Status of This Annex

This Restricted Funds Policy (“the Policy”) forms an integral annex to any grant agreement, memorandum of understanding, or funding arrangement entered into by Roma Public Council KUPATE BG with:

• The UK Foreign, Commonwealth & Development Office (FCDO)

• A British Embassy or High Commission

• A UK-registered charity or public authority

• An EU-based public or charitable funder

Compliance with this Policy is mandatory for all restricted funding received under such agreements.

Purpose and Regulatory Basis

This Policy establishes the governance, financial control, and accountability framework for the management of restricted funds, in accordance with:

• Charity Commission guidance CC8 – Internal financial controls for charities

• Charities Statement of Recommended Practice (SORP) (FRS 102)

• UK Government grant standards, including regularity, propriety, and value for money

• EU principles of transparency, accountability, and sound financial management

The Policy ensures that restricted funds are applied solely and lawfully for the purposes intended by donors and funders.

Scope of Application

This Policy applies to:

• All income classified as restricted funds under the Charities SORP

• All grants, donations, or contributions subject to donor-imposed conditions

• All trustees, board members, officers, staff, consultants, and volunteers

• All programmes, projects, and activities financed wholly or partly by restricted funds

This Policy operates alongside statutory duties and does not limit legal obligations under UK, EU, or national law.

Definition and Classification of Restricted Funds

Definition under CC8 and Charities SORP

Restricted funds are funds received subject to specific conditions imposed by the donor or funder that legally restrict how the income may be used.

Under the Charities SORP, restricted funds:

• Arise from external donor conditions

• Remain restricted until the conditions are fully satisfied

• Must be separately identified and accounted for

Distinction from Other Fund Types

• Restricted funds – donor-imposed legal restrictions

• Unrestricted funds – available for general charitable purposes

• Designated funds – unrestricted funds earmarked by trustees

Trustee designations do not create restricted funds.

Acceptance of Restricted Funds

Pre-Acceptance Due Diligence

In line with CC8 and FCDO expectations, Roma Public Council KUPATE BG will accept restricted funds only where it is satisfied that:

• The restriction aligns with the organisation’s charitable objects

• Delivery capacity and governance arrangements are adequate

• Conditions are lawful, ethical, and non-discriminatory

• Financial controls can ensure full compliance

The organisation reserves the right to decline funding where restrictions pose undue risk.

Formal Documentation of Restrictions

All restrictions must be confirmed in writing at the point of acceptance, including through:

• Grant agreements or funding contracts

• Award letters or schedules

• Approved applications and donor correspondence

Oral or implied restrictions are not recognised.

Governance and Accountability

Trustee Responsibilities

In accordance with CC8, trustees are collectively responsible for:

• Safeguarding restricted funds

• Ensuring funds are applied only for their intended purposes

• Maintaining effective financial controls

• Ensuring accurate reporting and disclosure

Trustees must act with reasonable care, skill, and diligence.

Management Responsibilities

Senior management is responsible for:

• Implementing this Policy

• Maintaining appropriate accounting systems

• Ensuring staff awareness and compliance

• Reporting risks, breaches, or variances to trustees

Financial Controls and Accounting Treatment

Segregation of Restricted Funds

Restricted funds must be:

• Separately identified within the accounting system

• Allocated unique fund or project codes

• Fully traceable from receipt to expenditure

This complies with Charities SORP reporting requirements.

Budgeting and Authorisation

For each restricted fund:

• A budget must be approved in advance

• Expenditure must be authorised in line with internal controls

• Costs must be directly attributable, reasonable, and evidenced

Cross-subsidisation between restricted and unrestricted funds is prohibited.

Use of Restricted Funds

Permitted Use

Restricted funds may be used only:

• For the purposes specified by the donor or funder

• Within the approved budget and timeframe

• In compliance with grant conditions and applicable law

Prohibited Use

Restricted funds must not be:

• Used for general organisational purposes unless expressly permitted

• Applied to other projects or activities

• Transferred to reserves

• Committed in advance of donor approval

Misuse constitutes a material breach of grant conditions.

Monitoring, Reporting, and Assurance

Internal Monitoring

In line with CC8, ongoing monitoring includes:

• Regular financial reviews

• Budget-to-actual analysis

• Management reporting to trustees

This ensures early identification of risks and variances.

Funder and Donor Reporting

In line with FCDO and British Embassy expectations, reporting may include:

• Fund-specific financial statements

• Narrative progress and performance reports

• Outputs, outcomes, and impact evidence

• Value-for-money assessments

Reports will be timely, accurate, and supported by verifiable records.

Unspent Funds and Project Closure

Treatment of Unspent Restricted Funds

At the end of a funding period, unspent restricted funds will be managed in accordance with:

• Grant agreement provisions

• Donor or funder instructions

• Applicable legal and regulatory requirements

Reallocation or Return of Funds

Unspent funds may only be:

• Reallocated with explicit written donor consent, or

• Returned to the donor where required

Where donor contact is not possible, trustees will seek legal advice.

Variation of Restricted Purposes

Changes to Donor Conditions

Any variation to donor-imposed restrictions must be:

• Agreed in writing by the donor or funder, or

• Authorised by law or a competent regulatory authority

Trustees must not unilaterally alter restrictions.

Risk Management and Fraud Prevention

Control Environment (CC8-Aligned)

Controls include:

• Segregation of duties

• Clear authorisation thresholds

• Audit trails and supporting documentation

• Independent review and oversight

Reporting of Irregularities

Any suspected fraud, misuse, or material breach will be:

• Investigated promptly

• Reported to funders in accordance with grant conditions

• Disclosed to regulators where legally required

Transparency and Public Accountability

Roma Public Council KUPATE BG will disclose restricted funds appropriately through:

• Annual financial statements

• Grant and donor reports

• Public accountability documents

All disclosures comply with data protection and confidentiality requirements.

Review and Approval of This Policy

This Policy is reviewed periodically by the governing body to ensure continued compliance with:

• Charity Commission guidance

• Charities SORP

• UK Government and FCDO grant standards

• EU principles of sound financial management

Any amendments require formal approval.

Assurance and Compliance Statement

Roma Public Council KUPATE BG confirms that all restricted funds are managed in accordance with:

• CC8 – Internal Financial Controls

• Charities SORP (FRS 102)

• FCDO and British Embassy funding standards

• UK and EU best practice in nonprofit governance