fundraising;

• Consider grant applications to area level and where appropriate recommended to the Centre for approval and award.

Running Events

Enter contracts to deliver events; Set and charge fees for events in accordance with the Area Handbook.

Communication

• Communicate with Member Societies, Members and the public as agreed in the Communication Plan;

• Communication Re Area events (internal and external);

• Support Central communication as required;

• Manage website and any other content platforms as agreed with the Centre;

• Promote and support central policy, if and as required;

• Report on Area activities and liaise with the relevant Department for reporting purposes.

Volunteering

• Support local volunteering in Area;

• Facilitate Training of volunteers.

Training

Facilitate Training content and modules as provided (or approved) by the Centre.

Culture

• Foster positive and constructive relations between Member Societies and the Centre and not to do anything that would be injurious to that relationship;

• Support and promote the terms of The Statement of Mutual Obligations between The Arts Society and its Member Societies.

All of these activities should be carried out with reference to agreed protocols and procedures as set out in the Handbook and the Code of Conduct for Area Team Members.