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2. Procedures for keeping accurate accounts

How an association organises its accounts, payments and record keeping is up to the members (or more probably, the committee) and can vary depending upon the size and complexity of the association's financial situation. If your association is small, you may only wish to have a voluntary treasurer who 'keeps the books'. Alternatively, if the association requires more on-going, skilled accounting services, the association could employ its own in-house finance staff, or out-source the tasks to an accountant or book-keeper.

Written records will generally involve the use of cash payment books to record amounts the association pays, cash receipt books to record amounts received, GST tax invoices and tax records, salary records, bank reconciliation statements and other relevant financial documents.

2.1 Good financial practices

As a minimum, associations wanting to embrace good financial practices should give attention to developing policies and procedures in the following areas:

  • preparing an annual budget of expected income and allocated expenditure;
  • recording income received, including source, date and amount. Examples include grants, membership, donations, fundraising, sales of goods and interest;
  • developing a system to accurately, but speedily, record and pay necessary bills, including authorisation clearances and issuing invoices;
  • recording and authorising petty cash transactions;
  • where necessary, recording Australian taxation information, such as goods and services tax, superannuation, fringe benefits, income tax records and withholding payments;
  • where necessary, recording salary and leave payments, and reimbursements to employees. Time and wages records must be kept in accordance with the relevant award or industrial law;
  • undertaking bank reconciliations (ie checking association records against bank records);
  • recording expenditure against key area items. These areas are usually aligned to budget items (eg $200 for a newsletter against an annual association budget of $5000);
  • maintaining an up-to-date register of association assets; and
  • maintaining an effective and secure filing system for insurance policies, leases, contracts and funding agreements.

If the association has a significant turnover, an essential tool for the management committee is the monthly or quarterly cash flow statement. This will enable the management committee to ensure that the association is solvent - that is, it is able to pay its debts as and when they fall due.

2.2 Members' right to the financial accounts

The Act requires that the association's annual financial statements (or annual accounts) be presented to the members at each AGM. The annual accounts should show:

  • a statement of receipts and payments of the Association, recording its total receipts and payments based on the cash method of accounting, as well as a statement of the assets and liabilities of the Association; or
  • a statement of the income and expenditure of the Association, recording its total income and expenditure based on the accrual method of accounting, as well as a balance sheet.

Members should have the opportunity to examine these accounts if they wish. Ideally, each member would receive a copy of the accounts, which might be included in the association's annual report (if applicable). Where this is not feasible, then time must be allocated for the treasurer or other committee member to present a summary of the accounts and explain the major items.

This requirement of the Act does not give members any rights to view the various financial records of the association, nor any of the accounts or statements that might be prepared for the committee during the year. However, it is open to the association to make provision in the rules for access to these records or accounts, if that is the wish of the members.

If, for any reason, the annual accounts are to be audited, then the audit report must form part of the statements presented to the members. Some associations will invite the auditor to attend the AGM so that he or she can respond to enquiries from members.