BASIC BOOKKEEPING FOR NOT-FOR-PROFIT ORGANISATIONS

DISCLOSURE

Material contained in this presentation is a summary only. It contains information of a general nature and is not intended to be used as advice on specific issues. Opinions expressed are subject to change. The information contained in this presentation has been obtained from personal experience and other sources deemed to be reliable, and we have taken every care in preparing the presentation. Notwithstanding this, Tax and Legal, partners, principals, managers, affiliates, directors, author(s) or any person involved in the preparation of the presentation expressly disclaim all or any contractual, tortious or other form of liability to any person or other entity in respect of the presentation and any consequences arising from their use by any person or other entity in reliance in whole or part.

BOOKKEEPING LEGISLATION

Changes to the Tax Agent Services Act 2009From 1st March 2010, the Federal Government via the Taxation Practitioners Board and the ATO changed the legal requirements and qualifications needed to provide GST and BAS related services.

So what does this mean for you if you use a bookkeeper to prepare your accounts and lodge your BAS or GST related documents?

BOOKKEEPING LEGISLATION (CONT.)

Not a Registered Bookkeeper• You may not be covered by the Safe Harbour

Provisions of the Act and it may be illegal for them to continue to offer GST related services to you.

Registered Bookkeeper• You may have additional safeguards for late or

misleading statements made in a GST return under the Safe Harbour Provisions.

WHAT IS BOOKKEEPING?

• Bookkeeping is the language of business.• It is how a business or organisation “keeps

score.”• In terms of a formal definition, it is the art of

recording, classifying, and summarising in terms of money, transactions and events which are of financial character.

TYPES OF BOOKKEEPING SYSTEMS

• Single-entry bookkeeping system or single-entry accounting system is a method of bookkeeping relying on a one sided accounting entry to maintain financial information.

• Double-entry bookkeeping system is a set of rules for recording financial information in a financial accounting system in which every transaction or event changes at least two different nominal ledger accounts.

BOOKKEEPING PYRAMID

MAINTAIN AND COLLECT THE INFORMATION

• Keep records of daily receipts and payments• Collect details of grants and subsidies.• Maintain a payroll register for employees• Generally, records must be kept for five years

CASH VS. ACCRUAL

• Cash basis accounting is the simplest form. Income and expenses are recognised as they are received and paid.

• Accrual accounting differs in that income and expenses are recognised when they are incurred.

BANK STATEMENTS

• Compile all your bank statements.• Record all deposits and withdrawals.• Cross-match all tax invoices and receipts.• Prepare a bank reconciliation.

CASHFLOW

• Cash flow is the movement of money into or out of a business or organisation. It is usually measured during a specified, limited period of time. Measurement of cash flow can be used for calculating a company's value and situation.

• Positive Cashflow occurs when receipts are greater than payments.• Negative Cashflow occurs when payments are

greater than receipts.

INVOICING

• An invoice or bill is a commercial document issued by a seller to a buyer, indicating the products, quantities, and agreed prices for products or services the seller has provided the buyer. An invoice indicates the sale transaction only.

TRIAL BALANCE

• A 'Trial Balance' is a list of all the General ledger accounts (both revenue and capital) contained in the ledger of a business or organisation. This list will contain the name and value of the nominal ledger account. The value of the nominal ledger will hold either a debit balance value or a credit balance value. The debit balance values will be listed in the debit column of the trial balance and the credit value balance will be listed in the credit column.

BALANCE SHEET

• A Balance sheet is a picture of a business or organisation at a specific point in time.

• It has three parts: assets, liabilities and ownership equity. The main categories of assets are usually listed first, and typically in order of liquidity. Assets are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company.

• According to this statement, it is based on the accounting equation, net worth must equal assets minus liabilities.

PROFIT AND LOSS STATEMENT

• The profit and loss statement is a summary of the financial performance of a business over time (monthly, quarterly or annually is most common). It reflects the past performance of the business or organisation and is the report most often used to track how their business or organisation is performing.

• As the name indicates the profit and loss statement (also known as a statement of financial performance or an income statement) measures the profit or loss of a business or organisation over a specified period. A profit and loss statement summarises the income for a period and subtracts the expenses incurred for the same period to calculate the profit or loss for the business or organisation.

BOOKKEEPING MANUAL

• This manual should describe all the organisation's normal administrative tasks and specify who is responsible.• Documenting your procedures, is a good

opportunity to check over your processes to see adequate controls are in place.• It assists new Treasurers, bookkeepers and the

finance committee staff.

AUDIT

• Auditing is defined as a systematic and independent examination of data, statements, records, operations and performances (financial or otherwise) of an organisation for a stated purpose.

• In any auditing the auditor perceives and

recognises the propositions before him/her for examination, collects evidence, evaluates the same and on this basis formulates his/her judgment which is communicated through his/her audit report.

ACCOUNTABILITY

• Ensure all relevant guidelines, acts, regulations and the constitution are adhered to.• If your organisation received a grant from a

federal/ territory or local government body, you are held accountable for the way money is used.• Associations must lodge annual financial

summaries in the approved form with the Office of Fair Trading within1 month after the Annual General Meeting.