We’re regularly creating resources to help your charity thrive

Tender Portal

Charity Tender Portal

What is internal audit? 

An internal audit is the process of reviewing your key processes, like finance and governance. It checks they are complying with laws and regulations, and the risks you care about managing. It should also ensure operational efficiencies. 

How does internal audit differ from an external audit? 

The internal audit’s primary purpose is to improve your processes and procedures and minimise risks. An external audit is more about meeting external requirements. It is an annual review of your financial statements and is subject to regulatory guidelines. The primary purpose is to reassure creditors and other stakeholders. This demonstrates things like solvency and ability to honour liabilities as they fall due. External auditors will accept a margin of error called materiality. External auditors may also point out any process errors, but improving your systems is not the function of an external audit, so much may go undiscovered.  

What can SDC do for us? 

We can put in place a rolling programme of internal audits. This will ensure your systems and processes are as efficient as possible. This will improve your strategic outcomes. Once we have identified any process gaps or risks, we can help you put in place the improvements and ensure they are working. 

We can audit all your financial and governance processes. Then, we’ll write up those processes  and support their implementation.

What is a Client Account? 

A client account is when a professional firm opens an account to hold a client’s assets safely on their behalf. For example, we can open a client bank account for a charity that hasn’t got a bank account of its own. 

Why Would a Charity Need a Client Account? 

This can happen for many reasons. 

A charity might be recently created and trying to set up a traditional bank account. But these can sometimes take a long time to set up, often several months. We can open a client account much faster. It can be a useful temporary stop-gap. This allows the charity to accept funds from donors. It also lets them start spending on their mission earlier. 

A charity might also have problems opening a traditional bank account. It could fall foul of a bank’s due diligence checks. . As the banks system focuses on risks around companies and individuals, rather than charities. A charity might consider something beneficial, but the bank may see it as high-risk.  Examples may include: 

  • Trustees based overseas or with particular lived experiences; 
  • Large incoming grant payments, especially from overseas; 
  • Payments to partners based in unusual locations. 
  • Once refused, it can make it even more difficult to open an account elsewhere. 

Our client accounts solve these problems. When opening one, we conduct our own due diligence, not the bank. We understand how charities generally operate. We can gain a much more nuanced understanding of what a charity is doing.  

This doesn’t mean that our due diligence is any less robust. Instead, each charity’s individual context forms the basis. Once we are happy, the bank is happy too. 

Some banks don’t offer everything a charity needs. For example, a charity may have a Pound Sterling account at their bank. But they may not be able to open a US Dollar account. A USD client account with Stuart Davis Consulting could be used instead. 

Some donors request that their funds are held in a separate bank account from the charity’s other funds. A client account would act as this separate account. This is especially useful if the donor wants to send funds quickly, and opening a new traditional account will take too long. 


How Does a Client Account Operate?  

A client account acts like a normal bank account. You can receive payments in and make payments out as you normally would. We would undertake checks around unusual payments, just as a bank would. Unfortunately, you also get the usual bank charges. The main differences to a normal account are few: 

The account name will be in the format (“SDC re: [charity name]). This shows the bank that it is one of our client accounts. 

Stuart Davis Consultancy would be one of the signatories on the account. Other signatories would be added, normally a trustee the CEO and Office Manager. 

It would act like a normal business account. So, it isn’t subject to any discounts that a charity or community account might be able to get. 

The balance can’t go negative.  

Can Any Charity Get a Client Account With You? 

 It’s at our discretion whether to open a client account for a charity. We’d want to understand what the need is, and we’d undertake our due diligence process. But if you meet those tests, we’d happily consider it for any charity. 

Are Our Charity Funds Safe in a Client Account? 

 Yes. We ringfence all our client accounts. In the unlikely event that anything happens to Stuart Davis Consulting, your charity’s funds are legally held separate from our own funds. The bank must ensure their protection. We also have a continuity agreement in place with another firm. This ensures that someone can take over our clients with minimal fuss. 

 If the bank fails, it will protect your charity’s funds in the same way as any other bank account. 

How Do You Prevent Theft and Fraud? 

 We split tasks. For example, the person raising payments does not reconcile the account. You must approve any payments to be transferred out in advance. We also provide monthly statements and reconciliations. When possible, we’ll help set up live bank feeds to your accounting software so you can track balances in real time. 

Are You Regulated? 

 Yes. Under financial regulations, a client account can only be opened by a regulated firm. This is either: 

  • One on the FCA’s register of financial firms. 
  • A professional firm like an accountant or a solicitor that is regulated by their professional body. 

In our case, we hold a Member in Practice licence from the Chartered Institute for Management Accountants (CIMA). CIMA also supervises us for the purposes of Anti Money Laundering Regulations. 

What Does It Cost to Have a Client Account for My Charity? 

 You’d need to cover the bank’s own fees, just like any other account. We may charge you for setting up a client account and for providing bank reconciliations if we are not providing other services.  

We don’t charge you for holding funds in our accounts. For example, we don’t take any percentage of donations deposited with us. They’re your funds, and we want you to spend them on your mission, not our overheads. Instead, we cover our operating costs from the interest we earn on the funds you hold with us. 

What are Internal Controls? 

Internal controls are the mechanisms, rules, and procedures within your charity. They aim to manage key risks in day-to-day activities. For example, they ensure the integrity of financial and accounting information, promote accountability and prevent fraud. A good system of internal controls will ensure your finances and governance follow charity law and any other regulations. They will improve operational efficiency. And they will improve the accuracy and timeliness of financial reporting. 

A good example of internal controls would be splitting the process of paying suppliers into different steps, and then dividing the tasks between different people. This “segregation of duties” prevents any one person controlling a payment for their own ends. Access controls in your software also help with this. 

 It is important to review the overall system of internal controls on a regular basis. This will ensure the controls are working effectively. It will also help you manage of any new and emerging threats, such as cyber fraud. 

What are the different types of internal controls all charities should have? 

Authorisation and approval controls. 

You need to have the appropriate authorisation that works. It’s not enough to have a hierarchical authorisation matrix. More importantly, competent individuals need to check it. They must understand what they are approving and be able to spot any errors or mistakes. 

 System Controls 

System controls are features within your finance systems that limit or prohibit access. They can be as simple as updating the password access. We can define roles for each accounts team member. This way, each person only has access to the system elements they need. We can audit your system controls and ensure they are working correctly.  

 Accounting Controls 

Accounting controls are those that ensure the accuracy of your financial books and records. Such as regular bank and other control account reconciliations. All charities should put in place a regular check of all assets and liabilities. A simple month-end checklist will ensure that all your balance sheet items are reconciled. It is part of the month-end reporting process that we can also offer support with. 

How we can help: 

We can review your current system of internal controls to ensure they are efficient and effective. 

We can support you in adding extra internal controls. For example, segregation of duties. If your team is too small for this essential control to be workable. 

If you are a new charity, we can set up an effective system of internal controls. We will consider your specific requirements. 

We can test your internal controls to ensure they are working as they should. We can help you identify and manage the risks your charity faces. We can help you prepare a register of risks and help you to monitor and manage them. It is important that all charities keep track of their risks and implement any mitigating factors.  

Appraising the value for money of a project for charities and not for profits isn’t as simple as it may be for a commercial organisation. It’s not as easy as calculating a return on shareholder value or the payback period. The social benefit of a project is a key measure, but can be hard to define. 

Yet, it is important that all organisations , especially charities, get value for money. They must ensure that any project is a worthwhile investment in time and resources. It must deliver on the organisation’s strategic objectives. 

Any charity proposing a project must cost and manage it. Any discretionary spending needs to be worthwhile and be fit for purpose. Investing in one project restricts spending on other projects. It also reduces the ability to increase day-to-day activity. 

No one should not rely just on standard investment appraisal techniques. Even so, they are an important measure that will help judge competing demands. 

Investment appraisal methods 

There are many methods an investment can be evaluated, but here are three of the most common techniques that Stuart Davis Consulting can help you with. 

1.      Payback period 

“Payback period” is the length of time between making an investment and the time at which that investment has broken even. To calculate the payback period, you would take the cost of the investment and divide it by the annual cash flows. Shorter payback periods are preferred because they take less time for the capital spent to be recovered. 

2.      Net present value 

Net present value (NPV) is the difference between the current value of revenue and the current value of costs. It’s calculated over a determined length of time. NPV calculates the estimated profitability. It also accounts for the time value of money. 

NPV determines if investing in a project is financially worthwhile. It helps compare potential returns to other options.  

3.      Accounting rate of return 

The accounting rate of return (ARR) is a ratio used to calculate an investment’s expected return compared to the initial cost. Unlike NPV, ARR does not account for the time value of money. A 

The presentation of ARR as a percentage return means that if the project returns 20p for every 100p invested over a one-year period, the ARR is 20%.  

Calculating a return 

Yet, for many charities and not for profits evaluating the return on capital can be difficult. You need to think differently and determine the return on social benefit. Some questions you could ask include:  

  • How many more people can you help with the investment? What would that do to them? 
  • What time or resource savings would you get if you fund this investment? 
  • How much more money might we get from backers or grant givers if we invest in a new program?  
  • What would happen to people if we didn’t do this, but did something else? 



What is a salary sacrifice scheme: 

A salary sacrifice arrangement is an agreement to reduce an employee’s entitlement to cash pay, in return for a non-cash benefit.  

As an employer, you can set up a salary sacrifice arrangement by changing the terms of your employee’s employment contract. Your employee’s need to agree to this change. 

A salary sacrifice arrangement must not reduce an employee’s cash earnings below the National Minimum Wage (NMW) rates. You must also put procedures in place to cap any salary sacrifice deduction and ensure NMW rates are maintained. 

A salary sacrifice scheme can be as complicated or as simple as you want it to be. They are often used for pensions, but can also be used for many other benefits, such as bicycle purchases, and childcare vouchers. 

Salary sacrifice schemes, employees “give up” a bit of salary in exchange for the employer paying for the benefit. This reduces both the employers and the employee’s National Insurance payments. 

Advice on setting up a salary sacrifice scheme. 

We can advise on the benefits of a salary sacrifice scheme to your charity and your employees. Every member of your staff will have different wants and needs. Some employees may want to increase their holiday allowance. For others, it may be the ability to buy childcare vouchers. By offering a salary sacrifice scheme, you can give your employees the benefits they value the most. This will help you retain and recruit the right staff for your charity. This will reduce the cost of recruitment and retention. A good salary sacrifice scheme should also reduce both the charities and the employees’ tax and NI bill. It should also be simple to administer. 


What is gift aid? 

Gift Aid is one of the most important government initiatives for charities. It offers the potential for charities to increase their fundraising by up to 25%. Gift Aid allows charities to claim an extra 25p from HMRC for every £1 donated by most UK taxpayers. Stuart Davis Consulting can support your charity in the registration process with HMRC to claim Gift Aid 

 However, you cannot claim back in Gift Aid more than the donor has paid in tax each year. 


Some donations are not eligible for gift aid. These include donations from: 

  • limited companies 
  • made through Payroll Giving 
  • that started as loans, but no longer need to be repaid 
  • from charity cards or of vouchers 
  • received in return for goods or services 
  • received before you were a recognised charity. 

Gift Aid declaration 

 Before you can claim Gift Aid, the donor must make a Gift Aid declaration. This declaration gives you permission to claim back the 25% tax. The declaration confirms that the donor has paid at least the amount you plan to claim in Income or Capital Gains Tax that year. They also agree for you to claim Gift Aid. This involves some administrative work. However, the process can be largely automated for online donations. At the bare minimum, the form must include: 

  •        the name of your charity
  •        the donor’s full name
  •        the donor’s home address and postcode

 You must retain the Gift Aid declarations for six years from the time of the most recent donations. 


Gift Aid on small donations 

The government recognises that it is not practical to get a Gift Aid declaration for small cash donations. It is also impractical when people make quick contactless donations. They allow claims up to £8,000 per tax year in Gift Aid from cash or contactless donations of £30 or less. The Gift Aid Small Donations Scheme (GASDS) accomplishes this. 

To claim gift aid, you can use HMRC approved software, or use a spreadsheet of your donations. If you are claiming for more than 1,000 donations, then you can only use approved software. Stuart Davis Consultingcan help you identify the correct software. It will work with both your finance system and your fundraising software. We can ensure that you claim everything you are entitled to and account for it correctly. We would also evaluate your current gift aid processes, after whichwe can make recommendations to improve them. 



Our Process.

No two charities are the same. There are common threads that run through different projects, but each charity has its own mission, its own impact that its striving for, and its own circumstances. Which means that everything we do has to be tailored to what that charity needs. Otherwise we simply won’t deliver for them. So we take all of that into account. Because we have such diverse skills in the team, we can bring people in and out of a project as necessary. And we’re flexible. Needs change over time. What we thought might be needed a couple of months ago might not be what’s needed now. So we make sure we can change with those needs.

Scroll to Top