Running a Club as a Business – Part 9

TREASURER
Well it would be nice if all clubs had a choice of volunteers for all the posts on the committee and none more so than the post of treasurer. Okay, so he gets to handle all the money, but outside of that his job is pretty boring with just the books to keep him company. Mind you, it’s just what good accountants love to do, add up columns of figures and get them to balance. (Yawn!)

Who’s hand on the money?

It is an important roll though and one that shouldn’t be underestimated. Your treasurer should firstly be a trustworthy soul, beware the treasurer that’s always first to by the lads a round of drinks at meeting nights (he could be spending the fish-stocking fund). The ideal man for the job is one who is very well organised, methodical, and above all has no criminal record, at least for embezzlement, fraud, forgery, theft etc.

He will be praised when everything goes right (even for things that have not been his doing) and he will be scourged when all goes pear-shaped. Always remember though, that the club’s finances are in his hands. If he slips up by not keeping the committee fully informed then the club has every likelihood of going under.

AUDITOR
In order to check that what the treasurer has recorded is correct, you normally appoint an auditor. This should be done at every AGM even if it’s the same person to get nominated who has done it for X years before. So what should you look for in an auditor?

You want someone who DOES know his (or her) way around a set of books and not necessarily someone who is a dear friend of the Treasurer either. So often I see clubs appoint an auditor who is absolutely clueless about accounts for it’s not just a matter of seeing two columns balance, as we’ll see. There is much more to it than that and it’s not about trying to catch the treasurer out either.

The purpose of the auditor is to ensure that everything that has been received and spent within the financial period has been accounted for. Even items that you owe someone for, but have yet to receive an invoice for must be included (these are “accruals”). Similarly, anything you have paid up-front for the next year must be accounted for in a different way (these are “pre-payments”). Once the auditor has been through the accounts and checked everything thoroughly it is HIS JOB (not the Treasurer’s) to draw up the statement of accounts and balance sheet.

NOW do you see why choosing a good man as an auditor is so important? So many times do I see clubs presenting poorly assembled balance sheets that I wonder how they get away with it. It’s not just small clubs either, large national organisations should be reprimanded for the rubbish they turn out as an excuse for the “Accounts” and all because they will not seek advice.

The job is quite complex and for this reason it will pay you to seek an outside service, a firm of accountants. Don’t be alarmed! This needn’t be as expensive as you might think, for a company – yes, for a small fishing club – no. Maybe one of the accountants would do it themselves as a part-favour for a smaller fee, say £ 200. Sounds a lot, but he will make sure that everything is as it should be and in the process he might save you some money by making certain recommendations. So consider this as an option and at least ask around!

THE BOOKS
Well, there are many different ways of recording the income and expenditure, but for most angling clubs, simplicity is the key. You might decide to keep a simple cash book with a separate column for money in the bank. Then again, a very clever treasurer with accounts/bookkeeping experience may well go for the full double-entry bookkeeping system (preferred by accountants).

Fish stocks should be bought from Capital Expenditure

The problems with double entry is that most things (as the name implies) have to be entered twice and it gets a bind. You can easily get lost and forget to make the balancing entry. Of course the auditor should pick this up since without it your books won’t balance. Nevertheless, it is a fiddle-some system, but one that can easily be overcome.

Keep the books on computer! There are many easy to understand account systems on the market now and most people (even treasurers) will have a PC of their own. The most common package that springs to mind and the one preferred by accountants and tax inspectors is Sage Instant, which costs a little short of £ 100, I think. It’s the one I use for my business, but that’s not the reason I recommend it, it’s quite simply the most respected amongst the profession.

You probably won’t use a tenth of the features within the package (particularly invoicing), but what you do use will simplify your job without doubt. If you fail to understand it then even more reason why you should consult an outside accountant as an auditor and appoint a treasurer with a bookkeeping background. The accounts are so important or as an old accountant boss of mine once warned – “Never fool around with other people’s money.” That is true!!

PRESENTATION OF THE YEAR END ACCOUNTS
Right, let’s look at a bad example (this has been taken from an amalgamation of a few club’s accounts)

I have even edited this lot down to a reasonable size as the originals were much more detailed and overcomplicated. Now I say it is a bad example, but don’t these results look good for the club and everything appears to balance. The club made a profit (look at the “Excess Income over Exp.”) of £ 2257, didn’t it? Look at our total fund as well, nearly nine thousand pounds.

The figures have been manipulated, not intentionally deceitful, but just in a careless, ignorant way. Look in the income column, there is a loan of £ 1800 from ourselves, how can that be income? There is an invoice missing for the rent for the small lake (£ 1500) which we still owe for last year. the owner has yet to send it. There’s also an unclaimed cheque that was returned to us which has been put BACK into income, we still owe the money. Also, there’s no need for all of that stuff under “Bank Accounts & Cash”.

However, there was £ 2000 spent on fish stocks and although part of the expenditure, this can be shown separately because it was allocated out of the capital reserve (ie.: previous year’s savings). I have even seen this type of expenditure lumped in with “maintenance” or “fishery costs” where it gets buried and no-one asks about it. In summary, what looks like a good profit is quite different when we see how it should be reported.

REVISED STATEMENT OF ACCOUNTS & BALANCE SHEETYEAR ENDING MARCH 2000

This is a far more consolidated statement of accounts. We have amalgamated all the subscriptions and all of the water rentals since there is nothing to be gained by showing them separate. The Treasurer can give the breakdowns in his report or if someone asks him at the AGM. We have also included an accrual for the missing fishery rental invoice that we haven’t yet received, but the sum belongs to last year’s accounts.

We have removed the “self-loan” of £ 1800 since it’s not a transaction in revenue at all. You will also notice that the £ 2000 of fish stocks has been shown separately to let anglers know that this is an investment from the Capital account. It’s always nice to show where their savings from previous years went.

The final value of the club, £ 8356, is lower because we didn’t the put returned cheque back into the books, we just re-issued it. We still show a profit, £ 397, but even this is only because we extracted the fish stocks and set them against Capital Expenditure. Had they been in general expenses we’d have shown a loss. However, it’s only when you’re making revenue losses year on year, that’s the time to worry.

Well, that’s how I like to see it. Much more simplified and meaningful, but an accountant might present it slightly differently again, it’s a matter of personal preference, but the idea is NOT to confuse the membership. The message is keep it simple and stupid so everyone can understand it. IT IS THEIR MONEY AFTER ALL!