Financial Management
Today's economy, and increasing competition between sports and recreation clubs for members, has placed a higher value on every club dollar. Money is a precious commodity that must be managed appropriately. Failure to plan or poor financial planning could see clubs forced out of existence.
The club member responsible for financial management (usually the treasurer) oversees club finance and would normally have at least a basic knowledge of bookkeeping, although this is not essential but advisable. Typically, duties of the treasurer may involve:
- Issuing receipts and promptly depositing all monies received
- Making all payments and keeping accurate up to date records of income and expenditure
- To be the signatory of club cheques (with at least one other)
- Be responsible for the club's petty cash
- To invoice groups or members for rentals e.g. building, equipment, uniforms etc
- Being fully informed about the financial position of the club at all times
- To prepare budgets for the forthcoming year describing potential sources of income and expenditure
- To present regular breakdowns of income and expenditure to the management committee
- Preparing and presenting financial statements to committee meetings and for the annual report
- Investing surplus funds
- To manage club investment programs
- To negotiate with banks for loans, overdraft facilities, and mortgages
- Handling tax returns if applicable
- Be up to date with all the rules and regulations regarding taxation
- To prepare annual financial accounts for auditing, and provide the auditor with information as required
- To ensure annual returns and statement of accounts are filled with the appropriate bodies
- Liaise with Government and Council bodies re funding availabilities
Operating Club Finances
Accounting Stationery
The club treasurer will need the following:
- A numbered receipt book with carbon copy page
- A file for accounts payable
- A file to start receipts from accounts paid
- Bank deposit books
- A cashbook or a general ledger
- Account forms for members' subscriptions
Bank Accounts
A cheque account is necessary for the well-run club. A cheque account provides a convenient record of payment through the cheque butt. It is therefore essential to complete cheque butts at the time of drawing each cheque. Cheques also provide a secure method of payment. This means that club members need not carry cash.
It is a good idea to have at least three members with the authority to sign cheques, with individual cheques requiring any two authorised signatures. Never sign blank cheques in advance, and never sign a cheque without an accompanying bill or docket from the supplier.
A savings account operating in tandem with a cheque account accumulates interest at higher rates when there are no bills to pay.
It is wise to pay all club bills out of the cheque account, as all expenditure becomes recorded on the account statement. You can ask your bank to forward statements weekly, fortnightly, monthly, or quarterly. It is up to you and will depend on the average number of transactions your club has. Include reimbursements to club members for expenses.
Cash Book
The cash book records all the club's receipts and payments on a daily basis. At the end of each month, the figures recorded in the cashbook are checked against your bank statements. It is also a good practice to summarise what the club owes people (the club's creditors) and what money other people owe the club (the club's debtors).
To determine the cash balance, simply total the receipts and deduct payments. Other items that will alter the cash balance are bank interest and charges, unpresented cheques, dishonoured (bounced) cheques, and direct credits or debits from other accounts.
The cashbook opening balance for each month becomes the closing balance from the previous month.
If you want to save money and use just one cashbook, you can record receipts in the front of the cashbook and payments in the back.
Receipts
Details of receipts are recorded in cashbook columns. Columns can be drawn up with the type of income expected. These are often the same as those identified in the income side of the club's budget.
Receipts are entered in three places, depending on the amount of detail you want and the type of cashbook you buy. Receipts are entered in the amount column, under its income type, and the banked column when banked. Often the banked figure will be an accumulation of all money received since the banking was last carried out. Listing individual amounts by banking date gives the opportunity for cross-checking to be carried out.
Bank all incoming cash and cheques promptly. It is unwise to use money without it first being banked as it may become impossible for the treasurer to keep track of what is going on. It is also essential that all cash and cheques received are banked without any deductions being made.
Tally all receipts at the end of each month. Monthly totals are accumulated to give a record of receipts for the year to date. In some cases, quarterly reports may be required. When this happens, it is more efficient to calculate cumulative figures month by month for each quarter rather than doing it for the entire year.
Receipt entries in the cashbook may look like this:
| DATE | DETAILS | CHEQUE | AMOUNT | M'SHIP | BANKED |
|---|---|---|---|---|---|
| 1/7 | B.Smith | 0000345 | 60.00 | 60.00 | 60.00 |
Be sure to enter the total amount of cash and cheques received daily. When receipting cash or cheques, make sure you enter the correct date and amount.
Payments
As with receipts, each column may be drawn up to reflect items of club payments as identified in the expenditure side of the club budget.
Every time a cheque is issued the details should be entered in the amount column. The amount column will operate as an indicator of total club expenditure. Then write the amount in the appropriate expenditure column - for example, rent. In this way, the total amount spent on rent during the year can be totalled.
At the end of each month the columns should be tallied for presentation to the club committee. At this stage, comparisons can be made against the budget to see whether expenditure is proceeding as planned.
All accounts received are required to be paid strictly according to their terms, usually between 7 and 30 days of receiving an invoice or claim from a supplier. It is usually the club treasurer's responsibility to prepare cheques for approval and signing at club meetings. Although the treasurer has the power to make payments between meetings, it is a good practice to have any such payments ratified at the next meeting. In general, all payments will be for budgeted items and can therefore be paid subject to ratification. The management committee minutes should record the authorisation for major expenditure.
Prompt payment will generally ensure the good will of tradespeople. Prompt payment of out of pocket expenses of volunteers also generates good will within the club.
Payment entries in the cashbook may look like this:
| DATE | DETAILS | CHEQUE | AMOUNT | POWER | RENT |
|---|---|---|---|---|---|
| 7/7 | ABC Real Estate | 0000123 | 700.00 | 700.00 |
Whenever you make a cash or cheque payment, write the details in the payments section of the cashbook, usually found at the back.
When writing cheques remember the basics:
- Write the payee's name in full
- Be sure to cross out "or bearer" if you want the cheque to be paid only to the payee
- Write in the correct date - post-dating cheques is not a good idea, and is illegal
- Write in the total amount in both written and numerical forms
- Make sure you cross the cheque "not negotiable"
- Put the club's postal address on the back and the invoice or account number
- Fill in the butt - this is a cross check for your monthly bank statements
- Sign the cheque
- Remember, always request a receipt for all payment, complete the cheque butt, and make sure there are two authorised signatures on the cheque
Some clubs find that authorisation can be easily verified by using a cheque requisition form. This form contains all details of payment - similar to those on the cheque butt - including the signatures of those club members authorised to make payments on the club's behalf. Alternatively, you may find having the signatories initial the cheque butt just as effective.
Cheque requisitions, if used, are best kept in monthly files, by cheque number. Once they have been presented as confirmation of cheques issued, they are required by law to be kept for future reference. A labelled archive box, expendable file, lever arch or manilla folder is best for this.
Bank Reconciliation
Ask your financial institution to send monthly account statements. Try to time these just prior to the monthly club meeting. Check the statement against your cashbook to ensure they are the same.
Remember that there are items that may slightly alter the bank balance - interest and charges, unpresented cheques, dishonoured (bounced) cheques, and direct credits or debits from other accounts.
A copy of the monthly statement is usually made available for the benefit of the club's auditor.
The bank statement shows all movements of funds in and out of an account. To obtain a clearer picture of the club's financial position the cash book balance is reconciled against the bank statement.
A Bank reconciliation statement looks something like this:
Bank Reconciliation Statement as at 18/07/01
| Opening Cash Book Balance | 1500 | |
| Add | ||
| Receipts | 60 | |
| Direct credits into bank account | 250 | 310 |
| Less | ||
| Payments | 200 | |
| Direct debits from bank account | 40 | 240 |
| True Financial Position | $1570 | |
| Bank Statement Balance at End of Period | 1735 | |
| Add | ||
| Receipts not yet banked | 235 | |
| Less | ||
| Cheques not yet presented | 400 | |
| True Financial Position | $1570 | |
| List of cheques not yet presented: | ||
| 12/1 - 000123 (Brand T-shirts) | 240 | |
| 14/1 - 000124 (Logo Designs Ltd) | 160 | |
| 400 |
Creditors and Debtors
Summarising what the club owes and what it is owed at the end of each month helps provide a clearer picture of the club's financial position. Knowing the total amount of creditors and debtors also gives you an idea of the club's likely cash flow for the next month.
Creditors
Creditors are people or organisations that the club owes money to. A creditor's summary might look something like this:
CREDITORS (ACCOUNTS PAYABLE)
| Details | Current | 30 days | 60 days | 90 days |
|---|---|---|---|---|
| XYZ Printing | 235.00 | |||
| Snap T-Shirts | 650.00 | |||
| TOTALS | 235.00 | 650.00 | ||
| TOTAL CREDITORS | $835.00 |
Debtors
Debtors are people or organisations that owe the club money. They are usually associated with an invoice issued by the club in respect of goods or a service, e.g. membership subs.
Debtors, or accounts receivable, would look similar, except that the table would have a column for the relevant invoice number issued by the club.
Petty Cash
Petty Cash is for small amounts paid by cash. A cheque is drawn on the club account for a small amount and all expenditure from this is recorded and receipts retained. Records of petty cash expenditure should be recorded in a petty cash book, not the club cashbook. Combined petty cash vouchers and register type books can be purchased from your local newsagency.
Items bought out of petty cash are for small amounts (less than say $20.00). It is best to calculate how much cash should be kept on hand and kept in a safe place. It is advisable to include the float in your club's theft insurance policy.
Petty cash can be issued in exchange for a receipt as a means of reimbursing club members who have used their own money to purchase small items.
Management Tools
Annual Budget
Governments, large national and multi-national corporations all operate with budgets. Their reasons for doing so may also be applied to football clubs. A budget offers a club a better means of planning, it provides for greater control over its activities and hence its future, it makes the club more accountable to its members, and may even be viewed as a motivational tool, encouraging continued financial growth through results.
Ideally, the treasurer will develop a financial plan (or budget) for the club. The treasurer would, in consultation with the relevant persons or sub-committees, analyse the club's accounts to become aware of the ebb and flow of cash. It would also be a good idea for the treasurer to consult the club's development or strategic plan to identify any additional sources of income and determine major areas of expenditure associated with the coming year. From that, the treasurer draws up a budget outlining when money can be spent and when it should be held in reserve to cover future payments.
The club's financial performance can be judged against the budget by using the monthly accounts.
The Budget as a Management Aid
In a world that measures success in terms of economic performance, a club can gain credibility and support from financial institutions (banks) or sponsors - including government - if it demonstrates it has a well thought-out budget and is working within it.
The handling of finance by amateur bodies can be fraught with problems. A budget can help avoid these. A tight budget will discourage unwise spending of club funds and shape a more realistic and professional approach to financial management.
If financial cash flow statements are presented at monthly management committee meetings, club officers will know whether expenditure is on budget or not and be able to take early steps to rectify any problems.
Once a budget has been prepared, it can be used to project future cash flows. Money not required for several months could be put on higher interest short-term investments.
A budget may also lower auditing costs. Well-kept financial records ease the work an auditor must do, thereby lessening the audit fee. Naturally, the more exacting the budget, the more efficient the club's bookkeeping must be.
The budget allows the club to measure its performance in various areas. Money can be moved from projects that have under spent, to others that may require additional funds.
Links to planning
The budget is a vital tool in effective club management. It is therefore essential that it be drawn up to meet the club's needs over the coming period, usually the next 12 months. This enables the club to more effectively fulfill its aims and objectives, within the framework of its plan and financial means.
All members, especially those directly involved in fund raising for the club - or in spending club funds - should be invited to discuss the budget. The more people involved in the budget preparation - within reason - the less likely that an important figure will be overlooked. This process of consultation also means that there is more likely to be full agreement on how the club is financially managed. Also, members responsible for club expenditure may be more inclined to follow the spending restrictions within a budget if they helped to devise them.
A club's budget can cover a wide range of areas - travel, coaching, uniforms, overheads etc. It would be best to ask those members experienced in a particular area to estimate costs and expenditure relating to that particular area.
A sub-committee may be the best way of looking at complex budget issues. Sub-committee members can speak to the experts, discuss the issues, and then present a recommendation to the club management committee.
Drawing Up a Budget
The following points can be used as steps in the preparation of a budget. Firstly, identify all possible sources of income and expenditure. For example:
| INCOME | EXPENDITURE |
|---|---|
| Membership Fees | Rent |
| Gate Takings | Electricity |
| Hire of Clubrooms | Postage |
| Fund Raising | Telephone |
| Sponsorship | Stationery |
| Government Grants | Equipment |
| Trophies | |
| Travel | |
| Maintenance | |
| Insurance | |
| Uniforms | |
| Catering |
Obtain estimates from all budgeted areas, e.g. administration and programs. Then make a careful guess as to the amounts likely to be spent and received. You may be able to use the previous year's figures to determine amounts. In effect, the budget for the coming year is an educated guess at what income and expenditure will be. Many of the items are covered in the budget year to year income and expenditure.
These items can be updated. Adjustments for inflation and likely increased costs need to be made.
For some items it will be possible to calculate the amount that has to be paid or charged. This is necessary when there are large items of capital expenditure, e.g. replacing plumbing, or purchasing a new piece of equipment such as a computer.
Once the income and expenditure have been estimated, draw up a draft. Income should prove slightly higher than expenditure.
When a budget is being devised, it is important to make notes for the future. Predicted and actual expenditure might vary markedly in the first year, but fine-tuning over a number of years will bring the two much closer together. Notes will help eliminate any fuzzy thinking in past budgets.
It would be unusual if the experimental budget turned out close to balancing. The first draft may require several adjustments to make it fit reality. Alternatively the club may have to look at its planned projects and see whether they can be done within budget.
The biggest problem occurs if expected expenditure exceeds expected income. The club must find ways of reducing expenditure or increasing income. The first place to look is at large items of expenditure and trim them back. The options for saving money are far greater in heavy areas of expenditure as there are more dollars to play with. Go back over the options, consider all alternatives, get more quotes if it is a work program.
The draft budget for a small club might look something like this:
| INCOME | |
|---|---|
| Subsidies | 200.00 |
| Membership | 150.00 |
| Donations | 40.00 |
| Fund Raising | 300.00 |
| TOTAL | $690.00 |
| EXPENSES | |
|---|---|
| Rent | 250.00 |
| Equipment | 60.00 |
| Volunteers Expenses | 35.00 |
| Publicity and Printing | 20.00 |
| Fund Raising Expenses | 20.00 |
| Telephone | 150.00 |
| Stamps and Stationery | 30.00 |
| Insurance | 60.00 |
| Sundry | 50.00 |
| TOTAL | $675.00 |
| Surplus | $15.00 |
The draft budget for a big club might look something like this:
| INCOME | $ |
|---|---|
| Government Grant | |
| Salary Subsidy (Two Positions) | 22,000.00 |
| Membership / Affiliations | 100,000.00 |
| Awards, Badges, Club Pockets | 2,000.00 |
| Bank Interest | 500.00 |
| Bar Takings | 50,000.00 |
| Donations | 1,500.00 |
| Fund Raising | 10,000.00 |
| Gate Takings | 6,000.00 |
| Hire Of Gym | 5,000.00 |
| Sponsorship | 12,500.00 |
| TOTAL | 209,500.00 |
| EXPENSES | |
|---|---|
| Salaries and costs | |
| Administrator | 29,000.00 |
| Clerical Secretary | 18,000.00 |
| Development Officer | 25,000.00 |
| Coaching Coordinator | 6,000.00 |
| Hourly Paid Assistant | 1,000.00 |
| Casual Bar Staff | 17,000.00 |
| Stationary And Postage | 14,000.00 |
| Telephone | 12,000.00 |
| Travel | 3,500.00 |
| Insurance | 6,000.00 |
| Repair & Maintenance | 16,000.00 |
| Trophies | 1,000.00 |
| Photocopier | 10,000.00 |
| Computer | 6,000.00 |
| Publicity And Promotion | 10,000.00 |
| Rental | 2,500.00 |
| Bar Stock | 7,000.00 |
| Club Tracksuits | 2,500.00 |
| Coaching Sessions | 4,000.00 |
| Umpires Seminar | 2,000.00 |
| National Affiliation | 1,000.00 |
| Miscellaneous | 1,500.00 |
| TOTAL | 200,000.00 |
| SURPLUS | 9,500.00 |
Items of budget are often coded to assist in cash flow planning and reporting. This is particularly so of many computer accounting systems.
If there is no way of cutting back costs of the full program then the program must be either tightened or dropped altogether. Do not attempt to battle on without the funds to do it. Wait for another day.
If income exceeds expenditure the situation is far happier. In that case, the management committee must consider alternative use for the excess. But do not spend simply for the sake of it.
Income and Expenditure
The terms income and expenditure refer simply to the money your club has received (receipts) and spent (payments). Record all items of income and expenditure in your club's cashbook. A cashbook doesn't cost much and may be purchased from a local newsagent.
Cash Flow
Cash flow refers to the actual amount of "hard" cash available to the club to spend at any one time.
When predicting your club's likely income and expenditure in the budget, it is also wise to anticipate when periods of high/low income and high/low expenditure are likely. This allows you to plan in advance so that accumulated cash is available to meet high expenditure periods when income is low.
Many sporting clubs have to do this type of preparation because of the seasonal nature of many sports. The off-season is generally a period for maintenance and replacing equipment, with limited possibilities for generating income.
Financial Reports
As we have seen through using a simple cashbook, the club treasurer can reconcile the club's accounts and draw up lists of creditors and debtors at the end of each month. The simple form of reporting contains the most basic information that the club management committee would be required to assist in their decisions.
The management committee may, however, require more detailed information about trends in the club's income and expenditure patterns. In this case, the treasurer will draw up a report relating monthly figures to the budget.
It is possible to devise a standard monthly report sheet, especially if you have access to a computer with spreadsheet software.
The Basic Monthly Report
The basic monthly report will look something like this:
Treasurer's Report: Month of April
| INCOME | |
| Grants | 0.00 |
| Sale of socks | 20.00 |
| Affiliation fees | 100.00 |
| Total | 120.00 |
| EXPENDITURE | |
| Power | 80.00 |
| Postage | 40.00 |
| Stationery | 0.00 |
| Telephone | 0.00 |
| Insurance | 100.00 |
| Equipment Repairs | 250.00 |
| Sundry | 0.00 |
| TOTAL | 470.00 |
| Surplus (Deficit) | (350.00) |
| Cash at Bank | 500.00 |
The Budget Related Report
This type of report provides far more detailed information that the basic monthly report. It enables the club management committee to track income and expenditure and make decisions based on the budgeted targets for the year.
This report is closely related to the cashbook and annual budget. Presenting this type of report will take little time once the cashbook and budget are established. The budgeted figures for each item of income and expenditure will remain unchanged throughout the year. The figures that change will be those tallied at the end of each month and added to the year to date column. These figures may be brought directly from the cashbook.
The information at the bottom of the report comes from the reconciliation statement. It gives a more complete picture of the club's financial health. Provisions set aside cover amounts being saved to cover anticipated or known costs. In the case below, $120.00 is being put aside for a known cost. In this example, the $120.00 is a quoted figure for refrigerator repairs not yet billed to the club.
A report of this type may look something like this:
FINANCIAL REPORT FOR APRIL
| INCOME | THIS MONTH | YEAR TO DATE | BUDGET |
|---|---|---|---|
| Grant | 0.00 | 3,000.00 | 10,000.00 |
| Sale of socks | 20.00 | 100.00 | 550.00 |
| Affiliation fees | 100.00 | 200.00 | 500.00 |
| Total | 120.00 | 3,300.00 | 11,050.00 |
| Expenditure | |||
| Power | 80.00 | 580.00 | 2,000.00 |
| Postage | 40.00 | 800.00 | 3,000.00 |
| Stationery | 0.00 | 200.00 | 1,000.00 |
| Telephone | 0.00 | 360.00 | 900.00 |
| Insurance | 100.00 | 200.00 | 400.00 |
| Equipment Repairs | 250.00 | 250.00 | 500.00 |
| Sundry | 0.00 | 45.00 | 100.00 |
| Total | 470.00 | 2,435.00 | 7,900.00 |
| Surplus (Deficit) | (350.00) | 865.00 | 3,150.00 |
| Financial position at start of month | 500.00 | ||
| Add surplus (deficit) | (350.00) | ||
| Financial position at end of month | 150.00 | ||
| Cash at Bank | 150.00 | ||
| Debtors (money owed to us) | 50.00 | ||
| Creditors (money owed by us) | 120.00 | ||
| Provision | 120.00 |
The Annual Report
Most organisations and clubs publish a statement of income and expenditure and balance sheet as the principal financial report to be adopted by their members at the Annual General Meeting. This shows the profitability or financial achievement of the year's activities as well as the net worth of the organisation or club. The report is based on the receipts and the payments that have been summarised in the cashbooks.
Annual Profit and Loss Statement
The Annual Profit and Loss Statement can also be called the Income and Expenditure Statement.
This statement shows how much money your club has made or lost over the year. The statement is based on figures that the treasurer has recorded in the club cashbook. This statement is normally prepared by the club's auditor.
Annual Balance Sheet
A balance sheet is a statement of what the organisation owns and what it owes, the difference being the "net worth" or "accumulated funds" of the club.
In cases when a conventional balance sheet is not being prepared, it is advisable to provide members with a statement of the club's affairs in the form of a statement of assets and liabilities. This will list the club's assets and liabilities, organised into general categories, and show a reasonable value for each item. The liabilities, when deducted from the total assets will show the net worth of the club.
Using Reports
It is not worth the trouble of preparing reports only to ignore their implications. If the income or expenditure figures are far removed from those estimated in the budget, it is essential to find out why before taking appropriate action to remedy the situation. It is important to understand where things are going wrong and why.
Detailed and frequent financial reporting will give you a better chance of identifying problems early, and definitely improve the club's overall financial effectiveness.
Annual Accounts
At the end of the club's financial year the treasurer will need to prepare a set of accounts to be presented to the members at an Annual General Meeting. These accounts will be based on the figures recorded in the club's cashbook and budget.
If the club is incorporated under government legislation, the club is required to lodge a return (copy of the annual accounts) at the appropriate authority. These accounts are to be accompanied by a certificate stating that the accounts have been approved by the members at the AGM on a particular date. This must be signed by an officer of the club.
Simple annual accounts can be produced from your cash records. There will be two types of accounts necessary:
- A statement of income and expenditure which gives the receipts and payments, together with the annual totals from the previous year, if available.
- A statement of assets and liabilities which lists the value of the assets owned by the club and also the amount of liabilities owed by the club. This account also includes the previous year's figures.
Statement of Income and Expenditure for Year Ending 30/6/01
| 2000 | 2001 | |
|---|---|---|
| INCOME | ||
| - | Grant | 22,000.00 |
| - | Development Funding | 16,000.00 |
| 80,000.00 | Membership / Affiliation | 100,000.00 |
| 1,500.00 | Awards, Badges, Club Pockets | 2,000.00 |
| 315.00 | Bank Interest | 500.00 |
| 42,242.00 | Bar Takings | 50,000.00 |
| 2,000.00 | Donations | 1,500.00 |
| - | Fund Raising | 4,000.00 |
| 4,000.00 | Hire Of Gym | 5,000.00 |
| - | Sponsorship | 2,500.00 |
| 125,057.00 | TOTAL | 209,500.00 |
| EXPENDITURE | ||
| 23,000.00 | Administrator | 29,000.00 |
| 16,000.00 | Administrative Assistant | 18,000.00 |
| - | Development Officer | 25,000.00 |
| 5,000.00 | Coaching Coordinator | 6,000.00 |
| 5,220.00 | Casual Assistant | 1,000.00 |
| 15,120.00 | Casual Bar Staff | 17,000.00 |
| 10,637.00 | Telephone & Fax | 12,000.00 |
| 12,000.00 | Stationary & Postage | 14,000.00 |
| 3,000.00 | Travel | 3,500.00 |
| 5,100.00 | Insurance | 6,190.00 |
| 4,000.00 | Electricity | 4,525.00 |
| 14,150.00 | Equipment Repair | 16,000.00 |
| 1,850.00 | Trophies | 1,000.00 |
| 7,500.00 | Photocopier | 10,500.00 |
| - | Word Processor | 6,000.00 |
| - | Umpires Seminar | 2,000.00 |
| 2,800.00 | School Tournament | 5,200.00 |
| 700.00 | National Affiliation | 1,000.00 |
| 1,990.00 | Sundry | 2,500.00 |
| 100,647.00 | TOTAL | 192,890.00 |
| 24,410.00 | SURPLUS | 16,610.00 |
Statement of Assets and Liabilities for Year Ending 30/6/01
| 2001 | 2001 | |
|---|---|---|
| ASSETS | ||
| 20.00 | Petty Cash Float | 20.00 |
| 680.00 | Cash At Bank | 163.00 |
| - | Deposits-Building Society | 500.00 |
| 160.00 | Furniture & Equipment | 520.00 |
| 860.00 | Total | 1,203.00 |
| Liabilities | ||
| 82.00 | Debts Owed To Us | 68.00 |
| 26.00 | Outstanding Wages | 145.00 |
| 108.00 | TOTAL | 213.00 |
| 752.00 | SURPLUS (DEFICIT) | 990.00 |
Audit
The term audited accounts means that the financial records of the club have been checked by someone with recognized accounting skills (usually a Chartered Accountant) as being a true and correct record of the financial operations and position of your club at that time.
The records of all clubs do not necessarily have to be audited. It is advisable to be familiar with the rules/constitution of your club and its obligations if incorporated. Members of any organisation can usually pass a resolution requesting an audit. It is therefore wise to appropriately maintain the club's financial records. Following the procedures outlined here by be of some assistance, however, it is always a good idea to seek advice when you are unsure.
It is not unusual for clubs to go in search of an accountant who is willing to audit the club's books on a voluntary basis. If you club is considering this, ask someone that is not a member of your club. This provides for an independent audit. Be sure to give that person plenty of time to audit the accounts, as they may be busily engaged in their paid accounting work.
Some clubs, because of their rules, will require an honourary auditor to be appointed at the AGM. If your club is an Incorporated Association, it is usually a legal requirement to have the club's accounts audited prior to the AGM, so they may be presented for acceptance by the membership.
For incorporated organisations and depending on the complexity of a club's books, it may be possible to appoint an auditor who is not from a registered company, including accountants, bank managers, council clerks or chartered secretaries. Unincorporated groups requiring an auditor may approach their local bank manager, council clerk or an accountant, who may do the work for nothing in support of the club.
Whoever your auditor is, they will need:
- Copy of Club's Constitution
- The books of account, consisting of the cash books written up and balanced for the year, and journals and club ledger if these records are maintained
- Bank statements for the whole year
- Copies of deposit slips and cheque butts
- Receipt books containing the duplicates of receipts issued as well as cancelled original receipts.
- The auditor also needs to sight books of unused receipts
- Vouchers for payments made, which must be placed in numerical sequence of cheques drawn
- Access to "paid" cheques from the club's bankers - unless receipts have been obtained from payers for all payments made
- A copy of the last audited statements of account
- The financial statements for the year now being subjected to audit, together with all supporting working papers
- Minute books
- Any other records or evidence he/she may request to confirm the accuracy of transactions recorded and the existence of assets and liabilities shown in the books of accounts and the financial reports
- Copy of all insurance policies of the club
Depreciation
Few clubs have major assets so the question of depreciation - the decline in value of an asset through usage - does not occur.
Clubs sometimes set an annual charge, included in membership, to cover depreciation so assets may be replaced in future. As depreciation is a non-cash cost, it must be recovered out of income. It is a good idea to keep a register of the club's fixed assets.
Pay Roll
If your club has paid employees on its books, it is important to maintain correct financial records of their contract, pay conditions and all other relevant information.
A pay roll summary is an important set of records that should be passed on to the auditor. Keep this with the vouchers for the cheques written. Here is an example of a pay roll where employees are paid by cheque:
Pay Roll 1 - June 2001
| Name | Gross | Tax | Net | Cheque |
| W Russell | 400.00 | 128.00 | 272.00 | 12301 |
| P Muir | 220.00 | 66.00 | 164.00 | 12568 |
Below is an example of a pay roll where employees are paid in cash. Write a cheque for the total net amount. Cash it at the bank into the correct notes and coins to make up the separate payments.
| Name | Gross | Tax | Net |
| W Russell | 400.00 | 128.00 | 272.00 |
| P Muir | 220.00 | 66.00 | 164.00 |
| Totals | 620.00 | 194.00 | 436.00 |
| Cheque | 436.00 |
Insurance
Insuring the club's assets is essential. Ensuring the club's assets are adequately secured is just as important as purchasing insurance. Reviewing the club's security regularly is a good idea. The main types of insurance required by a club are: all risks, fire, burglary and public liability. Be sure, if you are part of a Sporting Club that you have your own Public Liability Insurance because the Sporting Club insurance will not cover claims outside of the Club.
Insurance is a specialist area so the best person to consult is an insurance expert. Before doing so, have a good idea of the value of assets you wish to protect.
Whatever the insurance, make sure you are getting the right cover for what you want. Don't just go for the cheapest premium. It may not be appropriate.
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