Treasurer / Accounting Functions
The TreasurerThis 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.
- 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).
Manage the bank account and paymentsMany 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 â€“ e.g. electronic transfers. Controlling expenses and how they are authorised gives rise to plenty of things to consider â€“ see the section below on internal controls for more details.
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 AuditThe 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.
- 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).
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?
Consider tax implications
- Income Tax
- PAYG, Superannuation
Consider staff and employmentThe 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
|10.200||Bank â€“ Trading accounts|
|10.300||Bank â€“ 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|
|13.210||ATO (PAYG Remittance)|
|13.300||Payment received in advance|
|30.000||Fixed Assets||30.100||Tables & Chairs|
Income & Expenditure Accounts
|43.000||Special Events||43.100||Club's Congress|
|44.000||Table Receipts||44.101||Duplicate â€“ Entry Fees|
|44.102||Duplicate â€“ Table money|
|44.201||Club Championships â€“ Entry Fees|
|44.202||Club Championships â€“ Table money|
|51.000||Interests||51.100||Interests on loans|
|51.200||Bank fees & Charges|
|53.000||Special Events||53.100||Club's Congress|
|55.000||Overheads||55.100||Printing & Stationery|
|55.400||Rates & taxes|
|57.000||Boards & Cards|
|59.000||Depreciation & Amortisation|
APPENDIX 2: SAMPLE of LETTER of ENGAGEMENT
AAAAA BRIDGE CLUB
Suburb NSW 2999
We are very pleased that you accepted to become the new director of our bridge club and we would like to confirm the conditions under which you will now work for the AAAAA Bridge Club.
You are not an employee of the AAAAA Bridge Club, but you will contract your services to the Club. As such, you will kindly provide us with a monthly tax invoice, inclusive of GST, setting up the number of sessions you directed during that month.
You understand that the Club is not responsible for any sick pay, holiday pay, long services leave or any such benefits accruing to employees, and you also understand that the Club will not contribute to a Workers Compensation policy on your behalf.
Your invoices will be paid upon receipt, on the last < day > of the month to which they refer, and no withholding tax will be applied if you provide us with your ABN.
Our Club meets on every < day > and you agree to direct each one of these sessions; should you be unable to attend a session, we would need a reasonable period of notice so that an alternate director can be found.
We agree that your fees per session are fixed at an amount of $< xx >, to be reviewed from time to time. [ Note: if fees are to be linked to table number (or increase thereof), mention the agreed mode of calculation]
We look forward to a long and pleasant association.
The Secretary (or the President)