The treasurer should produce a statement of income and expenditure with the current balance at each committee meeting so that the committee members are kept up to date with the state of the club's finances and can take any steps which may be necessary before it is too late for appropriate action to be initiated.  At the end of each financial year, the treasurer must submit the annual Income and Expenditure accounts for the approval of the committee and after this, he or she will submit them to the auditor who will prepare the full accounts and balance sheet as required by law; they will then be presented to the members at the Annual General Meeting.

   The committee must ensure that adequate control is maintained over the club's expenditure.  In the first place this mean's that any planned expenditure, other than minor items such as postage, stationery etc., must be approved by the committee with competitive tenders being obtained where desirable; such decisions should of course be minuted.  The second method of control is the nomination of persons authorised to sign cheques on behalf of the club, this is usually any two of three nominees, say, the Chairman, Treasurer and one other committee member.

   There are a wide choice of types of bank account today, and professional advice could be useful in best matching the needs of individual clubs.  Many clubs will have both a current (cheque) account and an interest earning deposit account, so that money can be switched between the two as the need arises - large sums of money should not be left unused in a current account if it can be earning interest elsewhere.  Generally, it is more important to have the club accounts held in a Bank which is convenient for Club Officials to visit (e.g. close to the place of work of the Treasurer), - so that payments in can be made promptly and any queries can be resolved directly - than to have it in a less convenient location earning perhaps very little extra interest.  Delaying payments out can enhance the level of interest accrued by the Club, but be careful - it can also damage the relationship of the Club with local Traders, who could be useful to the Club in the future, perhaps as event sponsors or supporters.  Better to pay them on time and retain their goodwill!

   Most clubs will obtain their income from two main sources:
 

1. Subscriptions from their members.
2. The profits from competitive events run by the club.

1. The cost of running the club's general activities (overheads) including such items as insurance, printing and stationery, postage, advertising, cost of club magazine, audit fee, depreciation etc.
2. The cost of promoting competitive events.

   The accounts for competitive events, certainly the larger ones, are inclined to require a degree of knowledge of the competitive activities and it is quite likely that the club treasurer, although being a financial expert, may have little or no knowledge of the competitive side of the club's activities.  If the club is lucky enough to have a treasurer who is a competitor or organiser, then there is no problem, but if not, he or she may well have difficulty in handling these accounts because they will involve a lot of items and details which may be strange.  Clubs might therefore be wise to consider running two separate accounts, the first being a General account run by the club treasurer and the second being either a competition account or separate accounts for each event and these would be run by a competition treasurer who would provide the detailed accounts which the committee will require and then submit the necessary details to the club treasurer for incorporation in the overall club accounts.  This system has the advantage that the committee can see the financial results of each event which might otherwise be lost in a general account.  If a club runs an active social club with possibly its own clubroom, then this too would probably benefit by having its own account and treasurer.

Each club needs to decide what sort of profits they wish to aim for depending on the state of their existing finances and their plans for future development and spending.  This will require a budget which should be prepared by the treasurer, assisted where necessary by committee members who might be responsible for any specialist activities such as social events, club magazine etc.  When this budget has been prepared, the committee will be able to decide on the subscription rates for the forthcoming year.  At this stage of the year, it will probably be too soon to fix budgets for all the competitive events and these will normally be produced by the event organising committees who will need to wait until a decision has been made on the type of event to be run (status, size etc.) but when these budgets are prepared it must not be forgotten that allowance must be made for providing reserves for covering possible shortfalls in the general account and maintenance of the reserve account.

   Whilst most Motor Clubs today are Limited companies, this is a complex matter which is the subject of continuous change according to the size of a club, the type of events it organises and, not least, changes in Company Law made by successive Governments.  This matter is explored in detail in Guideline 6.

   It should be mentioned that these notes are in the main intended for the advice and information of committees rather than treasurers who hopefully will either know how to handle the job, or if not, will seek professional guidance.  Bearing in mind that a club running, say, two major events per year may well be dealing with a turnover running into five figures, the management and control of this amount of money is one of the most important aspects of running a successful club and must be given its due priority at committee meetings.

A typical Income and Expenditure Account for a club:

• web (html) format
• Excel (xls) format

Taxation

Corporation Tax

may be payable by a Club on its profits made in a given year, after certain allowances are taken into account.  The amount of any sponsorship moneys received, or the level of interest earned from Club accounts, may be significant factors.

PAYE & National Insurance

'Pay as you earn' (PAYE) procedures apply to payments to employees.  Whilst a Club may not technically employ anyone, care must be taken to correctly declare payments to such as casual bar staff.  Payment of expenses made to Event Officials may also attract the attention of the Inland Revenue where it can be demonstrated that a 'profit margin' exists in the level of payments made (e.g. for petrol or travelling expenses).  Maintain a regular and thorough review of such payments with your Auditors.

Value Added Tax (VAT)

Registration for VAT with the Customs and Excise means that a club can claim back most of the VAT it pays out (e.g. on Trophies), but the VAT element also has to be charged out on membership subscriptions, tickets to the annual awards 'do', and any sales of club regalia.  With a considerable amount of extra book-keeping involved, including the submission of legally binding quarterly returns, the best advice is - talk to your Auditors first.  Your local VAT Office may also be able to provide information on interpreting the current regulations.  Remember that if your Club does decide to register for VAT, the whole Club's activity must be registered and will be equally open to scrutiny.

What is a Treasurer?

   The rules of a club or association usually say that a Treasurer should be appointed at the Annual General Meeting.  The post of Treasurer is a voluntary position, although in larger organisations some of the Treasurer's work may be undertaken by a paid finance officer.  In that case the Treasurer will have a supervisory role.

   A newly elected Treasurer should meet the outgoing Treasurer, the Chairperson or President (and the Auditor if the organisation has one), to discuss the work that needs to be done.  Talking to the Auditor is particularly valuable because at the end of the year the Treasurer will have to give the Auditor all the financial records, and it will be helpful to know exactly what will be required.

   The Treasurer is the main person responsible for the finances, but must work closely with the other members of the committee.  It is important that the finances are handled in accordance with the constitution and committee decisions of the organisation.  Whether the Treasurer works alone or with the help of a paid official, the Treasurer is ultimately responsible for many functions related to finance.

What qualities are needed?

• enthusiastic
• well organised
• prepared to make a regular time commitment
• able to keep records
• careful when handling money and cheques
• scrupulously honest
• able to answer questions in meetings
• confident about handling figures
• prepared to take instant decisions when necessary.

What does the Treasurer do?

• looking after the finances of the organisation
• collecting subscriptions and all money due to the organisation
• paying the bills and recording the information
• keeping up-to-date records of all the financial transactions
• ensuring that all cash and cheques are promptly deposited in the bank or building society
• ensuring that funds are spent properly
• issuing receipts for all money received and recording this information
• reporting regularly to the committee on the financial position
• preparing a year-end statement of accounts to present to the Auditors
• arranging for the statement of accounts to be audited
• presenting an end-of-year financial report to the Annual General Meeting
• financial planning including producing an annual budget and monitoring it throughout the year
• helping to prepare and submit any statutory documents that are required (eg, VAT returns, PAYE and NI returns, tax returns, grant aid reports).

Even if these duties are delegated to a professional officer, the Treasurer is still ultimately responsible.  It is up to the Treasurer to make sure that any delegated work is done properly.

What equipment is needed?

• an analysed cash book to record money received (receipts) and paid out (payments)
• calculator
• receipt book (in duplicate) to issue receipts for money received
• box file or lever-arch file for storing papers with which you are currently dealing
• ring-binders (2) for storing the completed documents
• petty cash box
• financial information of the organisation from previous years.

Paying the bills

   Normally, bills will be for items which have been budgeted, for expenditure which has already been approved or for routine items.  If the Treasurer gets a bill for something that has not been approved, and is not routine, the committee should be informed and asked for guidance.

   It is a good idea for the committee to set limits for financial decisions.  If it is a very small amount (e.g., up to £25) then the Treasurer could authorise it personally; a larger sum (e.g., between £25 and £100) might require consultation with the other officers (Chairperson and Secretary), and a larger figure still (eg, over £100) would require the approval of the full committee.

   All payments should relate to a written invoice or document.  This also applies to claims for expenses from members of the committee.  It is easy to produce a simple claim form for them to fill in before you pay them.  This helps the Treasurer and makes sure that all the payments are properly documented.

   Do not rely on your memory when handing out cheques.  Always make sure that you have some proper documentation.

Accounting for the money

   All the receipts and payments should be recorded in the account books, and a summary of these should be prepared showing all the receipts and payments of the organisation during a 12 month period (the financial year).

   If the organisation is a limited company, it must have a registered Auditor who produces a report under the requirements of the Companies Act.  Most members clubs, which are not limited companies, elect Honorary Auditors to inspect and verify the accounts which the Treasurer produces.

   Record the receipts and payments in the cash book.  Here are a few basic items that should be recorded for every transaction.

• date of the entry
• person whom you are paying (or from whom you have received the money)
• cheque number (for payments by you) or receipt number (for receipts issued by you)
• reference number for that entry; this number should also be written on the invoice or expenses claim form for easy cross reference
• details of the transaction (what was it for?)
• VAT element (only necessary if you are VAT registered).

Typical receipts page from cash book

• web (html) format
• Excel (xls) format

   Whenever cheques are paid into a bank or building society, the receipts section of the cash book should be totalled, and a note made of the total amount put in the bank, with the date.  These totals can easily be compared with the bank statements to make sure the two agree.

Collecting money

   Deposit all cash and cheques in the bank or building society as soon as possible after receiving it.  Not only is this efficient administration, it also makes good financial sense, since money in bank and building society accounts is likely to earn interest, and reduce banking charges.

Invoices

   If you receive lots of invoices to pay (i.e., bills), try to allow for these when the final accounts are prepared.  Include the expenditure in the financial year to which it relates, irrespective of when the bill is actually paid.  The people to whom you owe money are called Creditors.

   Accounts which allow for debtors and creditors are called Income and Expenditure Accounts. (See page 4/9 for more information on Income and Expenditure Accounts.)

Petty Cash

   Do not make the mistake of bundling all the money together over a few days or weeks.  The longer you leave it, the more difficult and time consuming it will be to sort out later.

Don't take short cuts, or expect to remember exactly who has given you what.  Write everything down immediately in a book or a file. Don't be tempted to use just any convenient scrap of paper and sort it out later.  The power of the human memory is not that great!

Preparing a budget

The detailed preparation of the budget is usually left to the Treasurer and one or two selected officers.  However, it should always be discussed with the committee for modification and approval.  The budget does not need to be presented to a General Meeting, but in a small organisation you should involve the members, and keep them aware of what is happening.  They are much more likely to agree to an increase of fees or charges if they understand the financial pressures that the committee is facing.

Do not set a budget with a deficit, in the hope that something will turn up.  Always aim for the budget to at least break even, and ideally build in a contingency fund.  This caters for unexpected things that crop up during the year, or turn out to cost more than you anticipated.

Sometimes, you will find that your original budget was inaccurate, and it will then be worth preparing a revised budget forecast with a more accurate prediction of the final outcome for the year.  You can then make decisions based on a clearer idea of the total funds that are available to you.

People who are going to have to work within a budget are much more likely to be careful with the money if they understand the reasons for the decisions, and were involved in setting the figures.

Statement of accounts

Accounts prepared purely on the basis of money received or actually spent are termed Receipts and Payments Accounts.  If invoices which have been issued or received by you are also included, it is termed an Income and Expenditure Account.  Here is an example of the payments part of an account for a small sports club prepared halfway through -its financial year.  It also shows the original budget and a revised budget forecast.

Statement of payments for period 1st April - 30th September:
 

• web (html) format
• excel (xls) format

Financial year-end

Audited accounts are the final statement of accounts, after they have been checked and verified by somebody with recognised accounting skills leg, a Chartered Accountant) as being a true and accurate record of the financial affairs of your organisation.

Try to find an accountant who is a member of your club, or who is prepared to give his or her service on a voluntary basis.  Give the Auditor plenty of time to complete the work, and try to get everything into good order before passing on the books and papers.  The annual accounts are prepared from your books and financial records.  There will be two statements required, which will differ slightly depending on whether you are working on a receipts and payments or income and expenditure basis.

If you are working on a receipts and payments basis, you will need:

• statement of receipts and payments for the financial year
• statement of assets and liabilities as at the last day of the financial year.

Receipts and payments

No adjustments are made for receipts or payments which relate to previous or future periods.  It gives a summary of the actual financial transactions, and the cash balance of the organisation on a given date.  The basic lay-out of a Receipts and Payments Account is shown below.

Of course, the total figures for money received and payments made will be itemised under appropriate headings to give you the detailed information you need.
 
 

Income and expenditure

• statement of income and expenditure for the financial year
• balance sheet as at the last day of the financial year.

Of course, the total figures for income (receipts plus debtors) and expenditure (payments plus creditors) will be itemised under headings which are appropriate to you to give the detailed information you need.

Any depreciation (e.g., on office equipment) should be subtracted from the surplus before closing the Income and Expenditure Account for the year, and the net surplus or deficit figure carried over to the balance sheet.  Purchases of items that are being valued on the balance sheet as fixed assets (e.g., purchase of a new typewriter) should not appear in the Income and Expenditure Account.

Balance sheets

Have a look at this sample balance sheet.  One total is the total net assets (fixed assets plus net current assets) which equal the Capital Account (sometimes called the General Fund).  Both these totals in this example are £700.  We often talk about the two sides of the balance sheet, but they are usually written one above the other.

Sample balance sheet:

• web (html) format
• Excel (xls) format

Balancing the bank account

Bank statements should be obtained regularly (monthly is usually about right) and be checked immediately against the books to reconcile the bank account with these books.  This enables you to keep up-to-date and identify any mistakes or discrepancies.  It will be much easier to sort out any differences now, rather than several months later, and it helps you to avoid having an overdraft, which is expensive.
 

Working with the committee

Get your committee to agree that the Treasurer must be kept informed well in advance of any significant expenditure that is being planned, even if it is within the approved budget. This helps to avoid serious overspending or cash flow problems which could have been prevented had the Treasurer known in advance.

All members of the committee share a responsibility to ensure that the organisation is financially viable, even though they might prefer not to have to worry about money.  They should be informed about the financial situation and reminded at every opportunity that they have a responsibility to help look after the financial wellbeing of the organisation

Tips to remember

• You only need to know two things about money: how to manage it and how to get more of it!
• Every club or association, no matter how small, should keep proper accounts and prepare regular statements.  Every year many sports organisations have to close down because of lack of financial control, or poor financial planning.
• An organisation which is slapdash in handling and accounting for its money is likely to be sloppy in other aspects of its work.
• Money may not be the Root of all Evil, but when dealing with other people's money you can expect high levels of interest and emotion.  They will always expect their money to be handled with extreme care and sensitivity.  Not only must you look after the funds with scrupulous honesty, but you must be seen to do so.
• Sports organisations must be seen to be honest, or no one will have confidence to contribute funds to them.
• It is wrong for people to steal, but it is also wrong to treat money so casually that people feel less conscience-stricken about stealing it, and less afraid of being discovered.  Try to establish a system which prevents fraud, rather than one to discover it or compensate for it.

Do not over-estimate your ability to remember details of financial transactions - write them down!

The important thing about accounting, apart from being accurate, is to be consistent, so that you can make meaningful comparisons from month to month, and from year to year.

• Always give receipts for money received and get receipts for money paid out.
• Keys to the safe or petty cash boxes should only be held by specified people who are always responsible for them.

Keep incoming and outgoing money separate

• Pay surplus cash into the bank promptly, and use a paying-in book.
• When opening mail or collecting tins containing cash, there should be at least two people present.
• Budgeting is one of the most important financial functions for any sporting organisation, whether large or small.  Do not be tempted to try to manage without a budget, or you will be heading for financial difficulties.

The bottom line

If you have been appointed as Treasurer of your club or association, then with a little care and attention you can ensure its financial well-being.  You will get a great deal of satisfaction from playing such an important role, and you will have the respect and thanks of everybody around you.

If you feel under pressure, confused, or that you are losing control, seek help at once. Advise the Chairperson or Secretary and ask for their agreement to getting some professional advice.  Remember that you are a volunteer, not an accountant and you are making a vital contribution to the well-being of the club.  It is much better to get some paid help to sort things out immediately, than for you to lose control of the finances, which may lead to the demise of the organisation.

We hope you have enjoyed reading this and have found it helpful in your role as Treasurer.  Good luck and happy accounting.