What is due diligence?
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Due diligence is an investigation or audit of a potential investment or product to confirm all facts, that might include the review of financial records. Due diligence refers to the research done before entering into an agreement or a financial transaction with another party.
CHART applicants must submit independently examined accounts. This can be a simple validity check.
What does an examiner do?
An independent examiner should look at all your records for the period being examined. Their job is to give an informed opinion, based on the records, about whether they have found any evidence to suggest that the accounts have not been kept properly, or that the figures being presented to the group by the Treasurer do not tally with the records that have been kept. The examiner should:
- Establish the opening and closing balances. Groups may have more than one bank or building society account and one or more cash float as well as petty cash. Check the bank reconciliation and number of last cheque issued.
- Check paperwork supporting income (e.g. the group's invoices, letters confirming grants, and copies of receipts issued by the treasurer).
- Check paperwork supporting expenditure (e.g. invoices from firms, till receipts and bus/train tickets). Check that at least 2 signatures are required to draw cheques, to make internet payments, to approve cash withdrawals from an ATM, and to authorise larger payments by cash. The signatories must be current officers (or other authorised committee member).
- Check that individual items are reasonable (e.g. if the secretary's telephone expenses are supported by their home phone bill, expenses will be only a proportion of the total bill).
This website contains more useful information:
Hastings Voluntary Action offers this independent service for a small fee.
What will be done with my examined accounts once they are submitted to CHART?
Once the CHART team receive the accounts and independent report we will ask Hastings Borough Council auditors to check three things initially:
- That they are satisfied the accounts have been independently examined
- That they are satisfied the company is solvent and will continue to be for the duration of the programme.
- Check for any recommendations made by the independent examiner
This is a first check and if all appears to be ok no further information will be needed. The auditor may require more information if there are any questions arising but otherwise this is the extent of the input from audit.
What is due diligence?