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.
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 (i.e. checking association records against bank records);
- recording expenditure against key area items. These areas are usually aligned to budget items (e.g. $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.