There are various pressures pulling on the manager to keep detailed financial records. The government and the clients expect honesty from the organisation and detailed financial records are one way to insure that the activities are above board. Also a good budget can make managing programs that much easier for the manager.
The non-profit organisation is subject to the same rules as a small business according to Taking Care of Cashews. This means that there are obligations put on the board of directors or executive. The keeping of financial records is one obligation. But more than just records the obligation covers the spirit in which the directors must act. This is like having a philosophy of behaviour that governs the money and assets of the organisation.
Keeping records allows a paper history to develope. This paper history can be useful to the present and future board or manager. The records should include items such as event expenses, prices of uniforms, memberships records, etc.. Anything monetary related to the volunteer should be written down or kept in a computer program. Of course, the level of detail will vary depending on the financial record keeping skill of the manager. Usually the organisation has a treasurer who is the main person with financial duties for the detailed records. And it has been my experience that training will be available for this person the treasurer, if needed. Also some accountants that deal with small business will donate time to help with a charitable group.
So what are the details that are included in these financial records? Well for one thing usually some structure like the months of the year are used to organise the picture or table. Dated numbers allow for planning. Thus one can depend on the grant being available in March if the accounting forms are sent in quarterly to the funding body. The payroll for any staff is likely on a monthly or weekly or biweekly basis.
Of course, accurate numbers are needed and this is a skill that not all people have, so the manager as well as reading financial newspapers must have a genuine number crunching ability. Also like writing anything else it takes a plan and persistence to keep the records up to date and accurate. Reciepts and checks and other paper money records can be collected and given to the accountant. But the manager too should have an understanding of the process. Knowing the difference between an asset and a debit and at the same time knowing who has authorised each financial transaction.
Volunteers may be given responsibility for cash and record keeping. Of course, both cash collection or expenditure and records should be made the responsibility of the same person, so that empowerment is achieved. But the same person can not authorise the spending of money. This principle is why two people must sign each check. It's why there are boards of many people. This is a form of control against fraud and it is wise to understand this principle. In general the authorisation of transactions is with the board or may in some cases be with staff or the manager.
This may make it easy to manage a program: good financial records. But actually it is very difficult to keep records up to date and accurate. With the pressure from the funding body and the membership and the volunteers it is a full time job. I breath a sigh of relief that there are such people as chartered accountants.
copyright by Peter Timusk.
