Financial recordkeeping

Treasurer's roles and responsibilities

The treasurer is the person on the board or committee who takes overall responsibility for the financial management of an organisation on behalf of its governing body. The amount of work involved for the treasurer will depend on the size and type of organisation, and on whether there is a staff member such as a financial administrator who can carry out some of the tasks.

Checklist of treasurer's overall duties

The treasurer carries out the following duties:

  • sets up and oversees bank accounts on behalf of the organisation (most organisations have a cheque account, a savings account, and term deposits)
  • ensures money received is receipted and banked promptly
  • invoices anyone who has purchased goods or services (rentals, use of equipment, membership fees etc.) from the organisation
  • make payments as required (see checklist for making payments for more details)
  • signs cheques on behalf of the organisation (at least one other person should co-sign the cheques)
  • maintains accurate records of income and expenditure
  • files GST and tax returns
  • keeps an accurate wages book and makes PAYE payments as required (where there are paid employees)
  • prepares annual budgets for the forthcoming year
  • manages a cash flow record and also the organisation's investments e.g. term deposits and property management (in association with the committee)
  • maintains an appropriate accountability system for grants received
  • prepares and presents monthly financial reports for management meetings 
  • prepares accounts for auditing and provides information for the auditor as required
  • prepares and presents the Annual Financial Report to the Annual General Meeting

To help perform these duties, the treasurer should have: 

  • a copy of the group's constitution (or rules)
  • copies of previous annual financial accounts
  • had a discussion with their predecessor to obtain any relevant information or advice
  • had a discussion with the group's auditor (if there is one) on any issues that may need to be addressed in the operation of the group arising from the last audit and find out what's likely to be needed for the next audit (if the accounts are audited).

Tip: In small community organisations, the treasurer should prepare a list of payments made during the previous month and present them to the regular committee/board meeting for approval. If possible, the treasurer should also get future payments/cheques approved at the meeting. Larger organisations will have established systems for controlling payments, often handled by a paid staff member.

Financial records

Many of the major problems for organisations arise from poor record keeping of financial transactions. The treasurer must be able to provide documentary evidence of every transaction made in order to prove the validity of his or her records and, if an audit is required, to satisfy the auditor.

The treasurer (and/or financial administrator) is responsible for maintaining the following records (dealt with in more detail below):

  • subs or membership register (in the case of clubs)
  • receipt book for monies received
  • a file for keeping your income invoices and paid accounts
  • petty cash book
  • an accounting system (preferably a computerised package e.g. MYOB) to account for all transactions.

Tip: Having a computerised accounting system can make things a lot easier, though it may not be possible for all organisations. You can use a cash book accounting system to keep track of your finances, either using a computer spreadsheet (e.g. Microsoft Excel) or a manual multi-column cash book (see later).

The treasurer (and/or financial administrator) is also responsible for maintaining the following (which are dealt with in this section or other parts of this kit, as indicated):

Receipt book

When cash is received, a receipt must be issued to the payer recording: 

  • the date
  • name of payer
  • amount received
  • what the money is for (e.g. subscription, donation etc). 

Tip: People making a donation to your group of $5 or more can claim this as a tax deduction if:

  • your group is registered with Inland Revenue as a donee organisation and
  • you have provided them with a receipt for the donation to include with their tax return.

Filing income invoices and paid accounts

  • file all income invoices in date order
  • write the cheque/payment number and date on all paid accounts and file in number order
  • consider keeping a separate file for all Inland Revenue returns and statements (GST and PAYE).

Petty cash book

Petty cash is used to pay for small, miscellaneous items such as milk, pens, stamps or local travel expenses. Though they may seem small, petty cash expenses need to be recorded. Your group should set up a petty cash book (see later sample) and have a designated place to keep the money, e.g. a petty cash tin or purse.

Petty cash checklist

To start using your petty cash system:

  • withdraw cash (or write out a cheque for cash), recording it as petty cash’
  • keep petty cash in a separate secure place
  • make sure you receive a receipt for each petty cash purchase
  • record the purchase, with the type of expense, in a petty cash book (see sample)
  • keep a running reconciled balance
  • when your petty cash gets low, make another cash withdrawal to bring it back up to the original amount.

Other things to remember are:

  • The withdrawal to start the petty cash system is not an expense it cannot be claimed for income tax and GST it is just to open the petty cash book. This would be coded to your petty cash asset in the statement of financial position.
  • The reimbursements will be for the amount spent and therefore will be coded accordingly and any GST claimed.
  • The petty cash book should be balanced at regular intervals. The balance in the petty cash will be the previous balance, plus any reimbursements, minus the receipts as listed.
  • Reimbursements from petty cash are subject to audit along with the organisation's other financial systems.
  • Any cash received by the group should be banked and not put into the petty cash.

Sample petty cash book

XYZ Community Group Inc. Petty Cash book

Date

Details

In

Out

Balance

01/01/10

Opening balance

 

 

$50.00

07/02/10

Postshop stamps

 

$13.50

$36.50

07/02/10

Stationery

 

$8.80

$27.70

14/02/10

Tea/milk

 

$6.60

$21.10

21/02/10

Postage

 

$6.50

$14.60

21/02/10

Milk, biscuits

 

$6.40

$8.20

28/02/10

Cheque 123

$41.80

 

$50.00

 

Next page: Computerised accounting systems

Previous page: Financial planning

Contents of the Community Resource Kit