The term ‘audited accounts’ means that the financial records of the club have been independently checked by a person with recognised accounting qualifications, as being a true and correct record of the financial operations and position of the club at that time.
The treasurer/finance manager must be familiar with the rules/constitution of their club, particularly if the club is incorporated. If the club is an incorporated association, it is usually a legal requirement to have the accounts audited prior to the AGM.
a) Do Accounts have to be Audited?
Each Club will need to check with their specific constitution and regulations, but you will find that most Clubs will need to provide Audited accounts.
It is also a good practice to undertake annual audits to ensure sound financial management.
Additional reasons for audit include:
- Board of Directors/ Management Committee responsibilities
- Directors holding a fiduciary duty
- Directors may fail to satisfy their duties and be liable to the members or a third party
- Governance obligations to take reasonable steps to monitor the management of the club
The following also needs to be noted: - Board/Management Committee must ensure the entity is not trading as insolvent
- It is the responsibility of the Board/Management Committee to maintain accounting reports, internal controls, and policies
- It is the Board/Management Committee’s responsibility to ensure the appropriateness of business plans and strategies
b) The Audit Process
The Auditor will require the following information and principal accounting records to perform their audit:
- Records containing cash receipts and cash payments information, including bank statements, cheque books, reconciliations and GST information
- A general ledger recording all assets and liabilities, income and expenditure (this would usually be in the form of a trial balance, profit and loss statement and balance sheet)
- General journals recording any one-off transactions
- Petty cash records
- Statutory records, including minutes of all meetings
- Asset register information
The Auditor will also perform the following as part of your audit:
- Tests on your accounting systems
- Review of your internal accounting controls
- Analysis of your procedures
Upon completion of the audit you will have the following information:
- Statement of Financial Performance
- Statement of Financial Position
- Statement of Cash Flows
- Notes to and forming part of the Financial Report
- Statement by Board of Management Committee
Auditors generally do not prepare statements as that is the responsibility of the entity (club), however some will prepare these and most should at least assist.
At the completion of the audit process, the Auditor should provide you with a closing report highlighting any suggested business improvements and point out risks to internal control uncovered during the audit. It is important to note that auditors will not check for fraud, unless they are hired for that purpose.
General examples of such business improvement recommendations include:
- Internal control recommendations
- Procedure and policy recommendations
- IT recommendations