A successful treasurer ensures your association operates within its approved budget, because without money your organization’s mission may be more difficult or impossible to achieve.
This blog is intended to provide an overview of what “things” a non-accountant treasurer needs to know.
Not-for-Profit Accounting Speak
The financial statements of a not-for-profit and a for-profit organization look the same, but use different words:
|Balance Sheet||Statement of Financial Position|
|Retained Earnings||Net Assets, which may be either Restricted or Unrestricted (Restrictions Assets, if any, are detailed in the notes to the Financial Statements)|
|Income Statement||Statement of Operations|
|Net Income||Revenue Over Expenses|
For-profit organizations are owned by shareholders; not-for-profits have “members”.
Your organization’s bylaws will define who is a member.
Arrange for a detailed briefing—not a meeting for coffee—with the outgoing treasurer so that you can learn of items not in the budget (e.g. spending commitments or obligations).
Gain an understanding of where your association stands financially, e.g. get a high level gauge on how much money you have, Accounts Receivable (who owes money), and Accounts Payable (who you owe money to) Pay particular attention to the immediate cash flow needs of your organization – does the organization have enough cash on hand to meet the cash requirement for the next one-three months?
Review the budget and prior financial statements to identify trends and patterns.
Meet with the external accountant/auditor face-to-face, as s/he is more likely to provide frank observations and suggestions orally.
As Board members are personally liable for unpaid: wages (including vacation pay) payroll deductions (EI, CPP, and income tax), and sales taxes collected, it is recommended that you:
- Confirm that there are no unpaid wages and/or vacation pay due to staff, including any recently terminated employees
- Review employment agreements/contracts
- Obtain confirmation in writing from employees about commitments that they believe have been made to them
- Ensure that monthly payroll deductions, GST/HST, and/or PST filings are up-to-date and there are no outstanding arrears
Change signing officers for bank/credit union and investment accounts.
Ideally have the necessary paperwork to change bank and other financial related accounts ready for signature at the Annual General Meeting (e.g. bank account(s), investment account(s) and credit card(s))—if there are credit cards, then it is wise to limit the credit limit of each card, or better yet, cancel them.
The requirements to verify signatures/the identity of signing officers vary: some banks will accept photocopies of ID, others require you visit a branch; brokerage firms cannot accept photocopied signatures.
Review insurance coverage
Make sure that the association and its Board members are protected by Commercial General Liability (CGL) and Directors and Officers (D & O) insurance
If there is no D & O coverage, then consider resigning from the Board, because of potential personal liability; even if a claim is totally without merit, there are legal fees to pay
In upcoming articles, I will focus on topics such as GST/HST and choosing an auditor/external accountant.
If you have any questions related to financial management or have suggestions for an upcoming article, feel free to email me at firstname.lastname@example.org.
The above is provided for informational purposes only. It constitutes general information relating the role of a volunteer treasurer. It does not constitute legal, tax, accounting, or other professional advice and you should not rely on it as such.