The National Standard Chart of Accounts for Not for Profit Organisations. Recommended Guide for the grouping of accounts for reporting and acquittals

Transcription

1 The National Standard Chart of Accounts for Not for Profit Organisations Recommended Guide for the grouping of accounts for reporting and acquittals

2 Introductory Notes This document is provided as a recommended guide to structuring a not for profit (NFP) chart of accounts into account groupings. The guide is intended for use by NFP organisations of any size for their internal reporting and for Western Australian government agencies to consider for acquittal templates and communication tools with the NFP sector. These recommended account groupings can be used by an organisation whether they have adopted (or are intending to adopt) the National Standard Chart of Accounts (National SCOA) or have a different chart of accounts. While the account groupings themselves have been developed in consultation with the NFP sector and government agencies, the approach in this manual is a guide only, and is not mandatory for the sector or government to use. Why recommend account groupings? Preparing a guide to account groupings fulfils two critical functions in financial management:: 1. it allows for efficient, consistent and streamlined reporting for the management, boards and committees vested with governing a NFP organisation; and 2. it can serve as a template for government to communicate with the NFP sector in a more consistent manner. This second function has the capacity to improve efficiency and productivity within the sector. While the community sector funding and contracting reforms being implemented by the Department of Finance will reduce the need for, and detail of, organisations reporting financial information to government, where such requirements remain (such as for acquitting grants), the National SCOA and this supplementary guide will make the process easier and less costly for both parties. How do account groupings work? Account groupings are represented in accounting software generally through the use of header accounts. These header accounts are simply a hierarchical structure within a chart of accounts whereby all accounts that sit below a particular header can be sub-totalled by that header. In this way, financial reporting can be achieved at varying levels of detail from the same transactional data. All accounting software packages provide for header accounts and generally these can be added at any time, that is, the chart of accounts does not need to be radically altered before adding headers. For government agencies, the account groupings suggested represent a potential mechanism for requesting financial information where needed as part of funding applications or assessing outcomes via acquittals 2

3 How do the account groupings work with the National SCOA? Account groupings are relevant and useful regardless of the adoption or otherwise of the National SCOA. However, the benefits of the National SCOA may be complemented by the addition of guidance on clear account groupings that government and the NFP sector can refer to. A map between National SCOA accounts and their recommended account grouping is included in this document. It does not matter whether an organisation has adopted the National SCOA because the headers can be allocated before, during or after that process. The National SCOA was developed to act as a guide for a broad range of organisations, and will not fulfil all the requirements necessary for an organisation s chart of accounts. Whilst it includes some header accounts, some interpretation of the National SCOA data dictionary is required, especially in the area of expenditure, on which the National SCOA is mostly silent. The suggested account groupings in this document are an outcome of that interpretation, as well as a general assessment of the needs of the NFP sector and financial reporting requirements. How many Account Groupings are involved - is it a complicated process? The recommended approach works within an accepted framework of a 4-level chart of accounts - that is, 3 levels for header accounts and one level for transaction posting. This approach is an outcome of the high level of usage in the sector of particular software packages. The attached Account Grouping Map shows how this approach might operate, however it s important to stress that most organisations will already be using account headers in some way; this suggested approach is simply an attempt to provide some clarity and direction with regards to specific account groupings and header accounts. The organisation or agency should select as many account groupings as is applicable to them. The important point in setting up, or altering, a chart of accounts is that all detail accounts should be allocated to a header. This achieves clearer and more accurate reporting at all levels of detail. How will using account groupings help improve efficiency? First, it s important to recognise that account groupings (i.e. the use of header accounts in the accounting software) are an important internal reporting tool. Even if an NFP organisation is not reporting externally, or is not funded by government, efficient and accurate reporting remains an important goal, and header accounts will assist in this regard. In addition, there is much to be gained by consistent two-way communication between government and the sector. For example, if an organisation is funded by more than one government agency, it would make for improved efficiency if all acquittals could use the same account grouping structure (for example reporting at level 3 in the attached account map). Further, with such a broad and varied sector, organisations find it difficult to benchmark themselves against other organisations or ask for indicators of performance. This sort of information could be brought together if a greater number of organisations were reporting financial data grouped by similar criteria. 3

4 How much work is involved? Generally, the addition of header accounts in accounting software is not onerous, although some knowledge of the software is required. Guidance can be obtained from an accountant / bookkeeper or from the technical support area of the software provider. It s important to recognise that some software requires all accounts (including header accounts) to run in ascending number order, so when attempting to allocate an account to a new header account, some renumbering may be required. Check with your accounting software, but this renumbering can generally be achieved without loss of transaction history and can be done at any time of the financial year. A full conversion to a new chart of accounts (e.g. the National SCOA) however can be far more complicated, and guidance should be sought before renewing or changing all detail accounts within a chart of accounts. 4

5 ASSETS 1 CURRENT ASSETS 1 Cash 2 Cash at Bank - restricted Term Deposit 1 - Bigtime bank Cash at Bank - unrestricted Operating a/c - Friendlybank Petty Cash Cash Float Undeposited Funds Short-term Investments Receivables 2 Accounts Receivable Accrued interest - term deposit Provision for Doubtful Debts Accrued Income Other Debtors Inventory 2 Yokine Bar - beverage stock Bunbury merchandise stock Other Current Assets 2 Other Financial Assets Workers Comp prepaid Prepayments Workshop venue hire deposits ABN Withholding Credits NON-CURRENT ASSETS 1 Controlled Fixed Assets 2 Land Buildings Accumulated Depreciation Buildings Plant & Equipment Accumulated Depreciation P & E Motor Vehicles Accumulated Depreciation M/vehicles Rental Property Furniture & Fixtures Administered Fixed Assets 3 a Land LotteryWest Building - Mandurah Buildings ArmadaleSupport Service Vans Accumulated Depreciation Buildings Plant & Equipment Accumulated Depreciation P & E Motor Vehicles Accumulated Depreciation M/vehicles Rental Property Furniture & Fixtures Other Non-current Assets 2 Long-term Investments Intangibles

6 LIABILITIES CURRENT LIABILITIES 1 Payables 2 Accounts Payable Loan - City of Somewherenice Accrued Expenses Loans Payable Payables - other ABN Withholding Tax Payable GST 2 GST Payable GST Receivable Payroll 2 PAYG Payable Superannuation Payable Salary Sacrifice Payable Employee Provisions 2 Provision for Annual Leave - Office Provision for Long Service Leave Prepaid Revenue 2 Revenue Received in Advance Project A Funding (Dept XYZ) Grants Received in Advance Other Current Liabilities 2 Grants Repayable State Rep. Team Deposits Received Hire Purchase Liability Lease Liability NON-CURRENT LIABILITIES 1 Employee Provisions 1 Provision for Long Service Leave 12mths+ Other Non-Current Liabilities 2 Hire Purchase Liability Lease Liability Loans Payable EQUITY 1 MEMBERS FUNDS 1 Retained Earnings 1 Members establishment funds Non-appropriable surplus Current year Surplus/Deficit Retained Surplus/Deficit Reserves 1 Asset revaluation Other reserves

7 INCOME 1 SERVICE CONTRACTS Service Payments GRANTS 1 Recurrent Grants 2 Grants (Commonwealth) Operating Core Grant - Dept XYZ Grants (State) Operating Grants (Local) Operating Non-recurrent Grants 2 Grants (Commonwealth) Operating Project A Grant - Dept XYZ Grants (State) Operating Grants (Local) Operating Grants Other Capital Grants 2 Grants (Commonwealth) Capital Project A Grant - Dept XYZ Grants (State) Capital Grants (Local) Capital FUNDRAISING 2 Fundraising - gifts 1 Donations received Tax deductible donations (non-public) Donations (Public collections) Non-tax deductible gifts Bequests Fundraising - contributions 1 Contributions (members) Contributions (public) Contributions (Govt) Contributions (Trusts) Contributions (Traders) TRADING & OPERATING 1 Sale of Goods 2 Merchandise sales Uniform sales - Summer league Clothing sales - Mirrabooka shop Canteen - Rockingham Fees & Charges - restricted 2 Project A - participant contribution Fees & Charges - unrestricted 2 Membership fees Project management fee Sponsorship & Licensing fees Other fees & charges Raffles & Gaming 1 Raffle 123

8 Property, Facilities & Equipment 3 b Rental income Signage sales - Main Arena Rental - Gosnells office

9 Income (cont.) Trading & Operating (cont.) Events & Activities 3 c Sale of tickets Participant fee Program sales Cost Recovery Team Entry fee 3 d Participant travel Participant uniform Other Income 1 Interest - restricted Interest - unrestricted Dividends received Sundry income Gain on sale of assets COST OF GOODS SOLD 1 e (NB: refer note 'e') COST OF GOODS SOLD 2 Cost of Goods Sold 2 Opening Stock Opening stock - merchandise Purchases Purchases - bar beverage Freight Freight - uniforms staff Closing Stock Closing stock - canteen EXPENSES PERSONNEL 1 f 3 g Salaries & Wages 2 S & W Annual Leave Expense S & W Fringe Benefits Tax S & W Long Service Leave Expend S & W Recruitment Expense S & W Salary Sacrifice S & W Sick Leave Expense S & W Superannuation S & W Termination Payments S & W Salaries - Other S & W Salaries & Wages S & W Cost recovery Employee support 2 Emp't Support & S'vision Costs Conference & Seminars Health & Safety Staff Amenities Training & Development (Staff) Non-employee labour 3 Agency Temp Staff Volunteer Costs S & W Fees paid

10 Expenses (cont.) TRADING & OPERATING 3 h Costs of goods sold 3 i Merchandise COGS (refer note 'e' and 'i') Uniform COGS Events & Activities 3 j Auspicing Fees Event Management fee Seminar catering Client Support Consumables Workshop venue hire Fundraising & Gaming 2 Prize money Raffle Permits Printing Marketing 2 Advertising & Promotion Communications Entertainment Costs Motor Vehicle 2 MV Fuel & Oil MV Repairs & Maintenance MV Insurance MV Registration MV Lease Payments MV Others Depn- Motor Vehicle Property, Facilities & Equipment 3 k Assets Purchases <$x,000 Cleaning & Pest Control Depn - Building Depn - Plant & Equip Depn - Rental Property Depn - RP Furn & Fittings Equipment Hire/Lease Loss on Sale of Assets Property Management Fees Rates & Taxes Rates - Rental Properties Rent Rent - Rental Properties Repairs & Maintenance R & M - Rental Properties Security Expenses Tenancy & Property Supplies & Services Utilities Write-off costs

11 Expenses (cont.) Trading & Operating (cont.) Travel & Accommodation 2 Travel & Accommodation Travel - Local Travel - Regional Travel - International Travel - Board Travel - taxis Travel - parking Recoverable costs 3 l Uniform recoverable Participant travel recoverable GOVERNANCE & ADMINISTRATION Office & Executive 3 n Amortisation Expense Bad Debts Board / Governance Expenses Computer Expenses Donations Paid Fees & Permits Management Fees Meeting Expenses Membership Fees Paid Postage, Freight & Courier Printing & Stationery Publications & Info Resources Sundry Expenses Telephone & Fax Charges 3 m Professional Services 3 o Accounting Fees Audit Fees Business Planning & Evaluation Consultancy Fees Legal Fees Financial & Insurance 3 p Bank Charges Credit Card Fees Insurance - General Insurance - Public Liability Insurance - Prof Indemnity Insurance - Rental Properties Insurance - Volunteers Insurance - Workers Compensation Interest Paid

12 Notes: 1. Current SCOA summary header account 2. New recommended header account - inferred by SCOA data dictionary comments, in some cases at a varying 'level' 3. New recommended header accounts designed to clarify reporting structures and support consistent acquittals a. Additional detail recommended for those NFP's holding assets that cannot be disposed of without an external party's consent b. Provides greater trading detail for NFP's operating significant commercial property or facilities-based operations c. Provides greater trading detail for NFP's operating significant commercial events and project-related operations d. Provides separation of revenues gained as a direct result of incurring cost on behalf of a member or participant, recovered at little or no margin. e. A separate level 1 code is recommended only for the NFP's where inventory-based sales are greater than 20% of total revenue, in other cases a header in 'Expenses' is suggested f. The SCOA does not include groupings of expense accounts, therefore all groupings are either new or an interpretation of th SCOA broader intentions g. Gives clarity of personnel costs, whether employed, paid or unpaid including the costs of supporting their activities h. Refers to expenditure incurred in activities pursuant to the core purpose of the organisation, providing separation of expenditure from personnel and pure administration overhead i. To be used where the NFP has sales of goods not considered material enough for the inclusion of a separate level 1 code (i.e. < 20% of total revenue) j. Refers to expenses incurred in identifiable activities and projects, whether regular or ad-hoc, that provides a service to members, stakeholders or the public k. Refers to expenditure incurred in the support, maintenance and use of property, facilities and equipment, where those assets are under the control of the NFP e.g. owned or operated l. Provide separation of costs incurred with a specific intention of future recovery from a member or participant at little or no margin. m. Refers to expenditure incurred in administering the NFP, its general governance and fiduciary responsibilities n. Refers to expenditure incurred in supporting the general administration and 'back-office' costs of the NFP o. Refers to expenditure incurred in utilising specialist support services or consultants on contract or ongoing basis p. Refers to expenditure incurred in maintaining banking, financial and insurance services