January 2014 Newsletter

This Issue

Thinking about your audit? – Get it in early.

Your Training Needs – Here’s what you said.

Paid Board Members? – It’s not unthinkable.

Our new spreadsheets are coming!!! – Better reports, less clutter.

 Get Your Audit Done Early: December and March Financial Years

Based on last year’s experience CCA’s busiest time is July to October when we are dealing with a large number of audits from organisations with March and June Financial Years as well as stragglers with December years. The later we get audit work in, the more urgent it tends to be as funding is often riding on it, and the more frustrating delays are for our clients. No matter how urgent the job is we can’t take any shortcuts with the audit testing we do.

If you are running a tidy cashbook (accounting software or a good, reconciled spreadsheet) you can start the audit process even before you have your accounts and Financial Statements finalised.

If you have a December Financial Year and need an audit, get in touch with us to get it started. If your Financial Year is ending in March (or thereabouts) now is the time to chase up those missing receipts, tidy up your asset register, and fix up those ‘to be coded’ and ‘suspense’ accounts.

NFP Accounting Training Needs

In December last year we ran a survey on not-for-profit organisations’ training needs in terms of accounting and admin to help us design this year’s training programme. Generally, people preferred daytime workshops on individual topics based largely on accountability issues (grant accounting; financial statements for audit; GST and payroll where applicable), and that is what we’ll do. There was also a lot of support for an online course, which we will have to put some thought into for 2014.

It was evident that many wrestled with accounting software. Although quite a few respondents seemed to have it sussed, problems with accounting software was the most often mentioned topic in ‘freestyle’ answers.

The problem with accounting software is that in order to use it effectively you have to have some understanding of accounting. Not-for-profits have more complex demands on what a software has to deliver compared to a business of similar size, and software help files are not written with not-for-profits in mind. Our accounting software training this year will have a generic session on how software ‘thinks’ as well as specific sessions on the main accounting programmes.

CCA will also run workshops on compliance with the new Financial Reporting Standards in association with the Canterbury Community Law Centre. Charities Services will also run something, but we want to make sure that community organisations not only understand what is required to comply, but also what choices you have, and the audit implications of some of the information that you may be required to disclose in future.

Paying Board Members?

Sometimes when working with co-ordinators and managers especially we hear a little frustration about the lack of support from the Board – support in the form of being informed enough to make decisions rather than going along with whatever the manager suggests. Our training needs survey also found that while managers strongly and almost unanimously supported the idea of specific Board training, most Board members rejected this or were only lukewarm about the idea.

Given the crucial role that a Board has in an organisation, paying the key Board members to encourage or ensure good functioning would make good economic sense, especially if work between meetings is required. But community groups generally balk at it.

There is no legal barrier to paying Board members. The Charities Act does not allow anyone involved in the running of a Charities-registered group to, for example, get a share of the organisation’s surplus, or to withdraw its assets for private purposes. It does not ban anyone from receiving reasonable remuneration for services provided.

Sometimes an organisation’s constitution or Deed specifically bans Board members from any form of remuneration, and sometimes people involved in a not-for-profit simply find it wrong to take pay from money given for charitable purposes. The last argument only holds as long as there is no-one who gets paid within the organisation, of course. Others may find it difficult to make a Board decision about the Board paying itself – a conflict of interest that can be avoided by using an AGM, members vote or similar method of external approval.

A difficulty arises where a Board member’s pay would be that person’s main or only source of income, and that person would have a key role on the Board simply by virtue of knowing the organisation so well. This creates too many opportunities for fraud and self-interest to be viable for not-for-profits.

Managers have an interest in a well-run and independent Board. For one, if a Board is very hands-off and essentially leaves everything to a paid manager, a Court may well decide that this manager must then be deemed a Board member herself, even without being elected. This is standard practice in Company Law and, in the absence of specific regulations in not-for-profit law, may be applied in this way.

Accounting 3.0 – Our New Spreadsheets on The Way

Our accounting spreadsheets are being updated at the moment, and have been making a significant leap forward again. As always, if you send us your spreadsheet at the end of the year we will upgrade you to the new one (if you want) free of charge.

What’s New:

Grant Reports!!!!!

Our new spreadsheets will be more report-based, using “macros” (think of them as apps) to create printable reports. Grant Reports will show for a specific grant how exactly it was spent, how much was received (or remaining at the beginning of the year) and how much remains to be spent. How cool is that!

Project, Budget and Income/Expenditure reports

The old Income-Expenditure Sheet has been replaced with a ‘Reports’ sheet to produce printable reports that are much easier on the eye than having everything on one sheet. Income/Expenditure reports can now be run for any date range (not just a month) and will show comparative figures for the previous date range. Preparing for those Board meetings is npw a breeze!

Financial Statements

An Income Statement and a Statement of Financial Performance can now be produced.

What Stays:

One key advantage of a spreadsheet is that you have all your transactions in an easily accessible table that can be sorted or filtered in an intuitive way. The key user functionalities of the Transactions sheet, Accounts List, GST and Assets tabs all remain pretty much unchanged.