If you are a Treasurer in a Not-for-Profit, congratulations and thank you. Not-for-profits in Australia handle over $40 billion a year, and Treasurers are largely responsible for the oversight of these funds. As such, they are crucial to a smooth audit.
Not-for-profit accounts must be audited at least once a year. Treasurers play a key role in the audit process
and also in ensuring the full Board is well informed of the organisation’s financial position and obligations. A Treasurer’s key responsibilities relating to an audit generally fall into the following categories.
Keeping financial records up to date with an audit trail for all transactions
It is essential that the treasurer understands the ‘ins and outs’ of the daily operations and the systems in place to control the finances – this is essentially what the audit is based upon. They must keep up-to-date financials with a strong audit trail and provide guidance and reviews of the internal controls of the organisation to protect against theft, fraud etc.
Reviewing internal procedures and monitoring internal controls
Treasurers put in place the financial policies and procedures needed to protect the organisation. This may include controls on expenditure such as upper limits before board approval is needed, controls on income generation, and systems for ensuring cash is kept securely.
Ensuring management knows their responsibilities and financial obligations
The Treasurer is pivotal to ensuring the board fulfils its fiduciary responsibilities and provides regular financial reports to the Board with clear explanations so that board members, some without accounting and finance experience, can be assured that proper financial oversight is in place.
Maintaining open communication with the auditor
To simplify the audit process, a treasurer can assist the auditor in many ways. This starts by creating a clear line of contact between the treasurer, who should update the auditor on any significant changes in operations, reconciling GST or PAYG, reconciling bank accounts, ensuring debtors and creditor listings are current and that any bad debts are written off, that the policy regarding asset purchases is adhered to and that asset registers are correct, that allocations within the profit and loss are correct and in line with budgets (if not explanations are reported to the board and the auditor).
Accru’s role, as the auditor, is to ensure that the financial obligations of the organisation are being abided by. To do this, the auditor collects evidence to obtain reasonable assurance as to whether the financial statements are free from material misstatement. When the evidence is collected it is important to note that the auditor is unable to test every single transaction that has occurred in the financial year as this would be far too time consuming. By testing a sample of transactions the auditor is able to provide an opinion on whether, materially, the financial statements prepared by management are free from misstatement.
The job of a not-for-profit Treasurer is not easy. As accountants and auditors to hundreds of not-for-profits, we understand this.
If you would like our assistance, please contact your local Accru adviser.