Financial management
It's not a difficult process if you follow a process and make sure that best practice is followed. The size of your club will determine the processes you’ll need to put in place.
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A treasurer
The treasurer is a key person for your club’s management. They are the person on your club’s board or committee who takes overall responsibility for the financial management of your club on behalf of its governing body. The size of this job will depend largely on how big your club is and whether there are other people who can help – either with the financial administration or as a finance sub-committee.
The treasurer will require a job description (Word, 28 KB). This will ensure they know what they’re supposed to be doing and it will also provide standards for their performance. The treasurer’s role includes reporting on the actual finances and seeking out the best ways to use available funds.
The treasurer will need the following accounting stationery to perform their job effectively:
- Cheque books.
- Bank deposit books.
- A cash book or general ledger.
- Payment authorisation (cheque requisition) vouchers.
- A numbered receipt book with carbon copy page.
- Account forms for members’ subscriptions.
- A petty cash payment book and petty cash vouchers.
- A file for accounts payable.
- A file to store receipts from accounts paid.
- A file of orders placed with suppliers.
- A file to store bank statements.
We have provided a sample job description for a treasurer (Word, 28 KB) in the resources section of Club Kit.
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Accounting systems and software
Usually a computerised accounting system, which is the easiest and simplest way to keep track. There are several simple to run programmes or software packages available. So have a look around to see what’s best for your club’s needs. If your club is small enough a manual system may be sufficient.
Here’s what your accounting programme should be able to do:
- Calculate GST and allow you to allocate GST by individual transactions.
- Follow spending.
- Produce comprehensive financial accounts (profit, loss and balance).
- Let you make necessary adjustments easily.
- Provide you with precisely the information required in easy to understand report form.
- Simple enough for everyone using it to understand it clearly.
For more information regarding accounting software, please see the Information Technology section of Club Kit.
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Cash books
A cash book is a journal in which all of a club’ receipts and payments are recorded. ‘cash’ includes actual money, credit card slips, cheques and money orders. You’ll have receipts and cheque butts but the cash book is where the details of these transactions are recorded.
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Bank accounts
Your club will need a cheque account. It is a simple and effective way of keeping track of your club’s spending, using the cheque butts. Usually clubs will need to have two management committee members (including the Treasurer) who are authorised to jointly sign cheques from the club’s bank account. Three members may also be authorised with only two required to validate the cheque.
Your cheque accounts bank statement will also provide an accurate record of your club’s spending. You can choose the frequency of these statements.
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Budgets
Your club will require an annual budget. This is the responsibility of the treasurer and needs to be agreed up by your club’s management committee. Once the budget has been approved it needs to be added into your accounting system so you can compare it to your club’s actual income and expenses. You can use either an excel spreadsheet or a manual cash book depending on your club’s size and needs.
To prepare a budget:
- Start with your actual income and expenditure from the last year – if your club is new you will have to base this upon realistic estimates.
- Add what you know about the coming year
- Adjust and modify until you have a realistic and reasonable budget
- Get the budget approved by your management committee or governing body.
We have provided a sample annual budget template (Word, 37 KB) in the resources section of Club Kit.
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Cash flow forecasting
To try and anticipate any dips in your club’s income and be able to plan around them, cash flow forecasting is important. If your income is variable, good forecasting will mean you’ll still be able to meet expenses.
To prepare a cash flow forecast:
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- Use the budget and break it down month by month.
- Add in opening bank balance and calculate closing balance.
Audits
As part of achieving best practice in running your club its financial records will need to be audited. An audit is when an independent person, such as an accountant, checks that the financial statements are a true and correct record of the financial operations and position of your club at the time that they are audited.
The auditing process may be undertaken by a suitably qualified volunteer or it may be necessary to use a professional auditing service. However, this can be costly so finding someone who is willing to perform the auditing on a voluntary basis is preferable. Auditing can be a lengthy process and it is a good idea to allow six to eight weeks for an audit to be completed.
Your club’s auditor will need:
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- The cash books for your club, written up and balanced for the year and journals or ledgers that your club may use for records.
- Bank statements for the whole year.
- Copies of deposit slips and cheque butts.
- Receipt books with duplicate and original copies plus any unused receipt books.
- Vouchers for payments that your club has made, arranged in numerical order.
- Receipts or copies of cheques paid to your club.
- Copies of minutes from your management meetings that show how financial decisions were made and agreed.
- Copies of any previous audit statements.
- All financial statements for the year being audited.
- Any other relevant financial documents.
Insurance
It is important that your club has adequate insurance protection. The extent of insurance that you will require will vary depending on the assets, size and activities of your club. Given the commitment and contribution that your volunteers make, it’s important that they are protected from any potential risks.
ACC provides all New Zealanders with accident protection but many clubs are choosing additional cover to recognise the importance of their volunteers and members.
Generally you’ll require policy coverage for
- Liability insurance.
- Fire and theft contents.
- Loss of income/increased costs of work.
Your choice of insurance company will depend on the policies, cover and costs that they are able to offer your club. Your club member may elect to take out individual policies or your club may select a ‘preferred supplier’ who is able to tailor costs and cover for the specific needs of your club. There are specialist insurance organisations who deal with sports insurance if you require it.
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Tax and GST
The IRD has information and frequently asked questions about GST and what your club needs to do.
Charitable organisations or trusts are organisation (incorporated or not) that carry out charitable activities or exist exclusively for charitable purposes. They are exempt from income tax, and individuals or companies who donate property to the charity are given relief from gift duty. For an organisation's purposes to be charitable its activities or aims must be for public purposes - the benefit must be available to a large part of the community. In addition, it must not be carried on for the benefit or profit of any individual.
From 1 July 2008, a charitable organisation will need to be registered by the Charities Commission to enjoy the above tax exemptions. The section on charitable organisation on the IRD website has more information about how this relates to tax.
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Resources and more information
IRD has more information on:
CommunityNet, an internet resource for New Zealand communities has lots of useful information and resources about financial planning and cash flow forecasting.
Other resources you can use for your club’s financial management include:
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