Trustees review management accounts
This criterion assesses whether the organization's trustees/board regularly review and scrutinize management accounts. Trustees must safeguard charity assets and exercise reasonable care and skill in financial oversight (Charities Act 2011; general trustee fiduciary duties). Regular financial oversight is essential for ensuring financial health, identifying issues early, making informed decisions about resource allocation, and ensuring proper application of funds.
| Metric | Packs circulated ≥5 working days before meeting |
|---|---|
| Target | ≥90% |
| Frequency | Quarterly |
| Method | (Meetings with timely packs / Total meetings) × 100 |
| Unit | % |
Level 1: Initial/Ad-hoc
Financial review is informal and ad-hoc. Management accounts are not regularly produced or are only reviewed by trustees when a significant issue arises.
Level 2: Developing
Management accounts are presented to trustees periodically, but the review is basic. Discussion is limited, and scrutiny is not deep or systematic.
Level 3: Established
Trustees formally review management accounts at regularly scheduled meetings (e.g., quarterly). The review is a standing agenda item, and key variances are questioned. Discussions and action points are recorded in minutes.
Level 4: Advanced
The review is strategic and forward-looking. Trustees scrutinize performance against budgets and strategic KPIs. Financial review explicitly updates financial risks on the risk register with mitigations and owners. A dedicated finance sub-committee may exist for deeper analysis.
Level 5: Optimizing
Financial oversight operates with muḥāsabah and iḥsān. Trustees conduct monthly reviews using dashboards with RAG thresholds and 'risk linkage'; receive packs ≥5 working days in advance; use a rolling 13‑week cashflow and 12‑month forecast; trigger reforecasting within 10 days when exceptions breach thresholds; review restricted funds to prevent deficits; confirm reserves vs policy; annually self‑assess oversight effectiveness.
Organisation Types
By Organisation Size
| Size | Applicability | Notes |
|---|---|---|
| Micro | partial | Formal management accounts packs and finance committees are disproportionate; simple cashbook income/expenditure tracking reviewed at meetings is sufficient. |
| Small | partial | Scaled down to basic financial reports; formal accounting software packs and written assurance notes are usually disproportionate for this size. |
| Medium | full | |
| Large | full | |
| Major | full |
Applicable When
- Organization is legally constituted
- If cash runway < 3 months, significant restricted funds, or >10% adverse variance persists for 2 periods, move to monthly board/committee review until stabilized.
Not Applicable When
- The organization is legally dormant and has had no financial transactions during the assessment period.
- The organization is a subsidiary or branch where ultimate financial governance is the exclusive legal responsibility of a parent organization's board.
- The organization has been legally constituted for less than one full financial quarter, and no board meeting has yet been due.
- If oversight is legally and contractually reserved to a parent board, document the formal delegation and the local reporting line; otherwise, this criterion applies to local trustee body.
Related Criteria
Discussion (1)
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