Terry from Morley has asked about Treasurer’s reports. He is in a not for profit association and he serves on the executive committee. Their treasurer is a qualified (and working) accountant but the reports he brings to the executive committee meetings are sparse or sometimes non existent.
In my experience with hundreds of associations, accountants do not always make the best treasurers. I’ll explain why in a moment. Book-keepers however, usually make excellent association treasurers.
There are 2 types of accountants broadly speaking – management accountants (often called financial accountants) and the ones that you and I come across in our daily lives helping with taxation and small business accounting. Management accountants are really good at looking at the big picture and have little interest in keeping the books. They are great at their job and they are great if your association has hundreds of thousands of dollars to manage.
For the small association, the large majority of the treasurer’s role is to “keep the books” and in my experience, management accountants don’t like doing that very much.
So having said all that, what should a treasurer’s report to an executive committee of an association contain?
1. There must be a budget. The best way is to divide your operation into portfolios, and make one person responsible for each portfolio. They draw up a proposed budget for the year and it, together with the other portfolio budgets are discussed at a budget meeting before the Annual General Meeting, where the budget should be approved by the membership.
Once the budget is in place, then each portfolio “leader’ operates within it and only goes outside it with the approval of the executive committee.
The first thing the treasurer should do at every meeting therefore, is to report on every budget item so that each leader knows where they stand, and the executive committee knows the overall situation.
2. There should be a report on money that has come in since the last meeting and how that compares with expected income – the budget again!
3. There should be a report on money which has been paid out since the last meeting.
4. There should be a report on funds held in the bank or investments.
Some organisations pass accounts for payment before the treasurer reports so that these payments can be included in Part 3 (above) of the report. In this way the report is up to date to the hour – a good place to be!
If an account is submitted for payment, it should have a “Requisition for Payment” form attached which indicates which budget item the payment falls under. I’ll send you an example Requisition for Payment form if you email me at firstname.lastname@example.org
The finances of any organisation are important. The executive committee is entrusted with the responsibility to manage the finances prudently. Without proper and regular treasurer’s reports you are simply not doing your job and leave yourself open to criticism – criticism you really cannot ignore.
All of this is just good governance.
What do you do if your treasurer cannot or will not provide reports with this information – get a new one. It’s your head on the chopping block as well as theirs if questions are asked.
Please Note: The author accepts no responsibility for anything which occurs directly or indirectly as a result of using any of the suggestions or procedures detailed in this blog. All suggestions and procedures are provided in good faith as general guidelines only and should be used in conjunction with relevant legislation, constitutions, rules, laws, by-laws, and with reasonable judgement.