A guide to third sector trading - WCVA

It’s an idea, but is it business? A guide to third sector trading
1: Getting
started
2: First steps 3: Business
planning
4: Legal and
governance
5: Funding
and
resourcing
6: Financial
controls
7: Managing
growth
8: Management
and
governance
9: Social
enterprise
10: Sources
of support
− there is a risk that discussions will be repeated when reports
reach the main board, leading to duplication and frustration
for committee members.
A ‘Finance Team’: This might take the form of a very small
committee and act like one. Its membership might be limited to
the manager and the Treasurer.
• Advantages: a potentially tight-knit group with a clear focus
which is easier than a larger committee to bring together
when needed.
• Disadvantages:
− the small size means that scheduled meetings may be
abandoned if only one member is unavailable
− teams of only two people may be efficient, but they do not
necessarily provide good scrutiny – members will be less likely
to ask searching questions, and may be perceived by the rest
of the board to be a clique
− the finance team can be an excuse for other board members
not taking any interest in finance at all.
Scrutiny by the parent charity: As a minimum, a charity should
automatically receive the same financial reports as the board of
the trading company, and it is free to ask for further information
at any time. It is good practice for the charity board to include a
director of the trading subsidiary who has good business skills,
and can communicate information to the trustees.
Independent oversight:
• Dangerous suspicion: It is vital that there are routine and
recognised systems for checking for and detecting fraud
by staff and officers. This is not just a safeguard against
dishonesty. Everyone needs to be protected against suspicion
of fraud, particularly those whose roles expose them most to
this possibility. This is because of the serious damage which is
caused to trust and relationships when anyone is suspected of
financial irregularity or misusing resources.
• The need for ‘backstops’: In practice it means that all actions
involving the use of the organisation’s resources in any
significant way need to involve at least two people – in the same
way that cheques must routinely be signed by two individuals.
The personnel providing these roles as backstops do not need
to be selected specially, they simply need to be specified by
written procedures – a second person to oversee the recording
and banking of cash, authorisation for staff to make purchases
over a certain value, someone to verify staff and board
expenses, and so on.
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