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EVENTS 7 December

Club Handbook> Treasurer / Accounting Functions

Treasurer / Accounting Functions

The Treasurer

This document summarises the main functions of a bridge club treasurer. While it is obviously useful for the treasurer to be an accountant, it is not essential. Above all the treasurer must be numerate and must always be conscious that the role involves dealing with other peoples' money. Consequently (s)he must ensure transactions are recorded properly and that appropriate controls are in place to safeguard that money.

Manage cash

The majority of table money is still collected in cash. Some form of recap sheet for each session should be kept – summarising how many tables attended, and how much money was expected plus if any of the cash was used for anything else (perhaps paid out as prize money or something?) That is useful in several ways:

• It helps record later what the total income was as well as what the expenses were (generally in accounting you are not supposed to net things off).
• It allows a record of the table numbers to be maintained if so desired (might be a useful number to look back at to see how it changes over time).

Obviously the cash then has to be kept securely and banked – how often this is done will depend on the frequency of sessions and the amounts involved.

Manage other receipts

The vast majority of a bridge club's income will be regular table money or entry fees, and the majority of that will be in cash with perhaps some in cheques. Both need banking. Some clubs may also choose to offer pre-paid vouchers (perhaps at a discount). These need tracking as well. It is also increasingly common for players to want to pay via credit card or online. Indeed for congresses, these payment methods are increasingly expected to be available. You need to have ways of tracking these items back to their source and working out who has pre-paid using these methods and who still has to pay on the day. Usually issuing some form of voucher or reference number will be adequate.

Manage the bank account and payments

Many club payments will be made in cash or cheque. The treasurer is usually the custodian of the cheque book and a signatory. These days, however, there are other means of payments available – e.g. electronic transfers. Controlling expenses and how they are authorised gives rise to plenty of things to consider – see the section below on internal controls for more details.

Keep the books and prepare annual accounts

The accounts can be anything from a manual cashbook to a sophisticated computerised accounting system. Obviously which depends on the size of the club, but something is essential in all cases as all clubs will have to prepare some form of annual accounts. The most important document at this stage is the chart of accounts; this will give the Club a template of its financial activities and a properly drawn chart of accounts is a great help in setting up the whole system.

The second decision is about the accounts themselves, whether they will be done by hand or by computer. If the Treasurer has access to a computer, it is almost essential to use it for the Club's accounts: the speed and the ease with which the information can be treated, analysed and disseminated makes it worthwhile. If the Club elects to use computerised accounts, the last decision is whether the Treasurer will create an accounting system or whether the Club will buy an accounting package.

There are some very good computerised packages available so it is unlikely to be worth creating a system from scratch. The NSWBA uses Quickbooks which serves our needs very well. Whichever way the decision goes, it is essential that the system be a proper accounting system with facility for provisions, accruals and journal entries otherwise the information will be quasi meaningless: there is nothing less useful than a simple cash account to assess the financial health of an organisation. A sample chart of accounts is provided at appendix 1.

Consider an Audit

The requirement for an audit of the accounts will often be set in the Constitution of the Club. If there is no such requirement, it is a matter for the Committee to decide whether an audit is necessary. Most bridge clubs (even those operating as companies) will not legally require an external audit as their revenue, assets and employees will be below the relevant thresholds. Other circumstances may require one, however. For example if the Club has borrowed money, the lender may make a condition of the borrowing that audited accounts be prepared regularly. Other options to gain some comfort without incurring the expense of a formal external audit each year might be:

• Have the accounts reviewed by a third party (perhaps a member that is a retired accountant).
• Have an external audit once every few years but not each year.

If a club does decide to have an external audit the choice of an auditor is a delicate one; quite apart from the fact that he/she be a registered company auditor, because from the auditor's point of view, bridge clubs, as other community based organisations, are not financially attractive propositions, so, to be fair, the Club ought to consider a long term relationship with its auditor. Furthermore, even if the auditor is a bridge player, he/she will need a considerable amount of briefing in the first year.

Prepare budgets and reports

These two items are dealt with together because a meaningful report will refer to the budget as a basis for comparison. Some basic budgeting is useful for any club – but the level will obviously depend on the sophistication and size of the club. At the most basic level one just needs to project ones income for the next year to see whether it can cover expenses. If not, table money may have to go up. Larger clubs or those with specific plans coming up (e.g. purchasing premises) may need to do more. A more detailed budget is simply an itemised listing of estimated income and expenditure for a specified period (usually a year). It is a highly valuable document for several reasons:

• It disciplines everyone to think about what income and expenditure ought to be;
• It helps controlling and managing the Club;
• It provides reliable performance indicators to measure achievements;
• It allows sound planning, particularly for cash flow forecasting and analysis;
• It makes the financial management of the Club transparent and accountable;
• It helps tracking the source of over- or under-achievement (cost or quantities for example).

At the last committee meeting before the AGM, the Treasurer ought to present next year's budget that will be discussed and if necessary amended before being used as next year benchmark. As far as the reports are concerned, the Treasurer will present a monthly report to the Committee and an annual report to the AGM. It will certainly be useful to send the monthly report together with the meeting paper (agenda, important item of correspondence if any) some days in advance to the committee members so that they can peruse it. The monthly report does not need to be a bulky document; one page is enough to register the transactions of the month, the financial position, the cash position and the comparisons with the budget and with last year's figures. Note that a standard report is easier to present and to read. Indeed, many of the computerised accounting packages include facilities to input a budget and generate reports comparing actual figures against budget.

Think about internal controls and systems

The larger the club and the more money involved, the more important this becomes. If large transactions are being processed, and staff have access to large amounts of money, the question of internal controls to protect the organisation become important. In fact if the club is set up as a company, the officers have a legal duty to have such controls to protect the company's owners. Therefore one of the most important tasks of the Committee will be to set up sound internal control procedures, or to make sure that such procedures are in place, are in use and are reviewed from time to time.

A good way to think about internal controls is to imagine that someone dishonest did reach a position of authority within your Club. How easy would it be for them to defraud the Club? Could they "lose" some of the takings? Could they make payments without anyone else knowing? The idea of course is to have systems in place so that the answer to these questions is "no". Sometimes these can be as simple as having more than one person involved (e.g. one person prepares a summary of table money, someone else banks it). Other times they may involve documents being prepared and specific authorisations being provided. Some practical examples of internal controls are the consideration of:

• Who has the keys to the office, the safe or wherever money and the cheque book is kept?
• How many signatories are required on a cheque? It is good practice to have more than one but that can be a nuisance if you want to make an immediate payment to someone but another signatory is not available!
• Who authorises payments?
• If electronic payments are made, who makes them and how are they authorised?

Each financial instrument (or letter of instruction to your bank) ought to be signed by two persons and, traditionally, the President, the Secretary and the Treasurer are the three signatories on the accounts. Each Club will make its own arrangements in that respect. Do not forget to advise your bank after the AGM if there have been any changes in the officers of the Club. It is preferable for large expenses (the definition of "large" will depend on the situation of each Club) to be specifically approved in advance at committee level. For all items of expenditure it is necessary that an order form or a payment voucher form (or a cheque requisition form) be designed and a copy of such be given to the Treasurer who can then pay such bills. Do not forget that a proper audit trail must be maintained at all time so that ALL FINANCIAL TRANSACTIONS ARE DOCUMENTED AND CLEARLY UNDERSTANDABLE.

Consider tax implications

• Income Tax

Most bridge clubs that are not running a business with the aim of making a profit will be exempt from income tax. Be aware, however, that if there are large surpluses being made, it is possible for this status to be challenged. Also, there is a principle that income from members is not taxed but external income (most commonly bank interest) is taxed.

• GST

Bridge clubs are not necessarily exempt from GST. See separate page on GST for a more detailed discussion.

• PAYG, Superannuation

Bridge clubs who employ staff will need to deduct PAYG and Superannuation from wages. See also section below on Consider staff and employment.

Consider staff and employment

The Club may be employing staff, either as administrator or as director, and if such is the case, the normal procedures of record keeping and payment will be followed. It will make the task easier if the Club is registered with the ATO as a Group Employer, as all forms will be provided. Do not forget that it is essential to scrupulously observe the timing of the payments of PAYG remittance, as committee members may become personally liable for any unpaid tax. Obviously, if the Club has employees, arrangements will have to be made for Superannuation and Workers Compensation Insurance and provisions made for annual, sick and long service leave. The Club and the directors have the choice between an employer-employee relationship or a contractual one. The task of the Club is simplified if the relation is a contractual one as the Club simply has to pay periodic invoices. A sample letter of engagement to a director (acting as a contractor) is shown below at appendix 2.

APPENDIX 1: SAMPLE CHART of ACCOUNTS

Balance Sheet
 

Main accounts		Sub-accounts
10.000	Members Funds	10.100	Cash
10.200	Bank – Trading accounts
10.300	Bank – Investment accounts
11.000	Borrowings	11.100	Bank Loan (Secured)
11.200	Debenture & Notes
11.300	Loans from Members
11.400	Loans from Local Authorities
11.500	Short term bank finance
11.600	Overdraft
12.000	Loans
13.000	Creditors	13.100	Trade Creditors
13.210	ATO (PAYG Remittance)
13.220	ATO (GST)
13.300	Payment received in advance
13.400	Accruals
14.000	Debtors	14.100	Trade Debtors
14.200	Subscriptions
14.300	ATO (GST)
15.000	Provisions
20.000	Inventories	20.100	Cards
20.200	Boards
30.000	Fixed Assets	30.100	Tables & Chairs
30.200	Office Equipment
30.300	Dealing machine

Income & Expenditure Accounts
 

Main accounts				Sub-accounts
40.000		Income
41.000		Financial Income
42.000		Subscriptions
43.000		Special Events		43.100		Club's Congress
44.000		Table Receipts		44.101		Duplicate – Entry Fees
44.1x1		Xday Session
44.102		Duplicate – Table money
44.1x2		Xday Session
44.201		Club Championships – Entry Fees
44.202		Club Championships – Table money
45.000		Lessons
46.000		Supervised Play
47.000		Sales
48.000		Other
50.000	Expenses
51.000	Interests				51.100	Interests on loans
51.200	Bank fees & Charges
52.000	Fees				52.100	Capitation fees
52.200	Affiliation fees
52.300	Masterpoint levy
53.000	Special Events				53.100	Club's Congress
53.200	Other
54.000	Staff				54.100	Directors fees
54.200	Administrative staff
54.300	Superannuation
54.400	Insurances
55.000	Overheads				55.100	Printing & Stationery
55.200	Cleaning
55.300	Catering
55.400	Rates & taxes
55.500	Power
55.600	Communication
55.700	Insurances
55.800	Professional Fees
56.000	Maintenance
57.000	Boards & Cards
59.000	Depreciation & Amortisation

APPENDIX 2: SAMPLE of LETTER of ENGAGEMENT