Created: August 23, 2013 at 1:33 PM | Updated: February 8, 2022 | By Community Resource Kit
On a monthly basis, the treasurer should prepare the following two reports for their management committee or board (governing body):
These reports are for the month, but it is important to review the year-to-date position at the same time.
In preparing these reports you should ensure that all the balances in the statement of financial position are correct (e.g. all bank accounts reconcile, unspent grant balances are correct etc). Some balances will not be confirmed every month, e.g. fixed assets might be reconciled yearly.
Check that these balances look reasonable, then review the transactions in the statement of financial performance. Most accounting systems allow you to easily go back to view and check the coding of each transaction.
The statement of financial performance is best reviewed against the budget figures. Any significant difference between actual figures and the budget should be looked into. If there are discrepancies, it will be useful to add a commentary to the report so these matters can be addressed by the governing body.
A sample monthly financial report, typical of a small community organisation, is shown below:
Monthly Financial Report for the Month of February 2018
Annual Budget |
|
Month (Feb) |
Year to Date |
8000 1800 200 10,000 |
Receipts: Grants Donations Other Total Receipts |
4000.00 125.00 6.20 4131.20 |
7000.00 1577.00 314.55 8891.55 |
2400 500 1000 500 2400 2000 300 200 500 9,800 |
Payments: Rent Power Phone Office Supplies Volunteer Expenses Computer Postage/email Audit Other/misc. Total Payments |
200.00 45.00 100.00 21.80 12.40
20.00
3.00 402.20 |
2200.00 425.00 975.00 445.80 972.40
350.00
424.75 5792.95 |
200 |
Surplus/(deficit) |
3729.00 |
3078.60 |
800 |
Add opening balance |
550.00 |
800.40 |
1000 |
Cash book balance |
4279.00 |
4279.00 |
2000 |
ADD: Savings/Deposit a/c |
2000 |
|
|
Deduct: Unspent Grants: (Lottery Grant) |
4000.00 |
|
3000 |
Available Funds |
2279.00 |
|
Other monthly reports may need to be generated depending on the organisation and the level of detail the management committee or board require. Some may require a breakdown of grants received or details on a particular project etc. Most accounting systems are able to accommodate different requests and track specific line items. It is important to get your coding and reports set up correctly to minimise the amount of manual reporting.
Strict accountability is demanded of any organisation that receives a grant. Once again, you can set up your computerised accounting system to keep track of grants received and the expenditure against them (see the following samples).
Tip: It is better to use your accounting system to track grants as the money is spent, rather than having to go back and account for it when the report is due.
With a computerised accounting system:
Tip: Remember to check each grant to see if it has GST added or is exempt (e.g. in the case of a donation). See the Inland Revenue resource Tax on grants and subsidies or download the IR249 guide here (PDF, 102KB).
Grantee |
Purpose |
Opening Balance |
Grants Received |
Spent |
Balance Unspent |
Lottery (1) |
Wage subsidy |
4000 |
|
4000 |
|
COGS (1) |
Admin costs |
2000 |
|
2000 |
|
Council |
Youth programme |
|
4000 |
3500 |
500 |
MSD |
Parent programme |
|
5000 |
5000 |
|
Community Trust |
Computer equipment |
|
4000 |
4000 |
|
JR McKenzie |
Newsletter/publicity |
|
2000 |
1700 |
300 |
Lottery (2) |
Wages |
|
10000 |
6200 |
3800 |
COGS (2) |
Admin |
|
3000 |
2000 |
1000 |
Total |
|
6000 |
28000 |
28400 |
5600 |
(This table is also included as a supporting document that can be downloaded from the bottom of this page)
* non-government grants are GST-exempt.
Once you have completed your normal monthly processing and reconciliations, you are ready to move on to the year-end process. During this process you are ensuring that all income and expenses for your financial year have been accounted for (regardless of whether you have paid or received money for them). You are also ensuring that both the statements of financial performance and position give a true and fair view of the financial year.
Tip: The checklist below will give you guidelines on what needs to be done in the year-end process. This checklist can be used as both an internal record of what has been processed and can be useful to give to your auditor.
Year end checklist (adapted from original developed by Community Accounts Mentoring Service)
Note: This checklist is intended as a guide only - the checklist is also included as a supporting document that can be downloaded from the bottom of this page.
Question |
Comments |
General |
|
Have all the bank accounts been reconciled? |
|
Have all investments balances been reconciled? |
|
Have all loans balances been reconciled? |
|
Have all debtors and creditors been accounted for (copies of invoices made for auditor)? |
|
Have all comparatives for income and expenditure been made and accounted for significant changes? |
|
Are tax returns required to be filed, if yes, have they been filed? |
|
Has the petty cash been reconciled? |
|
Has the opening retained earning been checked against last year's closing retained earnings? |
|
Has the current year's surplus/deficit transferred correctly from the profit and loss statement to the equity in the balance sheet? |
|
Does the balance sheet balance? |
|
Income |
|
Has all interest received been recorded? |
|
Are you exempt from Resident withholding tax (RWT)? If not, can you apply for an exemption? |
|
Have any unusual types of income been received (e.g. insurance)? |
|
Have all grants been accounted for? |
|
Have all unspent grants been calculated and accounted for? |
|
Have all outstanding fees been accounted for? |
|
Have all bad debts been accounted for? |
|
Expenditure |
|
Has the full year ACC Levy been recorded? |
|
Has entertainment expenditure been recorded (does the 50% deductible rule apply i.e. do you pay tax)? |
|
Have all legal and professional fees been checked for deductibility (e.g. non deductible if relates to capital expenditure)? |
|
Have all repairs and maintenance been checked for any capital items (e.g. over $200)? |
|
Have all depreciation rates been checked? |
|
Have all new assets been added correctly and the correct pro-rata amount of depreciation claimed (i.e. claimed from month purchased)? Have you included a copy of any assets purchased for auditor? |
|
Have any assets been sold or scrapped this year, if so have they been corrected accounted for in balance sheet and for depreciation (i.e. no depreciation in year of sale)? Is there any loss or profit on sale? |
|
Are there any private adjustments needed in respect of assets/depreciation? |
|
Has a full year's insurance been accounted for? |
|
Have 12 payments for power, phone and rent been accounted for? |
|
GST |
|
Is the group registered for GST? |
|
If not registered, has the gross turnover exceeded the compulsory level? Was your turnover $60,000 or more in the last 12 months? Will it be $60,000 or more in the next 12 months? Do your prices include GST? (Find more information on GST registration on the IRD website) |
|
If registered is it a voluntary registration? |
|
Has the correct basis of GST been used (e.g. payments or invoice)? |
|
Are all returns up-to-date and accounted for to Inland Revenue? |
|
Has GST been paid on all fringe benefits other than GST exempt ones? |
|
Has the GST on the non-deductible portion of entertainment been adjusted for? |
|
Has the correct amount of GST been accounted for in the balance sheet? |
|
Wages and PAYE |
|
Have all allowances been checked as to whether or not PAYE was required to be deducted? |
|
Has the status of any independent contractor been checked to ensure that the person is not in fact an employee subject to PAYE? |
|
Do the wages reconcile with the total reported to Inland Revenue and wage book, and to the ACC calculation? |
|
Has the relevant tax been deducted from those contractors that fall within the schedular payments regulations? |
|
If no tax on schedular payments has been deducted from contractors, has a certificate of exemption been sighted? |
|
Other |
|
Have you reconciled all items on the balance sheet? |
|
Have you reviewed all income and expense coding? |
|
Have any notified bequests been recorded? |
|
Are all minutes up to date, signed and ready to give to the auditor? |
|
Is a copy of your constitution available, in case the auditor requests it? |
|
Is your organisation liable for any fringe benefit tax (FBT)? |
|
Reports Required |
|
Statement of financial position (balance sheet). |
|
Statement of financial performance (profit and loss). |
|
Statement of movements in equity (maybe incorporated in balance sheet). |
|
Notes to the accounts. |
|
General ledger. |
|
Trial balance. |
|
Checked by: |
|
Signature: |
|
Date: |
|
Every organisation should produce financial accounts each year. Many organisations use the year from 1 July to 30 June (in line with the Government's financial year).
The annual financial accounts you will need to produce are:
Depending on the size of the group, the annual accounts may also include additional notes and schedules that explain aspects of the accounts in more detail.
Tip: The annual accounts are often prepared by the treasurer (or financial administrator), possibly with the help or advice from an accountant or the auditor. It is important that the rest of the committee or board also understand what the accounts say. This may mean enrolling in a basic accounting course.
Auditing is the process of independently reviewing and checking that the year-end financial statements present a true and fair view of the financial activities for that year. The requirement for an auditor will be determined by the rules (or constitution or trust deed) of your organisation. Some funding bodies may also require your financial statements to be audited.
There are several levels of audit and financial review that might be appropriate for community groups:
If your rules or constitution don't specify the audit requirements, independent verification (audit level 4) will be sufficient for smaller community groups (i.e. less than $60,000 total annual turnover). For community groups over this level (i.e. needing to be GST-registered and employing staff), it is preferable to get a review engagement (audit level 3) or audit by an accountant (audit level 2). A full audit by a chartered accountant (audit level 1) is only recommended for larger organisations (this is generally beyond the scope of this kit).
Tip: For more information on auditing, visit Audit New Zealand - https://auditnz.parliament.nz/resources/working-with-your-auditor.
Your auditor will need the following (but note that this list is not exhaustive so check with your auditor):
Tip: Ensuring your auditor has a completed set of financial statements, with well recorded and filed data, will help minimise the audit cost.
All registered charities are required to complete annual reporting to Charities Services. This includes filling out an Annual Return and attaching financial statements. Registered charities need to prepare financial statements in line with the new standards which came into effect in April 2015.
TIP: Charities Services have a comprehensive guide to the reporting standards here and there is more information in the next part of this guide - Annual returns and financial statements.
Next page: Annual returns and financial statements