Policies and Procedures for Bank Accounts

Ensuring that the interaction with banks is managed appropriately and securely has always been a fundamental aspect of nonprofit organizations. This aspect has become increasingly important as electronic banking provides various methods to access funds in your organization’s accounts. Despite the existing guidance that requires “ensuring all checks contain at least two signatures, or not signing blank checks,” the situation has become more complex today.

Accordingly, you will need to establish policies and procedures for using bank accounts, concerning how to handle them such as: who can access them to perform account opening and closing operations? Or change the account signature? Or the number of signatures required to make payments? Or who is responsible for maintaining financial records?

Since this area is at risk of fraud, the monitoring officer should hold meetings with the board of trustees to delegate any significant changes in banking arrangements. It is worth noting the previous measures in place, such as that bank accounts should only be used for the organization’s business, and only fully authorized staff in the organization should open or close bank accounts in its name.

  1. Disbursing Payments

You will need to review the bank you deal with regarding licensing procedures related to online payments. When discussing who can disburse payments, you might set a small amount that can be withdrawn by a single person to maintain the flow of daily work and communication. In this case, you may need to implement verification and auditing processes, such as issuing an invoice passed through another party, or conducting an independent monthly audit of payments.

  1. Dealing with Credit Cards

You must ensure that cardholders are aware of the various types of allowable purchases. It may seem unnecessary to emphasize that credit cards can only be used to purchase goods on behalf of the organization and in the name of the cardholder, but experience has shown that it is important to stress what is necessarily known, and here are some decisions that need to be made before drafting the procedures:

  • Do you want to define the tasks that will be completed with the credit card or leave it to the work context to define them for you?
  • Who should authorize the issuance of the card?
  • What limits should the organization set for a single monthly transaction?
  • Should the organization define the types of spending or types of stores that can be dealt with?
  • Who should be responsible for verifying the expenses and their compliance with the organization’s policy?

Cash Handling

1)Mail Revenue

Handling incoming revenue either in cash or via checks was challenging, but it has become less critical today. If you receive many donations by mail, you may need to establish specific procedures, which involve designating two people to handle the mail and receive, record, and verify the amounts.

Undoubtedly, raising and spending funds are processes that deserve documentation, and to avoid repeating the process multiple times and wasting the team's efforts, engage everyone in thinking about formulating the best ways to work for the organization’s benefit.

2) Event Funding/Ticket Management/Public Fundraising Campaign

Due to the variety of fundraising activities, general procedures may not be useful; therefore, there are some principles to consider. All records related to booth revenues and expenses should be kept, with a form prepared to document all transactions. Volunteers should be assigned to work at each booth.

Additionally, fundraising boxes should bear different numbers and should be secured, with two unrelated individuals counting the contents of each box. Tickets should have different numbers pre-assigned, with a record of their sales and related information maintained.

Petty Cash Expenses

The petty cash fund aims to absorb sudden difficulties. Some organizations have completely dispensed with it and replaced it with their debit or credit cards or expenses related to small costs. Therefore, you should consider the most suitable way for your organization to operate.

Accounting Documentation Policy

All essential records that the board of trustees may need to carry out its duties should be stored. This varies from one organization to another, depending on its accounting system or what it calls special files. If you lack the necessary expertise, you can ask the independent auditor to inform you about the documents they review at the end of each fiscal year, as this will be a good guide for you to know all that is necessary.

Accounting Procedures

You should define your key accounting operations and procedures, starting with those you consider to be at risk. To effectively carry out accounting procedures, you should envision yourself explaining the process to a newcomer, as you will then need to think about how to ensure that person has understood and absorbed what you've told them.

Source: Know How Nonprofit