Cricket Australia

http://www.cricket.com.au/get-involved/club-development/club-management/financial-management

Financial Management

Good financial management is essential for your club’s survival and is an important part of good governance. It involves being able to review financial information, effectively manage funds, implement sound financial practices and understand your club’s financial position and obligations.

Clubs will generally have a treasurer on their committee with some accounting experience to look after the financial management. However, every board member should have an understanding of a club’s accounts and financial reports. This knowledge will help with strategic planning, accountability and effective risk management.

Financial reporting

All clubs and associations should produce a profit and loss account (or income and expense account) showing the funds received and spent in a set period of time. Ideally clubs and associations should also produce a balance sheet, showing assets such as cash in the bank, and liabilities such as loans.

The treasurer needs to prepare basic financial reports each month to be presented at each monthly meeting. By using a cashbook, the treasurer can reconcile the club’s accounts and draw a list of creditors and debtors at the end of each month.

>>Monthly Report Template

Keeping good data

 

All reports that are prepared should have accurate and reliable information. It is important to use the correct accounting processes and procedures to make sure this is the case when developing reports.

Preparing and reviewing financial statements

Time constraints within smaller clubs and associations, or the difficulty in finding experienced bookkeeping assistance, often results in minor errors in the financial statements. When preparing or reviewing financial statements, ensure the reports are accurate in displaying the financial position of the club or association.

How often should reports be prepared?

Ideally, a club should produce monthly financial reports. If that’s impractical, quarterly or biannually should be acceptable. External users such as banks, government and suppliers will generally only require financial statements to be provided annually.

Annual Financial Management

Effective management of financial resources is often seen as the most common factor that separates clubs and associations. The member responsible for the financial management in any club is the treasurer. The treasurer is responsible for reporting on what has happened to the club‘s funds and for devising the most effective methods of using available funds.

Most sport and recreation organisations publish a statement of income and expenditure and balance sheet as the principal financial reports for presentation to and adoption by its members at the annual general meeting (AGM). These statements summarise and report the financial performance (statement of income and expenditure) and financial position or net worth (balance sheet) of the organisation.

Annual Statement of Income and Expenditure

The Annual Statement of Income and Expenditure, also known as a Profit and Loss Statement shows how much money an organisation has made or lost over the year as a result of its operations. It is a summary of the financial performance of an organisation. The statement is based on figures that the Treasurer has recorded in the cash book.

>>Profit and Loss Statement Template

Annual balance sheet

A balance sheet is a statement of what an organisation owns and what it owes, the difference being the net worth or accumulated funds of the organisation. It is a summary of the financial position of an organisation. This will list the organisation’s assets and liabilities, arranged in general categories, and show an estimated or actual value for each item. The liabilities when deducted from the total assets show the net worth of the organisation.

>>Balance Sheet Template

Annual Financial Budget

The budget is a statement of the likely sources of income and anticipated expenses for operations and capital development. The budget shows all sources of income and expenses such as administration expenses as well as program income and expenses. It is therefore essential that program sub-committees input to the budgeting process.

>>Operating Budget Template

Accounting

Every organisation needs some kind of bookkeeping system. You must be able to show how much was spent and received, what it was for and who authorised it. This should be recorded using invoices, receipts, bills, cheques and other financial records. You then need to classify your records into meaningful categories so the information can be sorted and analysed.

Cash accounting

With cash accounting, you record entries according to the date you paid someone or someone paid you. So if you invoice someone, you record the date you receive the money, rather than the date you sent the invoice. At its simplest, cash accounting uses the receipt book and bank deposit details to track income and the cheque book to track expenditure. Cash accounting is the simplest form of bookkeeping.

>>Tax Invoice Template

>>Receipt Template

Asset Register

An asset register allows you to keep track of your assets and provides a fair estimate of their worth. It meets your taxation, statutory and sale-of-business obligations. It is also an appropriate place to record serial numbers, make, model, etc.

You can start your asset register by recording all physical assets, regardless of the funding source. The types of physical assets that need to be recorded include:

  • Office equipment
  • Motor vehicles
  • Furniture
  • Computers
  • Communications systems
  • Equipment

After that, check each asset item at least once a year. As a general rule, record each asset separately. You also need to record leased assets.

Disposal of assets

 

When you dispose of an asset – sell, give away or throw away – update your asset register to include the date of disposal, the disposal amount and the method of disposal. Cease depreciation at the end of the month you disposed of the asset. When you sell an asset, record the proceeds in your financial records as well as your assets register.

Do not delete assets from your assets register until after the end of the financial year as the information needs to be incorporated into the annual statement of your financial position. At the beginning of the next financial year, record disposed of assets separately.

Asset Register Template

Commercial Partners