Financial reporting

[admin]

Knowing where the club stands financially is vital for making good decisions. That's where financial reporting comes in. It involves preparing and reviewing key financial statements.

Why Financial Reports?

• Shows Financial Health: Provides a snapshot (Balance Sheet) and summary (Profit & Loss) of the club's financial position and performance.
• Informs Decisions: Helps the committee understand income trends, spending patterns, and overall financial viability when making decisions.
• Tracks Budget Performance: Allows comparison of actual results against the budget (as discussed in the Budgeting topic).
• Meets Legal Requirements: Incorporated associations have obligations to keep proper financial records and present financial statements (especially at the AGM).

Key Financial Statements:

While reports can vary, the main ones usually include:

1. Profit and Loss (P&L) Statement: (Also called Income Statement)
   • Shows the club's income and expenses over a period of time (e.g., a month, quarter, or year).
   • Tells you if the club made a surplus (profit) or deficit (loss) during that period.
2. Balance Sheet:
   • Shows the club's financial position at a specific point in time (e.g., end of the month or financial year).
   • Lists the club's Assets (what it owns), Liabilities (what it owes), and Equity (the net worth, often representing accumulated funds). It shows the basic equation: Assets = Liabilities + Equity.
3. Cash Flow Statement (Sometimes Included):
   • Tracks the actual movement of cash in and out of the club over a period.

The Committee's Role:

• Treasurer Presents: The Treasurer typically prepares and presents financial reports at committee meetings.
• Committee Reviews: All committee members should review the reports, understand the key numbers, and ask clarifying questions. You don't need to be an accountant, but you should grasp the basics of the club's financial health.
• AGM Reporting: Verified financial statements for the previous year must be presented to members at the Annual General Meeting (AGM). The level of verification needed (e.g., review or audit) depends on the club's size – see the next post for details on these requirements.

QLD Government Resources:

• Overview Page: QLD Gov Financial Reporting
• Guide: QLD Gov Basic Understanding of Financial Statements (PDF) (Helps interpret P&L, Balance Sheets)
• Info: Office of Fair Trading Smart Business Guide (General guide for incorporated associations)

Regularly reviewing financial reports helps keep the committee informed and the club on a steady financial course.

[admin]

Following on from the basics of financial reports, it's important to know that under the Queensland Associations Incorporation Act 1981, incorporated associations have different financial reporting and auditing requirements based on their size. These rules ensure transparency and accountability.

Here's a simplified summary based on the QLD Government guidelines (always refer to the official Act or seek advice for specifics):

Club Size Categories (Generally Based on Revenue or Assets):

• Level 3 (Small Associations): Typically those with total revenue OR total assets below a certain threshold (e.g., under $100,000 - check the Act/OFT for current figures).
  • AGM Requirements: Must present their financial statements (P&L, Balance Sheet) to members at the AGM.
  • Audit/Review: Generally do not need their financial statements externally audited or reviewed unless their own constitution requires it, or members vote to have it done.
• Level 2 (Medium Associations): Those with revenue or assets between the small and large thresholds (e.g., $100,000 - $1 million - check the Act/OFT for current figures).
  • AGM Requirements: Must present financial statements at the AGM.
  • Audit/Review: Financial statements usually need to be reviewed by an independent accountant (less rigorous than a full audit) OR fully audited. The club's constitution or members may specify which.
• Level 1 (Large Associations): Those with revenue or assets above the higher threshold (e.g., over $1 million - check the Act/OFT for current figures).
  • AGM Requirements: Must present financial statements at the AGM.
  • Audit/Review: Financial statements must be audited by a qualified auditor.

Key Takeaways for Your Club:

• Know Your Level: It's crucial for your committee (especially the Treasurer) to understand which size category your club falls into based on its revenue and assets each financial year. For some of our largest clubs they may fall under the Level 2 category.
• Check Your Constitution: Your club's own constitution might impose stricter requirements (e.g., requiring an audit even if the Act doesn't for your size).
• Plan Accordingly: Knowing your requirements helps you plan for the costs and time involved in any necessary review or audit before your AGM.

QLD Government Resource:

• Detailed Guide: QLD Gov Financial Reporting Requirements (PDF) (This document provides the specific details and thresholds).

Understanding these requirements ensures your club meets its legal obligations for financial accountability.