Guide to MAINTAINTING FINANCIAL RECORDS

Transcription

1 March April 2016 C&S Program Guide to MAINTAINTING FINANCIAL RECORDS (AKA Treasurers Handbook) C&S Office Ground Level, Manning House

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3 CONTENTS INTRODUCTION... 2 TRANSFERRING THE CLUB BANK ACCOUNT... 2 BANK ACCOUNTS AND RECORDS... 3 AN OVERVIEW OF BASIC BOOKKEEPING... 3 MANAGING INCOME... 4 STEP 1: ISSUING RECEIPTS... 4 STEP 2: RECORDING INCOME IN YOUR CASHBOOK... 4 STEP 3: BANKING... 5 SUMMARY OF EVENTS FORM... 5 MANAGING CLUB EXPENSES... 5 DONATIONS... 6 BANK RECONCILIATION... 7 ANNUAL FINANCIAL REVIEW... 8 WHEN TO ORGANISE THE FINANCIAL REVIEW PAPERWORK... 8 PAPERWORK YOU NEED TO ORGANISE FOR THE ANNUAL FINANCIAL REVIEW... 8 FINANCIAL REVIEW RESULTS... 9 C&S AND USYD FUNDING... 9 SPONSORSHIP AGREEMENTS...10 JOINT EVENTS...10 ONLINE SYSTEMS...10 HIGH INTEREST ACCOUNTS...10 CASH FLOATS...10 BUDGETS...11 BACKUP OF DATA...12 REVUES TAXATION NON-PROFIT ORGANISATIONS...13

4 INTRODUCTION This Guide is primarily aimed at Treasurers and will cover aspects of managing your club s finances, focusing on budgeting and book keeping. However, please keep in mind at all times that your club must abide by the C&S Handbook and C&S Regulations, particularly in relation to various funding and registration guidelines. All sections of this Handbook are applicable to Revue Treasurers except for the USU funding process. It is imperative that financial records are up-to-date and maintained regularly throughout the year, so that you are aware exactly how many funds are at the club s disposal and you do not run at a loss. Diligently maintaining records after each event will make your end of year financial review a lot easier. YOUR CLUB S FINANCIAL YEAR Your club s financial year end (FYE) will be listed in your constitution. It will usually fall before your AGM. This means, most Treasurer s will be beginning their term 1-2 months after the financial year has begun. For this reason, make sure you obtain all financial documents covering this period from the previous Treasurer. It is important to request the following from the out-going Treasurer, from the beginning of the current financial period: Cheque, Deposit and Receipt books Tax Invoices/Receipts Bank statements Updated Cashbook TRANSFERRING THE CLUB BANK ACCOUNT Gaining control of the Club or Society bank account can take some time to complete. How to change the bank account signatories: 1. Obtain an authorisation letter from the C&S Office reflecting the names of the new signatories and print off a copy of your Minutes of the meeting where the executives were elected. 2. Every signatory on the authorisation letter will need to visit the bank together with 100 points of ID (e.g. photo ID, passport, bank cards, and proof of address). The bank teller will take you through the steps of becoming a signatory. 3. Update the club s mailing address with the bank 2

5 BANK ACCOUNTS AND RECORDS In rare cases, larger clubs may have more than one bank account. In this instance, you should keep separate bank records and cashbooks for each bank account. There are three main types of bank records: bank statements, cheque books and deposit books. Please store these records carefully and ensure you use your deposit book when banking any cash into the account. This will mean your records are kept in order for the financial period. AN OVERVIEW OF BASIC BOOKKEEPING Bookkeeping is maintaining records of all financial transactions for your society. This means keeping track of the following in a cashbook. Your club must use the C&S Cashbook template, which you can download from Orion. All receipts/tax invoices issued to your club for expenses incurred e.g. food receipts Any ticket stubs/receipts for income such as membership fees or entry fees for an event All other income deposited into your club s account from funding or sponsorship Each time your club receives income or spends money, you should record this in your cashbook. At least once a month you should cross-reference the cashbook with your bank statements to make sure that the amounts correspond. Keeping on top of this will mean that at the end of the financial period, your club s finances should be in order. Don t stress yourself out by leaving everything until the end of the year! CAPITAL ITEMS LIST A list of your club s assets as reported to the C&S Office forms part of the Cashbook. This must be maintained so you have a clear record of all items owned by the club. Whenever you purchase a new item, ensure you record the information on this tab. A Capital item is an item belonging to your society that will be maintained for at least 3 years. This includes small items such as storage boxes, tables and banners. 3

6 MANAGING INCOME When receiving income for event attendance, membership fees, t-shirt income etc. always ensure you follow these steps: Collect cash/cheque & Issue Receipt Record overall income in cashbook Immediately bank the cash Cash will show on bank statement, matching cashbook If income is received via direct deposit, skip to step 2. Always make payments directly from the society s bank account, DO NOT use cash from an event. If you follow this instruction, your bank records will match your cashbook entry for the event and will make your life a lot easier at the end of the financial year! STEP 1: ISSUING RECEIPTS You must use a receipt book when collecting any income for membership or an event, these can be purchased from newsagencies. If possible use a separate receipt book for each event. For small amounts (under $5) you may use a raffle ticket book or a spreadsheet to record income. However, you must at all times record what the income was for, and list the date and amount. When taking income for membership, always record the name of the individual. No receipt need be issued to sponsors, unless specifically requested. Receipt Example Cash Receipt No. 39 Date: Name/Reference: Amount: $ Item Purchased: Signature: STEP 2: RECORDING INCOME IN YOUR CASHBOOK Every time your club receives income, you need to update your cashbook. If income has come from nonmembers, including any donations or sponsorship agreements, this income may incur tax. You must set aside 15% of this income as you will be required to pay the ATO at the end of the next financial period. If your club is potentially in this position, please contact the C&S Office immediately. 4

7 Your Cashbook should match your club s bank statements, and include all income and expenses. If there is a discrepancy, this requires immediate investigation. STEP 3: BANKING After each event where cash/cheques are received, immediately bank all income using a deposit book (preferred) or deposit slip. This amount will then correspond to the amount recorded in your cashbook in Step 2. You will then be able to clearly cross-reference the two records and it will be clear at the end of the year where the money came from. Never issue reimbursements to members in cash before banking the money. Reimbursements must be made via cheque after a request is lodged by the member with an attached receipt. SUMMARY OF EVENTS FORM Each Club or Society is required to summarise and record their events, and the income received from both members and non-members. This is because non-member income is taxable. This summary of events form can be found on a designated tab in the Cashbook. These summaries of attendees and income received per attendee should match and support the total funds received and deposited as recorded in the Income Journal. MANAGING CLUB EXPENSES The following steps must be taken whenever a payment is required: Money is spent and a receipt is collected for the item/s If a member paid for an item with their own money, have them formally request a refund in writing with an accompanying receipt If applicable, reimburse your member directly from the club's account Record the expense in your club's cashbook The debit amount on your bank statement will match the expense in your cashbook All money spent by your club or society is referred to as expenditure. This may be money on food and drink for an event, for the purchase of a major item for the club s use or for things like t-shirts or merchandise. Treasurers are required to obtain a valid receipt or tax receipt/invoice to support all payments 5

8 REIMBURSING MEMBERS Whenever a member purchases an item on behalf of the club, they must be reimbursed immediately from the club s bank account, after supplying a valid tax receipt (see below) and requesting a refund in writing (an is sufficient). Never reimburse a member using cash from event income. The Treasurer must retain a copy of the receipt and the request for reimbursement for their financial records. It s easiest to keep these documents in date order so that transactions correspond with the club s bank account. WHAT IS A TAX RECEIPT? A tax receipt, or invoice, is a receipt that details the supplier s business name, ABN, address and itemises exactly what has been purchased. Most major stores such as Woolworths or Bunnings will issue tax receipts with every purchase. The important thing to remember is to retain the receipt with the ABN, not the Eftpos receipt. Be especially mindful when dealing with smaller businesses and restaurants to request a receipt at the time of purchase. DRAWING CHEQUES Payments for items must be made by using the club cheque book or by issuing a cheque to reimburse a member who has paid for a club expense out of their own pocket. All cheques require 2 authorised signatures to be valid. Treasurers must: Never pre-sign blank cheques for future use; and Never hand-over blank cheques to anyone Ensure all cancelled cheques should be retained and crossed as cancelled. Cheques to reimburse members should never be issued without a valid tax receipt (NOT an Eftpos receipt) and a written request for payment. DONATIONS Some clubs may hold events to raise funds for a charitable cause. The accounting of these funds is no different to other income. All monies or income collected should be banked in the same manner as all other income. The funds paid to the charity should be supported by a formal letter or receipt from the charity with the amount and purpose clearly recorded. Donations should not exceed the amount of profit made at a fundraising event. 6

9 BANK RECONCILIATION The Bank Reconciliation cross-references the cashbook with the club s bank statement. Your Treasurer should complete this at least once a month in order to keep on top of the club s finances. Firstly, add your totals for the month/year from both the cashbook and your bank statements as per the following example: Cashbook/ Funds balance at Beginning of Year Add: Income Less: Expenditure ( ) Cashbook/ Funds balance at End of Year Balance per bank Statement at End of Year Less: Unpresented cheques (86.00) Add: Outstanding deposits Cashbook/ Funds Balance at End of Year To ensure that the bank reconciliation balances it is important to ensure that all bank charges, fees, and interest income shown on the bank statement is recorded in the Cashbook. If the amounts don t balance, check for the following things: Are there any donations, or interest earned that aren t recorded in the cashbook? Did the society write a cheque that hasn t been banked by the recipient? Is there cash from an event or membership fees that hasn t been deposited yet? Have any members outlaid money but have not yet been reimbursed? Are there any missing receipts not accounted for? 7

10 ANNUAL FINANCIAL REVIEW As a condition of continuing registration, all clubs are required to submit their financial paperwork for review within 2 weeks of their Financial Year End. The financial review has been introduced in 2016 in place of the full financial audit. If your club wishes to have their finances professionally audited, you may consult a private accounting/auditing firm at the club s expense. We recommend consulting an accountant if your club is in an income tax position. After the financial review you will have a clearer idea of your club s financial status and you will be in a position to report back to your members on the following: Grants that have been properly used to promote social and cultural activity on campus Whether or not the club has been operating on a financially sound basis Whether the club has been operating within its constitution, the C&S Guidelines and general standards of accounting Any potential taxable income If your financial review is deemed unsatisfactory, the club s registration status may be affected. WHEN TO ORGANISE THE FINANCIAL REVIEW PAPERWORK Each club in the C&S Program has a specific Financial Year End outlined in their constitution. Treasurers will generally receive a reminder when it is time to submit your financial documents, however; it is ultimately your responsibility to ensure they are submitted within 2 weeks of your FYE. If you do not have the result ready by your AGM, you should report on the current state of the club s finances based on your online cashbook, bank statement and income for the year. PAPERWORK YOU NEED TO ORGANISE FOR THE ANNUAL FINANCIAL REVIEW Templates for some of the below paperwork can be found on the Orion Portal Forms and Guidelines page. If you re unsure what any of these are, please contact the C&S Office. Executive Declaration Bank statements covering the entire financial period Completed cashbook - must include Capital Items List, Submission Form and Reconciliation Income support e.g. receipt books, tally sheets, raffle books to support all income recorded in your cashbook Expenditure support i.e. any invoices not previously attached to a Post Event form If applicable, any sponsorship agreements or income from non-members If applicable, any tax lodgment information Records of any charitable donations 8

11 FINANCIAL REVIEW RESULTS On completion of the financial review, the C&S Financial Officer will complete a report on your club s financial status and state whether it is Satisfactory, Unsatisfactory or Improvement Required. You are required to implement any necessary changes, if your result is not satisfactory. Satisfactory The required accounting standards have been met Income and expenditure adequately supported As such the society will be re-registered for another year. Improvement Required The Financial Officer is satisfied with the accounting standards except for certain items. This opinion may have been formed because of: Missing documentation supporting income and expenses, e.g. bank statements or tax invoices Inadequate accounting systems and accountability for income received or payment of expenditure Inadequate accounting of USU funded transactions Non-compliance with critical areas of this guide, the C&S Handbook and/or C&S Regulations Depending on the exact nature for the Improvement required status, conditional registration may be granted for 6 months, after which another financial review will be performed. If there has been no change in the quality of the financial records, the society may be deregistered and further C&S funding denied. Unsatisfactory In these cases, little, incomplete or no financial records have been submitted by the Treasurer and no explanation of the state of the financial records has been offered. If Treasurers are concerned at any stage during the year that the society funds have been used inappropriately or are missing, please report it immediately to the C&S Office, Police and in cases involving cash, to the University Security. OTHER GENERAL ACCOUNTING MATTERS C&S AND USYD FUNDING C&S FUNDING The C&S Program offers various types of funding, including event, capital expenditure, merchandise, locker hire, publishing. These types of funding are all subject to different caps, eligibility and methods of calculation. For detailed information please consult the C&S Guide to Funding, C&S Handbook and C&S Regulations. The University of Sydney may fund society activities through the provision of a Faculty grant. If a grant is received, a receipt or documentation is required to support this transaction in your accounting 9

12 records. You may request these grants from the University. All funding received from the University of Sydney should be recorded on Post Event forms as income. SPONSORSHIP AGREEMENTS A sponsorship is a valuable way for a society to receive financial support. Please be aware that sponsorship money is taxable, and it is important that appropriate agreements are prepared to support the amount of the sponsorship and any accompanying obligations of both parties. For more information consult the C&S Guide to Sponsorship. For taxation information contact the C&S Financial Officer. JOINT EVENTS When organising joint events, the clubs involved should properly document the division of income and expenses between their clubs in advance of the event. Clubs must work together to produce a budget for the overall event, and ensure that all parties have provided feedback regarding this budget. Where possible, communicate in writing so that there is evidence of any financial agreements. You will also be required to lodge a Pre-Event Registration Form on the Orion Portal, which enables you to allocate percentages of funding to each participating club. ONLINE SYSTEMS The use of external online systems for some large events may be utilised by a small number of societies. If your society is considering the use of an external online system or a third party to sell event tickets, the following should be considered: How would problems be detected and addressed e.g. website issues, incorrect pricing, refunds. When the funds will be transferred to the club if you require the income prior to an event you may not receive the ticket funds in time Commission/Booking fees chargeable to the club or attendees Whether it is a reputable company HIGH INTEREST ACCOUNTS A few societies have opened linked Internet accounts to obtain a higher rate of interest on their unused funds. These bank accounts are acceptable only if they are linked to the club s main chequing account. No payment facility should be available from these online accounts as all payments should only be made using the main cheque account. A separate online Cashbook should be prepared to record the transactions within the linked Internet account. CASH FLOATS Small amounts of cash on hand may be required to provide change to members attending club events. This cash is referred to as a float. A float can be obtained from the bank by making a society cheque out to cash. You will need to remember not to count this float amount as part of your overall profit at the end of the event. 10

13 The float amount must be recorded in the Online Cashbook as an expense. After the event, the float plus any profits made will be banked together. At this stage you must record the amounts separately in your Online Cashbook so that it is clear the float has been returned to the account, with the profit recorded clearly. Note: Cash should not be held over from one event in order to provide a float at another event. EXAMPLE: Recording Cash Floats in the Online Cashbook Your club has withdrawn $50 from the society chequing account to use at OWeek as a cash float. At OWeek, your club signed up 44 members, who each paid a $5 membership fee. Your total cash at the end of the week is $270; $220 of which is membership income and $50 remains from the cash float. Your income and expenses should be recorded in the Online Cashbook as follows: Transaction Date Description Total $ 27/02/2016 O-Week Float /03/2016 O-Week Float /03/2016 O-Week Membership Income BUDGETS It is important to budget for events to ensure the society bank account does not become overdrawn and the society does not experience financial problems. The following steps can help you budget efficiently: Outline all events at the beginning of the year with your executive Realistically plan the expected income and expenditure for an event by accounting for all potential costs. Consider any risks for each event, e.g. the impact of low attendance, sponsors cancelling Ensure your society has enough funds to cover the event without relying on income. NEVER allow members to shoulder costs without immediate reimbursement prior to the event. It is unacceptable to promise reimbursement based on projected income. Your club is allowed to make profit on an event, provided the funds are used in furtherance of the club s aims Always ensure your club s funds are in surplus, and that there are funds for the continuance of the society the following year Put aside 30% of all non-member income (e.g. sponsorship money) in the event that your club is required to pay tax Clubs are encouraged to organise events where a profit is made in order to fund future events for members. However, events that have made profit will not be eligible for C&S Funding, as the purpose of funding is to reimburse the club for costs. Clubs should run similar to a small organisation and therefore strive to maximise income in order to produce greater outcomes for the club s future, such as larger events and increased 11

14 benefits for members. When budgeting for an event, you should aim to charge attendance in order to cover your costs and produce an income for the club that can be put back into member services. BACKUP OF DATA It is important to backup the Cashbook regularly i.e. to save data in two different places. All hard copy historical documentation should be held in a secure location where it will not be subject to damage or loss. REVUES The content in this handbook is applicable for all Revue Treasurers, however, some processes differ slightly. Please consult the USU Revues Manual for more information, however, here is an overview for your reference. The Revue Treasurer should: Ensure that they are familiar with the contents with the Revues Manual available from the USU Program Events Coordinator Prepare a budget for the Revue Record all ticket sales, both manual and online Complete a Population Summary for Revue tickets sold and unsold which supports total ticketing sales Seek additional resources available for Revue Treasurers on the Orion Portal Specific training sessions for Revue Treasurers are held in Semester one (1). Each Revue Treasurer is required to attend one of these specific Revue Training sessions in order to obtain C&S Funding. 12

15 TAXATION NON-PROFIT ORGANISATIONS Certain societies are exempt from income tax because of their aims and activities as defined in the constitution. If you are unsure if your society is exempt from income tax, please contact the C&S Office. Exemptions apply to societies whose aims and activities include the following: A cultural nature (art, drama, music); and A sport and games nature (chess, bridge) Generally all other societies will be classed as Non-Exempt. In these cases, Treasurers need to take special note of any interest earned and any Non-member income which is assessable for tax purposes (e.g. non-member attendance fees, sponsorship). For this reason, attendance records need to be accurate and clearly state which attendees are not members. Income received from members is not taxable. Note: Any liability for income tax is the responsibility of the Club or Society. Treasurers are required to sign the Log of Tax Status at when submitting financial documentation at the Annual Financial Review. Society financial documents and taxation records should be retained for at least 6 years as per ATO legislation and Taxation Rulings. A Club or Society generally does not need an Australian Business number (ABN) or Tax File Number (TFN) and should not endeavour to apply for either without first discussing with the C&S Office or Financial Officer. Clubs or Societies are non-profit entities and as such do not need to register for GST unless the turnover is in excess of $150,000 per annum. If the Club or Society is already registered for GST, please make an appointment with C&S Financial Officer to ensure that GST payments are correctly accounted for and submitted on a timely basis to the ATO. 13