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Exercising budgetary control and monitoring

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Putting together a properly costed plan, and then using it to monitor progress, is a core part of good governance, and this is the section where you outline the process and principles to put that in place.

The annual plan and budget approval

This is where you set out who will be responsible for putting the business plan together, and a timetable for when it will be presented for discussion and approval each year.  You might also set out some of the sections to be included.  NCVO’s business plan template is a useful model for what should be included in a plan, and has guidance on how to put it together.

It is up to you how much detail on process you include in your finance manual, but once you have thought through:

  • who will draft the budget
  • how the information will be gathered – top-down approach where senior staff allocate budget? Consultative bottom-up process involving project staff?

... it's useful to write that down so that everyone understands what is expected of them. 

Not everything will fit in neatly with your annual planning cycle, so you also need to have a process for approval of projects and related budgets that arise mid-year.

Reporting and monitoring income and expenditure

This is the section where you outline what regular financial reporting you will deliver, and what to do if life is not going according to plan and the reports show a marked variation from budget.

The trustees need to know enough about the finances to be able to comply with their legal duties to manage the charity’s resources responsibly, and the staff need to know enough to deliver their work effectively.  The suggested wording gives a basic outline of the kind of information that would be required for this. 

What people then need to know is how much leeway they have to diverge from the budget, and when to alert senior managers or trustees.  This is a matter of judgement, and the kinds of questions you need to consider are:

  • What variations from budget are different levels of staff able to sanction without referring upwards?  Are these different depending on whether the project is likely to to be in surplus or in deficit?
  • Who is responsible for highlighting the variance?
  • Do you want to know line by line, or as a total figure? (Does that depend on the funder?)
  • Who should decide what actions should be taken either to bring the finances back in line with budget, or to agree to adjust the allocation?


As an NCVO member you can download our financial procedures manual templates.

Page last edited Jan 03, 2018

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