One of the most important jobs of your club’s management committee is ensuring the club is solvent (able to pay current debts) and financially secure for the future. Financial management is a vital part of good club governance. The management committee is answerable to its members and must know the current assets and liabilities of the organisation at any time.
Without good financial management, nothing else can succeed. This involves being able to set fees appropriately, effectively manage funds, implement sound financial practices, understand the club’s financial position and obligations, and being easily able to access and review all financial information. Clubs have a legal obligation to ensure they manage their finances properly. While the treasurer is responsible for day-to-day cash handling and reporting, all management committee members are accountable for the financial management of a club.
Financial management tips
Good financial management can be achieved by implementing the following:
- Set, follow and review an annual budget
- Ensure prudent use of club funds according to strategic and operational needs as agreed by the management committee, with members’ input (via the club’s development plan and budgets)
- Monitor income and expenses against the budget
- Regular financial reporting to the committee and members
- Transparency and accountability in all financial decisions and transactions
- Present profit and loss, balance sheet, and bank reconciliations to every meeting
- Make bank statements available to all management committee members
- Formal education and training opportunities for the treasurer (and other committee members) to ensure they are confident and competent in their role
- Ensure financial management policies are simple, easy to understand and implement
- Never sign blank cheques
- Use standardised, reliable and easy to use financial reporting software
Your club should produce the following monthly financial reports:
- Profit and loss, year to date vs budget
- Balance sheet
- Outstanding debtors
- Outstanding creditors
- Bank reconciliation
- Cash flow
In addition to monthly reports, your club should also produce yearly financial reports including:
- Annual statement of income and expenditure
- Annual balance sheet
Including last year’s figures in annual financial reports enables the management committee and the members to see whether the financial performance and position of the organisation has improved or worsened since last year. There are many financial management software options for not for profit associations, many of which are hosted online for ease of access. Your club should choose one that is easy to use, reliable and affordable. Your treasurer should be trained in the software package your club uses when they take on the job rather than using the treasurer’s own software preference.
The goods and services tax (GST) is a broad-based tax of 10% applied to supplies of most goods and services consumed in Australia. Community organisations must be registered for GST if their annual turnover is $75,000 or more (commercial sector) or $150,000 or more (not for profit sector).
Even if your club’s turnover is under $150,000, it may be of benefit to your organisation to register for GST, particularly if you receive a substantial grant. Always consult the Australian Tax Office or a qualified accountant if you are unsure how to deal with GST.
Note that your Australian Business Number (ABN) is separate from your GST registration status, and the two should not be confused. Your ABN is simply a unique number that identifies your organisation to the government and community as an organisation that is carrying on a business in Australia.
An audit should not be seen as a threat to any club. The term ‘audited accounts’ means that the financial records have been checked by someone with recognised accounting skills (e.g. chartered accountant) as being a true and correct record of the financial operations of your club.
What should be audited?
- Financial records
- Receipt book
- Receipt book register
- Bank deposit book
- Cheque book
- Petty cash book
- Minutes of meetings, particularly your AGM
- Asset register.