The Treasurer has day to day responsibility for dealing with the organisation’s money. It is the Treasurer’s job to keep accounts and report to the committee. It is the responsibility of the whole committee for deciding how the money will be raised and spent, the whole committee should agree on spending decisions.
The committee, not just the Treasurer, is responsible for ensuring that proper records are kept. Sometimes the committee leaves the Treasurer to get on with it alone, only showing an interest at the AGM or when something goes wrong. This is worrying for the treasurer and also means that the organisation does not make the best use of its money.
Why keep accounts?
Because your committee is responsible to all its members for any money it receives and spends.
To keep track of the money (eg. to ensure that you have paid subs and that you have paid bills that need to be paid)
To let you see how much money you have available
To help you budget and plan into the future
To help with fundraising – often funders will ask to see your accounts to show that your organisation is well run
Dealing with money
Each organisation will deal with money in a different way depending on circumstances however there are basic rules regarding dealing with money that apply to everyone.
Be methodical, keep records as your going along, don’t rely on memory at a later date.
Make sure you have paperwork for any money paid out or received
Keep a record of each single transaction (not just a total for a day’s fundraising for example)
Keep the organisations cash separate from your own
Do not hold onto large amounts of cash, bank cash as soon as possible
Check regularly that the cash in your tin matches the balance in your cash book
Make sure two people are required to sign cheques or withdrawal forms.
Check bank statements carefully
Issue a receipt whenever you take in cash. It is best to use a small duplicate book with numbered pages. Record the total, the date, what the cash is for (eg subs) and sign it. Hand over a copy as a receipt and keep the duplicate as your own copy for your records.
If you receive a cheque, take a photocopy of the cheque before you bank it and file the copy with your covering letter and a note of when and where the cheque was banked and receipt from the bank.
Paying out money
Get invoices or receipts for all money paid out. This rule applies to both cash and cheques. When you pay out cash, write out a petty cash voucher and ask the person receiving the cash to sign for it. File the paperwork together in order.
Paying by cheque: make a note on the cheque stub of the value of the cheque and who it is made out to. Write the number of the cheque on the invoice/bill.
Keeping a cash book
Your book-keeping will depend on the circumstances of your organisation. There is no ‘right’ way to keep records but it’s best to keep things as simple as possible. The basics for keeping a cash book are as follows:
Keep separate records of your cash and building society accounts
Keep separate columns for date, incomings, outgoings and balance
Have a separate column for comments (ie the reason for the transaction)
End of month procedure
It is a good idea to rule off the page at the end of each month, add each column and check that the balance in your book is the same as the cash in your tin. Carry of the balance to the start of the new month.
If you can’t get your cash book to tally with the cash in your tin do not carry over the error into the next month. You can write “error in cash” and start the new month with the correct balance to match your cash tin. This means that you can see exactly in which month the error took place and you are more likely to find an explanation.
When the bank statement arrives this gives you the opportunity to check that the figures in the statement match those in your account book.
Tick off each cheque in your account book which appears in the bank statement
If the statement does not match the figures in your account book it may need to be investigated
NB Once you are satisfied that you have written up your book correctly, it is your book (not the bank statement) which tells you how much money is available to spend.
Reporting to the Committee
Your report gives a summary of the information in your cash book so that the committee knows the financial position. The committee should decide how much detail it needs and whether a verbal report is enough.
You should always be in a position at a meeting to say how much money the organisation has available. To give the committee the best picture, the Treasurer should report:
Money available in cash account and in bank/building society
Amount received and amount spent since last meeting
Expected bills and income between this meeting and the next
Reporting to the Annual General Meeting (AGM)
This is a formal written report and must show the following:
Total amount received during the accounting period with a breakdown of the receipts
Total amount paid out with a breakdown of the payments
The amount of money left (balance of funds) and where the funds are heald. You should show how much is in the bank or building society and how much you hold in cash or a float.
Independent Examination of Accounts
There is no legal requirement for most small community organisations to have an independent examination of their accounts. Many organisations include a clause in their constitution that their accounts must be independently examined before they are presented to the AGM. Some funders such as the National Lottery make it a condition of the grant.
Many small organisations choose to have an independent examination of accounts as it:
Provides an itemised written account for the treasurer to present at the AGM
Helps to reassure a new or unconfident treasurer
Helps sort out any problems with the accounts
Demonstrates to members and other organisations that the accounts are in order
The independent examiner doesn’t have to be a professional accountant but must be someone outside the organisation who is competent to examine accounts such as a finance worker, bank manager or council treasurer. Most independent examiners will take a fee for their services using a pricing structure which is based upon the income of the organisation.