Accounting for Parents and Citizens Associations

Accounting for Parents and Citizens’ Associations

2003 (revised – Nov 2006) Contents

Introduction...... 1 P&C responsibilities...... 2 Accountability...... 2 Who is accountable and for what?...... 2 P&C executive...... 2 Subcommittees...... 2 President...... 2 Treasurer...... 3 Principal...... 6 Accounting records...... 7 Financial year...... 7 Accounting software...... 7 Reporting...... 8 Monthly reporting...... 8 Annual reporting...... 9 Planning and budgeting...... 10 P&C and school planning...... 10 Preparing a budget...... 10 Preparing a cash flow...... 11 Dealing with budget problems...... 12 Procedures and processes...... 12 Banking...... 12 Establishing a bank account...... 12 Electronic banking...... 13 Keeping a cash book...... 13 Receiving money...... 13 Banking procedures...... 13 Credit cards/EFTPOS...... 14 Cash registers...... 15 Paying the bills...... 16 Purchasing...... 16 Paying by cheque...... 17 Electronic funds transfer (EFT)...... 18 Petty cash...... 19 Bank reconciliations...... 20 Investments...... 21 Recording investments...... 21 Trading statements...... 22 Gross profit...... 22 Net profit...... 24 Tax registration...... 24 Registration for an Australian Business Number (ABN)...... 24 Registration for Income Tax Exempt Charity (ITEC) endorsement...... 24 Deductible Gift Recipient (DGR) endorsement...... 24 Registration for Goods and Services Tax (GST)...... 25 Registration for Pay As You Go (PAYG)...... 26 Summary of requirements...... 27 Audits...... 28 Appointing an auditor...... 28 After completion of the audit...... 28 Qualified audit...... 28 Records...... 29 Other topics...... 30 Tuckshops and other businesses...... 30 Accounts...... 30 Accountable forms...... 30 Recording income...... 30 Recording expenditure...... 31 Stock control...... 32 Trading statements...... 32 Security...... 33 Outside school hours care (OSHC)...... 33 Assets...... 33 Loans...... 33 Gifts...... 34 Giving...... 34 Receiving...... 34 Textbook hire schemes...... 34 Raffle tickets...... 35 Employees...... 35 Wages...... 35 Taxation...... 35 Legislations governing P&Cs...... 36 Exemptions from the Financial Management Standard...... 36 Where to find help...... 37 Examples...... 39 Example 1: Budget and cash flow...... 39 Example 2: Cash book (list of receipts and payments)...... 41 Example 3: Bank reconciliation statement...... 43 Example 4: Statement of receipts and payments (monthly)...... 44 Example 6: Audit certificates...... 46 Example 6a: Auditor’s disclaimer...... 50 Example 7: Statement of receipts and payments (annual)...... 51 Example 8: Statement of financial position (balance sheet)...... 52 Example 9: Statement of financial performance (profit and loss)...... 53 Example 10: Cash register readings book...... 54 Example 11: Daily balancing total sheet...... 55 Example 12: Petty cash book...... 56 Example 13: Raffle ticket and takings reconciliation...... 57 Proforma 1: Daily takings sheet...... 58 Activity answers...... 63 Activity 1...... 63 Activity 2...... 63 Activity 3...... 64 Accounting for Parents and Citizens’ Associations 2003

Introduction In Accounting for Parents & Citizens’ Associations (refered to as the manual) you will find information about the financial responsibilities and operations of a school parents and citizens’ association (P&C). P&C executives, auditors and school principals will all welcome the information in this manual. P&Cs — vital and necessary partners in successful school communities — are governed by legislative requirements. By following the instructions in this accounting manual you will ensure:  proper discharge of your responsibilities  sound financial management of your P&C  that your P&C operates in accordance with legislative requirements. Use the reference material as a base on which to establish the financial processes of your P&C. This book is an essential financial and management tool because it is the official financial management practice manual for P&Cs and has been approved by the Minister for Education. Many of the practices it outlines are mandatory. Whenever you see the word must this indicates that this activity is compulsory; should indicates only that an activity is recommended. The manual is divided into four main sections:  P&C responsibilities  procedures and processes  other topics  examples and proforma.

Accounting for Parents and Citizens’ Associations 2003

P&C responsibilities This section gives an overview of financial responsibilities and the reporting and accounting requirements for a P&C. Accountability Proper accounting procedures, like those given here, have two purposes.  They prevent loss and fraud. You might trust everyone in your school community, but accounting procedures remove temptation and the procedures will tell you if the wrong thing is happening and where.  They protect the P&C executive. Good accounting of P&C funds removes any basis for accusations of financial impropriety against your executive members. Who is accountable and for what?

P&C executive All executive members of the P&C are responsible for ensuring that the P&C and its subcommittees follow appropriate financial management procedures.

Subcommittees P&C subcommittees are bound by the same accounting requirements as the main P&C and must be directed by the P&C, as set down in the constitution.

President To ensure that the P&C is accountable, the president must check that the executive and the subcommittee executives are carrying out the processes and procedures listed here. The actual financial reports are the responsibility of the treasurer; the president is responsible for making sure the reporting is complete and countersigned. The president’s responsibilities are listed below.

At all times

 Ensure controls for handling cash are used properly.  Ensure records are kept up to date. (See also Records)  Keep accountable forms secure, especially chequebooks.  Be alert for conflicts of interest between members of the executive and P&C activities.  Monitor that payments are approved for appropriate purposes.  Ensure all accounting is open and that the atmosphere at meetings welcomes questioning of the accounts.  Ensure that P&C members are aware of the financial requirements of this manual.

Monthly meetings

 Ensure the treasurer presents a complete set of financial documents (including original bank statements).

Accounting for Parents and Citizens’ Associations 2003  Ensure financial documents are presented for each subcommittee account.  Ensure all payments are approved.  Ensure the budget is reviewed and reasons for variances identified.  Countersign all the treasurer’s financial reports.

Annual meetings

 Ensure annual financial statements are completed.  Ensure consolidated financial statements are produced by combining the financial statements for all P&C accounts (if multiple accounts exist).  Ensure a copy of the approved audited annual financial statements are sent to District Office.  Review the need for subcommittees.  If a subcommittee’s continued existence is reconfirmed, appoint office bearers (who must be current members of the P&C) and review the account limits set on the subcommittee’s operation.  Review GST status.

Treasurer While everyone should be interested in complying with financial accountability requirements, this is the treasurer’s primary role. The treasurer also gives advice and sets an example for others so that all funds being held and handled by the P&C are openly accounted for. The treasurer should encourage all members of the school community to understand the state of the P&C finances and ask questions about what they do not understand. P&C finances must be open and compliant — and they must be perceived as such by the school community. The treasurer’s role is outlined below.

At all times

Cheques  Ensure all cheques are marked Not negotiable – account payee only and the words or bearer are crossed out when you receive a chequebook from your bank.  Ensure all cheques are signed by two approved signatories.  Ensure all cheques are made out to a person and not to cash.  Never sign blank cheques, even for people you trust.  Ensure cheques are not signed by an employee or the principal, nor must cheques be signed by two members of the same family.

Payments  Make all payments by cheque or EFT, except for small payments from petty cash.  Support all payments with invoices, receipts and dockets.  Ensure that Goods received and Paid stamps or markings appear on all paid invoices.

Accounting for Parents and Citizens’ Associations 2003  When using photocopies of invoices as support for payments, ensure they are stamped or marked Not previously paid.  Take advantage of discounts.  Operate petty cash on an imprest system. Receipts  Issue receipts in sequential date order as per takings, for the total of funds collected.  Ensure two independent people are responsible for collecting and counting money.  Issue receipts to people responsible for collecting and counting money. Banking  Check banking corresponds to receipt totals.  Bank or securely store all money daily. Cash books  Keep cash books up to date.  Match the sequence of entries in the cash book with the sequence of receipts and payments.  Do not use white-out in the order book, cash book, receipt books or chequebook butts. Management  Regularly transfer surplus subcommittee funds to the main account.  Keep an account of all receipt books, order books and chequebooks in a register of accountable forms.  Keep a register of equipment held by the P&C.  Control plant and equipment to prevent theft and loss.  File and hold all P&C records for appropriate periods (See Retention periods) Employees  Ensure your employees are receiving the correct wages, leave entitlements and pay slips.  Keep your insurance and workcover payments up to date.  Have an accessible copy of all industrial awards relevant to your employees.  Keep your tax and superannuation payments up to date.

Getting started

 Ensure you know what subcommittees exist and which ones operate a separate account.  Advise the ATO who, within your P&C, are Authorised Officers that can deal with the ATO. Use form NAT 2943 Application to Register for the New Tax System Change of Registration Details and forward it to: LMG Team A T O PO Box 9100 CHERMSIDE Qld 4032  Reduce the number of subcommittee accounts to the minimum.  Ensure that all accounts are using order books for purchases, official receipt books to collect money and chequebooks to make all payments (excluding petty cash payments).  Ensure that a register of accountable forms exists.  Ensure that all accounts are current and balanced, especially if the financial year has already begun.

Monthly responsibilities

 Present the following complete and up-to-date financial documents for each account to the P&C monthly meeting:  cash book  statement of receipts and payments  bank reconciliation (with supporting bank statements)  trading statements, if a subcommittee has stock or inventory (recommended monthly, but acceptable if only done each term).  Sign off all financial reports.  Have another executive member check the bank reconciliation before each meeting.  Ensure all subcommittees present a financial report to each P&C monthly meeting and:  view the bank statement when checking the bank reconciliation  check the bank reconciliation against the cash book and initial both documents.  Monitor receipts and payments against budget.  File all financial reports, bank reconciliations, payment vouchers and any other documentation that may be required by audit to verify the financial position of the P&C.

Yearly responsibilities

 Stocktake plant and equipment.  Generate annual financial statements.  If multiple accounts are held, combine annual financial statements from the P&C and subcommittees into consolidated annual financial statements.

Accounting for Parents and Citizens’ Associations 2003  Have annual financial statements certified by executive members of the P&C.  Arrange audit of annual financial statements. Recommend an auditor with appropriate qualifications and experience for appointment at the annual general meeting for the following year.  Send copies of the audited financial statements to your district Executive Director (Schools) at your district office. Your principal can provide contact details.  On receipt of a qualified audit report, you must include a response addressing the reasons for the qualification when logging the audited financial statements with your District Office.  Prepare a budget for next year. Set up a committee for that purpose and work with the members.

Principal The principal of a school is an ex officio member of the P&C and must act as the Minister’s representative on this statutory body. When principal and P&C work together to achieve the same goals:  the school community acts as one in the interests of the students  P&C planning and budgeting complements the efforts of the school staff to enhance the education in the school. Although principals are forbidden to hold office or to be a signatory for the P&C, you should advise volunteers who do hold office on how to carry out their roles successfully. The continuity of the principal’s role in the P&C helps bridge the gap that occurs when executive members of the P&C may change each year. Experienced principals can also help executive members with limited skills and experience in the interpretation and application of financial accountability.

At all times

 Ensure controls are in place and operating for cash collection.  Know the requirements of this manual.  Monitor compliance.  Act on any non-compliance you detect. Should a Principal of a school have any reason to suspect misappropriation of P&C funds, or fraudulent activity by any member of the P&C, the Principal is to report this immediately in writing to the Regional Executive Director. The Regional Executive Director will seek approval from the Director of Internal Audit for an Internal Auditor to engage in a fact finding activity with a view to determining whether or not to refer the to the Queensland Police Service.

Monthly meetings

 Ensure that the P&C executive presents financial documents for every account held (including subcommittee accounts), including:  cash book  statement of receipts and payments  bank reconciliation (with supporting bank statements)  trading statements, if a subcommittee has stock or inventory (recommended monthly, but acceptable if only done each term)

Accounting for Parents and Citizens’ Associations 2003  Ensure that the P&C financial reports are validated by the P&C executive (signed off by the treasurer and countersigned by the president or other executive member).  Report on the current financial status of the school.

Annual meetings

 Ensure the P&C executive tables the annual financial reports in correct format for each bank account held, including combined reports where multiple accounts are held.  Ensure a copy of the audited financial statements have been sent to district office.

Accounting records

Financial year All P&Cs should adopt the calendar year as their financial year. This better aligns school and P&C planning and budgeting and helps consistent parliamentary reporting of financial details.

Accounting software P&Cs have historically used cash accounting and recorded their receipts and payments in manual cash books. P&Cs may take advantage of a free spreadsheet application (with user manual) that is available from your community participation officer. This manual uses the free spreadsheet application to show examples of the various processes and reporting required. However, handwritten cash books are still acceptable. It is increasingly common for P&Cs to use commercially available accounting software. These packages may operate on cash accounting or accrual accounting depending on how transactions are processed. If your P&C decides to use accounting software (such as MYOB or Quicken™) the format of reports generated will be acceptable for reporting purposes. If your P&C has registered for GST, you should use a commercial accounting package (see also GST registration). The decision to use the free spreadsheet or an accounting software package is a decision for the executive of each P&C. If you do decide to use accounting software, consider the following points:  the size and complexity of your P&Cs operations  level of knowledge and expertise of executive members, especially the treasurer  the likely expertise of future holders of executive positions  access to computers with adequate hardware  availability of suitable training  security  ease of regular backup of computer files.

Accounting for Parents and Citizens’ Associations 2003 Reporting Monthly and annual reporting are accountability processes. They provide a means for assuring the necessary checks and balances are in place and ensuring your P&C is in a sound financial position.

Monthly reporting

Reporting periods Set the accounting periods as whole calendar months. At each monthly meeting of the P&C, present the financial reports for the previous calendar month. A calendar month must be used because this links in with the Business Activity Statement (BAS) or Instalment Activity Statement (IAS) reporting requirements of the Australian Taxation Office (ATO). The ATO requires quarterly reporting (for example, to cover January, February and March) so accounting periods ending at the end of each month work well.

What to report Monthly reports must include the following:  a list of the receipts and payments for the previous reporting period  a bank reconciliation as at the end of the reporting period  a trading statement showing year-to-date figures for any and every trading activity (preferably monthly but mandatory every three months)  monitoring of budget position. Other than routine stock purchases, payments for the future period should also be tabled and approved by the meeting before the event. These reports must be provided for all accounts held by the P&C and its subcommittees.

How to report If you are using an accounting package, select the appropriate reports to present the required information to the meeting. If you are using the free spreadsheet application, the required documents are provided in the Monthly statements section of the menu:  Cash book (Example 2)  Bank reconciliation statement (Example 3)  Statement of receipts and payments (monthly) (Example 4)  Trading statement — Tuckshop (Example 5) You can monitor your budget monitoring by comparing budget figures to the totals on the statement of receipts and payments.

Avoid over-reporting The purpose of reporting is to keep the school community informed of financial matters. Certain reports are mandated, but do not over-report or present large amounts of irrelevant data because too much information gets in the way of informing the school community. The meeting provides an opportunity for community members to ask questions about the finances of the P&C. This is the best way to achieve true accountability.

Accounting for Parents and Citizens’ Associations 2003 Annual reporting After preparing the reporting documents for the last month of the financial year, you must compile a set of annual financial statements and submit them to the appointed auditor. The audited accounts can then be presented at the P&C annual general meeting. Following acceptance at that meeting, a copy of the set of audited documents must be sent to the district office within one month of the meeting date.

What to report The set of annual financial statements will depend on whether you use the free spreadsheet or a commercial accounting package. Free spreadsheet If you are using the free spreadsheet or hand written cash book, the required documents are provided in the Annual statements section of the menu:  bank reconciliation statement as at the end of the last month of the year (Example 3)  trading statement — tuckshop as at the end of the last month of the year (Example 5)  statement of receipts and payments (annual) (Example 7)  statement of financial position — balance sheet (Example 8)  statement of financial performance — profit and loss (Example 9)  certificates (Example 6) Commercial accounting package If you are using an accounting package, select the appropriate financial reports. These are:  bank reconciliation (the bank reconciliation for the last month should have the year to date figures)  trading statements for any and every trading activity (trading statements for the last month should have the year to date figures)  statement of financial performance (profit and loss)  statement of financial position (balance sheet) You will have to add the certificates identified in Example 6 to the financial reports produced by the accounting package.

Consolidated reporting You must provide a set of financial statements, as detailed above, for every bank account held by the P&C and its subcommittees. If more than one bank account exists, a set of consolidated statements (in addition to the set of financial statements for each account) must also be generated and form part of the annual financial statements. These consolidated statements are:  consolidated statement of receipts and payments (not necessary if using an accounting package)  consolidated statement of financial performance  consolidated statement of financial position.

Auditor’s needs The auditor also needs to see the following information:  bank statements for all accounts  all payment vouchers

Accounting for Parents and Citizens’ Associations 2003  all receipt books  cash book  stocktake records and any other documents that provide supporting information for financial transactions, for example, committee minutes authorising expenditure. For more information on the auditor’s role, see Audits.

Planning and budgeting

P&C and school planning Budget development is an essential component of goal and direction setting for the school. The P&C and the school must develop plans together to get the best possible outcome for students. This requires the parties to identify activities that are expected to occur during the next year and also take into account activities planned for future years. P&Cs should develop simple processes to estimate the timing and value of cash receipts and cash payments to avoid cash shortages. The P&C contribution to the school’s budget should also be monitored through the principal’s reports on the schools finances that are presented to the P&C monthly meetings.

Preparing a budget

A budget:  must be prepared for each year  must be approved at the AGM at the beginning of the financial year  is only as good as the work done preparing and monitoring it. Consultation and realism are the keys to a successful budget. Budgeting may seem difficult and pointless at first, because you have to make a lot of assumptions about what might happen. The benefits will become clearer throughout the year. A budget is a plan of expected receipts and payments. Your budget should:  anticipate your income and expenditure for a financial period  predict the expected cash flow  identify potential cash shortfalls. Remember that budgeting is a continual exercise of planning, monitoring and reviewing.

A sample budget is shown in Example 1.

Budget committee

The P&C may form a finance/budget committee to facilitate consultations for the treasurer and help the treasurer prepare the budget. This committee will be required to complete the following tasks.  Identify new revenue and expenditure programs, cost them and set priorities.  Anticipate receipts for the coming year by looking at the previous year’s receipts and consulting with subcommittees.

Accounting for Parents and Citizens’ Associations 2003  List known and/or recurring payments for the coming year.  Identify any additional receipts and payments.  Identify anticipated surplus or deficit.  If there is a surplus, prioritise remaining expenditure and savings programs not yet included in the budget.  If there is a deficit, review expenditure and revenue programs. A deficit budget may be acceptable as a one-off if funds have been accumulated in the past. For example, funds generated in previous years for a swimming pool may be brought forward and expenditure for the current year will exceed revenue for the current year.  Amalgamate all the plans for subcommittees into the one budget.

Test the budget Ask a wide range of questions to test whether the budget is realistic. For example:  Will sales be as high as last year, given that enrolments are expected to decrease?  Will competition from a newly opened shop affect sales?  Are wage increases expected?  Will increased prices affect the level of sales?  Will parents be as responsive to fundraising initiatives as last year?

Activity 1 - budgeting

Identify three reasons for budgeting. Who should be involved in a creating a budget? Answers are given at the end of the manual.

Preparing a cash flow

Cash flow statements Once the overall budget has been decided, it is helpful to break the budget up month by month. This is called a cash flow statement. A budget cash flow is shown in Example 1. How to prepare a cash flow statement Prepare a cash flow statement by estimating in which months the receipts and payments are likely to occur. For example, if a chocolate drive is to be held in September, profits from the drive could be expected to start flowing into the account in October. To make these estimates for ongoing activities, look at the actual cash flow for the previous year. For example, if the tuckshop had made a profit of $2000 by last June, it could be expected that a similar profit would be made by this time for this budget year if the situation is unchanged. Be realistic and remember that you are only estimating. While you may try to get as close as possible to the eventual outcomes, you can never accurately predict what will happen. You are not expected to be clairvoyant. The best you can do is gather all possible information, consult widely and get the best advice available. How to monitor receipts and payments Actual receipts and payments for all accounts should be compared with the budgeted cash flow statements at each monthly P&C meeting.

Accounting for Parents and Citizens’ Associations 2003 The monitoring process allows you to identify if receipts are below anticipated year-to-date receipts or if circumstances have changed, expenditure may have to be adjusted. For example, enrolments may be lower than anticipated. Therefore, profits from the tuckshop and the chocolate drive will be lower.

Dealing with budget problems The treasurer should develop a course of action to overcome any financial problems that may occur because budget expectations may not be met. Action can be taken to get the budget back on track, or the original budget can be revised to take into account the changed circumstances. You need to warn the P&C if expenditure is greater than expected or revenue is less than anticipated. If necessary, the cumulative totals can be easily graphed with appropriate spreadsheet software to give a graphical overview of the current position and to track trends.

Procedures and processes These procedures and processes must be followed in the handling of P&C finances. Some or all of these procedures and processes may apply depending on what activity is involved and the circumstances surrounding the activity. Banking

Establishing a bank account The P&C must establish an account – (School Name) Parents’ and Citizens’ Association — with an approved financial institution, such as a bank, building society or credit union. For a list of institutions, go to http://www.apra.gov.au/ADI/ADIList.cfm. Under the terms of the Queensland Government School Banking Product Agreement with the Commonwealth Bank of Australia (CBA), P&Cs are entitled to use the CBA and receive interest on the credit balance held in a society cheque account calculated using the Reserve Bank of Australia’s (RBA’s) Target Cash Rate less a 2% margin. All P&C accounts held with banks, including subcommittee accounts, are exempt from account debit tax. You can claim this exemption by submitting the form DT2 Application for exemption from payment of debits tax that is available from banks or the Office of State Revenue. However, accounts with credit unions and building societies are not exempt from the bank account debits tax. Wherever possible, use a cheque account facility for non-profit clubs and associations to minimise bank charges. Following approval at a monthly meeting, the president should sign the bank form requesting establishment of any accounts opened in the name of the P&C or its subcommittees.

Subcommittee bank accounts Keep the number of accounts to a minimum. This can be achieved by using separate columns for each activity in the main P&C cash book. It is also recommended that the Outside School Hours Care (OSHC) subcommittee have a separate bank account. Due to the special requirements of childcare providers and the commonwealth funding procedures, the Department of Family and Community Services (FaCS) can provide a list of software providers. See also Outside Hours School Care in Tuckshops and other businesses

Accounting for Parents and Citizens’ Associations 2003 Electronic Banking Use electronic banking only if the financial institution’s software provides necessary functionality and security. The CBA currently offers Quickline software which is operated through a modem (and telephone line from a dedicated computer) which meets these requirements. Alternatively Internet banking will allow access by all authorised officers through their home computer. (See EFT – Mandatory Requirements pg18 for details) Keeping a cash book The treasurer of the P&C and the treasurer of each subcommittee are the people authorised to operate a bank account. For each bank account the authorised person must keep a cash book. This cash book must clearly show the source and date of receipts and purpose of payments. A sample of a cash book is shown in Example 2.

How to keep a cash book

 Enter receipts and payments promptly.  Keep separate books or sections for receipts and payments.  If the cash book is not electronic, make all entries in ink.  Do not make corrections in the cash book by using white-out or overwriting entries. Make corrections by ruling through incorrect entries and initialling the new entries.  For GST-registered P&Cs, insert a column to recognise the GST component of the transaction. Receiving money Record all money received by your P&C so that the records identify from whom the money was received, the date and the nature of income. This is achieved through processes such as the use of daily takings sheet (see Proforma 1), official receipts and the use of bulk receipts for items such as raffles and chocolate drives, All collections must be banked in full as soon as possible.

Banking procedures

 Two independent people must be responsible for collecting and counting all money and they must sign the supporting documentation, for example the daily takings sheet.  People responsible for receipting and counting money should not also be responsible for banking. For example, if the tuckshop convenor is responsible for banking duties, tuck shop receipts must also be counted by two independent people who also sign the daily takings sheet.  All banking should be done promptly, cash in particular should be banked on the day of collection or the next working day.  Use bank deposit books for each bank account.  Use night safes to bank large amounts after hours.  Consider and comply with any conditions of insurance over money in transit to the bank. When taking money to the bank, do not advertise the fact that you are carrying a large amount of money.

Accounting for Parents and Citizens’ Associations 2003  The treasurer must ensure records are sufficiently detailed to allow the identification of sources of income and timing of banking. This is necessary because bank statements show only the total of money banked.

Credit cards/EFTPOS The P&C may offer parents the convenience of paying by credit card and/or EFTPOS. However, these facilities attract a charge. As a guide, the CBA charges P&Cs 2 per cent on credit card purchases and 0.05 per cent on EFTPOS purchases (these charges are subject to change). Approach the P&Cs bank and follow their procedures. Receipts from credit or debit cards should be treated the same as cash when recording entries in the cash book. Bank charges from credit or debit cards will be charged to the P&Cs account and should be entered in the cash book when the monthly statement is received.

Activity 2 - receipting

The following scenarios illustrate how your P&C may receive money. For each example, identify the best way to account for these funds. Answers are given at the end of the manual.

Scenario 1 On 1 April 2002, the Sample SS hands you a cheque for $55.00. This is for catering for the School Council meeting. The Sample SS provides you with a cheque, number 123.

Scenario 2 On the same day, 1 April 2002, your preschool students and the teacher aide hand in $230.50 in cash which is money taken in the P&C chocolate drive. Mrs Happy Helper, the preschool aide, has recorded details of what each student handed to her.

Scenario 3 Mrs Soap pays for her children’s uniforms and book packs for last year. She pays $520 by credit card.

Scenario 4 Tuesday is homemade pie day and the tuckshop has had a busy day. Jane Arnold and Sue Beattie, who are in charge of counting the money, agree that total sales of $3 687.00 were made on this day, 23 May 2002. Sue Beattie banked these takings on her way home. Their daily float is $50. What is the best way to account for tuckshop takings and record the entry?

Cash registers Your P&C will benefit from using a cash register if:  you process a substantial number of cash transactions  your P&C or a subcommittee is involved in five-day trading. Registers also help you prepare money for banking because they provide exact banking totals.

Standard procedures

If a cash register is used in the activities of the P&C the following standard procedures must be followed.  The cash register shall have adequate accumulating capacity that should not exceed the keyboard display. For example, if the keyboard capacity displays eight digits then the accumulating capacity will need to be at least nine digits.  The cash register should print on a receipt the amount received, a progressive receipt number and the date of receipt. The method of payment should be shown, for example, cash or cheque. If this is not possible, the operator should insert the particulars. The receipt should identify the operator, the cash register (if more than one) and a description of the item.  Imprinting of the journal roll is mandatory. All particulars of receipting, resetting or displaying totals should be indicated on the journal roll.  The capacity of the printer should be at least the accumulating capacity of the cash register.  The cash register should be inoperable whenever a receipt roll is not properly inserted in the cash register.  The cash register must feature an audit total into which every amount for which a receipt is issued by that register should be accumulated continuously.  The audit total must be of a non-resettable type, or must be resettable only by a special key that is held by an authorised officer of the association.  Where the audit total is resettable, a non-resettable progressive count of the number of times that the audit total has been reset should be maintained. The authorised officer should read the audit total and audit total reset indicator at the end of the financial year or the performance of a service. These totals should be promptly entered and certified in a cash register readings book.  The register should be capable of accumulating separate totals for each mode of payment: cash, cheques and other methods.

Managing the cash register

Cash registers can enhance control but only where access to the register is restricted.  The cash register should feature keylocks or other devices to be placed under effective supervisor control for date setting, access to the journal roll, and reading and resetting routine for totals.  Most cash registers have six keys. Four are for operators, one is for a submanager and the last one is for the manager. The manager should not be an operator.

Accounting for Parents and Citizens’ Associations 2003  The manager should have control over the monthly balancing total. The submanager should have control over the daily balancing total.  The manager should retain custody at all times of all keys not in use. Any officer wishing to use the cash register should obtain their key from the manager. The cash register drawer lock should only be placed in the register while an operator is present. The manager should be responsible for the removal of the journal roll and its safe custody.  Differences between the total daily balancing total docket and money collected are the responsibility of the cash register operators. Your committee should develop guidelines on this responsibility.  Keep a cash register readings book.

Managers daily balance

 Check the readings indicated by the cash register against the entries in the cash register readings book (see Example 10).  Verify the correctness of every adjustment made to the journal roll or to an entry in the cash register readings book.  Verify all cancellations and ensure that the receipts are retained and securely filed.  Verify the money on hand at the end of each day.  Make sure that the submanager prepares the daily balancing total sheet (see Example 11) and the daily balancing total cash register roll is attached to these sheets and stored securely in date order.  Issue a receipt for the total of the daily balancing total sheet and make sure the original of the receipt is securely stored.  Record the money received as categorised in the daily balancing total sheet in the cash book. Every month, perform a monthly balancing total. Check each daily balancing entry on the monthly balancing cash register roll against the cash book and bank statement. Then initial the cash register readings book. Paying the bills Your P&Cs constitution details the required approval process for expenditure. Where possible, purchase equipment and materials (especially large value items) by giving the funds to the school and having the purchases incorporated into the school budget. This recommendation is particularly relevant if your P&C is not registered for GST and is therefore not able to claim the input tax credits available with these purchases.

Purchasing This section outlines how to make best use of the P&Cs purchasing capabilities and the procedures that need to be followed. Use an official order book to authorise all purchases. An official order from the P&C or one of its subcommittees, prevents disputes about pricing, quantity and items ordered. This is particularly important with perishable items. The use of purchase orders allows you to monitor approved purchases and identify unacceptable practices, such as someone mixing private and official orders together. An example of unacceptable practice is someone ordering 10 loaves for the tuckshop at a discount rate and getting another couple for private use at the tuckshop rate.

Accounting for Parents and Citizens’ Associations 2003 Each purchase order should clearly state:  date of order  supplier  exact number and nature of items ordered  who is placing the order. Pre-number all order books and pre-stamp with the following: ------Name of School Parents and Citizens’ Association Fund

Committee (as appropriate) ------

Purchasing Policies and Procedures are available on Education Queensland’s website at: http://education .qld.gov.au/corporate/pandc/ P&C accounts are not permitted to use credit cards to make payments. If the purchase is for a very small amount, use petty cash (see Petty cash).

Paying by cheque

Who can sign cheques? At the AGM or at a general meeting, the P&C should authorise the president, vice-president, secretary, treasurer and other officers to sign cheques, with any two to sign each cheque. Signatories to bank accounts will have to complete documentation at the bank and provide the bank with identification. The P&C should advise the bank in writing when signatories to bank accounts change or are cancelled.

Who cannot sign cheques? The principal cannot be a signatory to any P&C account because the principal is not allowed to be an office holder of the P&C. Paid employees of the P&C such as the tuckshop convenor or outside school hours care director should not be officers of the P&C and therefore cannot be signatories to any accounts. This avoids any chance of conflict of interest or of officers having to make payments to themselves.

Managing chequebooks Keep a register of all chequebooks and the names of people holding the books. All people holding chequebooks should keep them in a secure place. If a chequebook is missing, lost or stolen, have a stop payment put on those cheques. You can do this by a telephone call to most banks. Never sign a blank cheque. Order Not negotiable worded chequebooks, if possible. If this type is not available, mark/stamp Not negotiable – account payee only on every cheque when you receive the book. Cross out the words or bearer. An officer other than the treasurer should certify and date the inside cover of the chequebook when all cheques have been properly marked or stamped.

Accounting for Parents and Citizens’ Associations 2003 Completing cheques Mark cheque butts with the date, payee, reason and amount for which the payment is made. All expenditure must have supporting documentation validating the transactions, for example, payment vouchers, invoices or committee minutes. You must file this supporting documentation in cheque number sequence. Invoices received from suppliers should quote your order number so that you can cross-refer to check accuracy. If a cash cheque needs to be drawn for petty cash or a cash float, mark it, please pay cash, at the top. Make the cheque out to the person to whom the cheque is given, who should then provide a receipt to support the payment. Cancelled cheques, along with their butts, should be crossed with the word Cancelled, filed with invoices in cheque-number sequence and recorded in the cash book as cancelled. The auditor may request cheques that have been presented to and paid by the bank. These can be obtained from the bank by prior arrangement and will incur a bank charge. Attach these cheques to the relevant invoice.

Electronic funds transfer (EFT) MANDATORY REQUIREMENT 1. All EFT transactions are to be authorised by any two Account Signatories by entering: a. either a user name and password OR b. a user name and the randomly generated pin if using a security token (highly recommended if the financial institution offers this level of security). 2. Confirmation email (if applicable) from the financial institution which is normally generated following the entry of any new supplier accounts, must be filed for audit purposes. 3. A record (printed copy) of any supplier accounts deleted/edited and must be filed for audit purposes. 4. The two account signatories are to sight, check and approve all documentation BEFORE any EFT transfer is authorised. 5. A receipt/record of all transfers for each payment must be printed and attached to the relevant document (invoice) and filed for audit purposes. 6. The use of Internet Banking requires a change in the P&C Constitution – please consult with your Community Participation Officer (Education Queensland regional office) for advice.

How to choose a password It is recommended that P&Cs deal with financial institutions that provide security tokens as a level of security. If a password is required it is important to choose your password with care to ensure maximum security. The following hints may help you with ensuring password security: 1. Your password can contain alphabetic characters (A-Z) and numeric characters (0-9). 2. Your password must not contain:  a recognisable part of your name;  your date of birth;  the name of your spouse, pet, favourite footy team etc.  anything that can be reasonably linked to you.  If it does, you may be liable for any loss arising out of unauthorised transactions. 3. For added protection, you should change your password regularly. 4. You should not use a password that you may be using as a PIN for your ATM, EFTPOS transactions. 5. Do not keep your password in your wallet or anywhere that can be accessed by anyone other than yourself;

Your password is confidential and must NOT be passed onto anyone else.

HOAX EMAILS Hoax emails are regularly in circulation. They direct you to a fake website to capture your confidential banking information. Although these emails may appear genuine, they are fraudulent and should be deleted immediately. Financial Institutions do not send emails requesting you to confirm, update or disclose your confidential banking information. To verify that you are on a secure authentic site you need to check the SSL protocol.

What is SSL? The SSL protocol, originally developed by Netscape, has become the universal standard on the Web for authenticating Web sites to Internet Explorer users, and for encrypting (scrambling) communications between Internet Explorer users and servers.

Installed on a Web server, a Server ID is a digital credential that enables visitors using the Internet Explorer to verify the site's authenticity and to communicate with it securely via SSL encryption

These symbols MUST be showing – this verifies that the site is authentic:

Petty cash You should use petty cash only for small payments, such as those less than $10. You will find this payment method more efficient than writing many cheques for small amounts. To use petty cash imprest system follow these steps: 1. If the P&C approves a $50 advance to its secretary for petty cash, make a cheque out to the secretary with, please pay cash, written on the top. 2. Make an entry in the cash book with petty cash written after the secretary’s name. 3. As the secretary spends money from the petty cash, they keep a petty cash book record. (A petty cash book can be purchased from a newsagent or stationery store.) 4. Receipts are pasted in the petty cash book for every item purchased with the cash. The secretary should sign the back of each receipt and give some detail of the item purchased. 5. When the secretary has spent nearly all of the $50, they should request a recoupment of petty cash from the treasurer.

Recoupment

 Total the individual payments since the last recoupment.  Count cash on hand — the amount the secretary has left.  Add the two amounts. They should equal $50.  Categorise the total amount to be reimbursed into the appropriate types of expenditure.  Make out another cheque to the secretary for the total of the payments to be reimbursed.  The secretary should then mark the petty cash book as shown in the sample petty cash book (Example 12).

Activity 3 – Petty cash

The secretary of Small Items State School P&C needs petty cash. She is given cheque number 345 for $50 on 21 June 2002. A month later, she comes back with the details of her purchases and asks for reimbursement of the expended amount. Her details on petty cash transactions are listed below. In the blank petty cash book form, enter the details of the petty cash transactions and complete the recoupment of petty cash. Answers are given at the end of the manual. ream of copying paper $6.45 21/6/02 box of 12 ballpoints $9.99 21/6/02 5 x 45c stamps $2.25 2/7/02 jar of instant coffee $6.99 3/7/02 500 g sugar $1.90 4/7/02 20 x 45c stamps $9.00 18/7/02

Bank reconciliations A bank reconciliation is the key accountability process to be completed each month. It will confirm for you that your bank account is consistent with your cash book. Follow this checklist to complete a bank reconciliation.

Complete a bank reconciliation

 The treasurer arranges for the bank to issue a bank statement as at the end of each month.  When the bank statement is received, record any interest or bank charges in the cash book before the cash book is balanced.  All P&C accounts should be exempt from federal debit tax. If federal debit tax has been charged, contact the bank and/or resubmit an exemption form.  Check that the deposit and withdrawal/cheque entries on the bank statement match those recorded in the P&Cs records and explain any differences. Complete a bank reconciliation statement (see Example 3).

Accounting for Parents and Citizens’ Associations 2003  Before the monthly meeting, get another executive member to check and certify the bank reconciliation. They should also sign the bank statement and cash book when they are performing this check.  Attach the bank reconciliation to the bank statement, give copies to the secretary and include all the paperwork in the monthly reports.

Investments Excess P&C funds that are not required in the immediate future can be invested in any bank or approved financial institution. See Establishing a bank account. You can put surplus cash only in investments such as term deposits, passbook accounts and the like. Any deposit in an investment fund should be authorised by a meeting of the P&C. Before making a recommendation to a meeting, the treasurer should compare interest rates offered by the approved financial institutions. The signatories for the investment account should be the same as for the main P&C cheque account. Withdrawals from investment accounts should be immediately deposited back into the main P&C cheque account. Withdrawals must also be authorised by a P&C meeting.

Recording investments

Entering investments

 Draw up a voucher for the investment.  Write a cheque payable to the financial institution with which the investment is to be made.  Add an investment column to the payments page of the cash book.  Record the amount in the investment column and in the payment column of the cash book.  Set up an investment register and record the details of each investment as given in the sample register page.

INVESTMENT REGISTER Investment held with Toowong Commonwealth Bank

DATE DESCRIPTION IN $ OUT $ BALANCE $ 2003

3 Nov Initial Investment Cheque No. 261331 1 000 1 000

Withdrawing investments

 Check the terms of the investment before seeking P&C approval for the withdrawal.  {bullet}Advise the financial institution that all or part of the investment is to be withdrawn. Add an investment column to the receipts page of the cash book.  Record the amount withdrawn in this investment column and in the banked column of the cash book.  Enter the withdrawal in the investment register as shown in the sample register page.

INVESTMENT REGISTER Investment held with Toowong Commonwealth Bank

DATE 2003 DESCRIPTION IN $ OUT$ BALANCE $

3 Nov Initial Investment Cheque No. 261331 1 000 1 000

11 Nov Withdrawal 500 500

Investment interest Interest will be received in one of three ways. Direct credit to the cheque account This is the recommended method. When the bank statement arrives showing the interest, treat the interest the same as if it had been received by cheque. The entry in the cash book should refer to the bank statement. Do not make any entries in the investment register. Cheque The bank may issue you a cheque for the amount of interest. Deposit this cheque as soon as possible into the cheque account. Make an entry for the amount in the interest or general column and banked column of the receipts page of the cash book. Do not make any entries in the investment register. Direct credit to the investment account This method is not recommended. Direct credit involves difficult accounting entries.

Trading statements Your tuckshop, book shop and uniform shop are all examples of trading activities (see Tuckshops and other businesses). Trading statements, showing the profits made for the year to date (YTD), are required for each trading activity of the P&C. The profit is calculated by comparing receipts from YTD sales with payments for the same period to get a net result. Trading statements must be produced at least every quarter and for the financial year that forms part of the annual financial statements. Ideally, trading statements should be generated monthly so that you can quickly identify and address any unusual trends. Trends towards a loss should be identified before the financial position becomes difficult. A sample of a trading statement is shown in Example 5.

Gross profit Gross profit is the difference between the total amount of money received — sales income — less the amount that was paid out to purchase those goods — cost of goods sold. Gross profit objectives and mark-ups should be decided by the P&C. Base your decision on whether you want high profits or whether you want to provide an inexpensive service to students for items such as lunches and uniforms.

A low gross profit percentage indicates one or more of the following:

 prices are too low

 stock is being lost or wasted (see Stock control, Tuckshops and other businesses).

Accounting for Parents and Citizens’ Associations 2003  Giveaways are too high

 Loss of money or stock due to theft

The concept of gross profit A key concept to understand is that gross profit (%) and the mark-up (%) on an item are different. Gross profit is calculated from the sale price whereas the mark-up is calculated from the cost price.

1 If an item is marked up by 33 /3 per cent, the gross profit is 25 per cent. This is demonstrated in the following example. See the worked example below.

1 If you buy an item for $75 and sell it for $100, the mark-up is 33 /3%.

However the gross profit would be: Sales $100 Cost of item $75 Gross profit $25

The gross profit percentage is: Profit ($25) x 100 = 25 per cent Sale price ($100)

Calculating gross and net profit for a trading activity The value of the gross profit for a period of sales is shown below.

Net sales income $17 809.13 Less Cost of Goods Sold Opening stock $5 000.00 Plus purchases $9 300.00 $14 300.00 Less closing stock $942.87 Cost of Goods Sold $13 357.13 Gross profit $4 452.00

This trading activity has generated a gross profit of 25 per cent. The calculated profit being: ($4 452.00 / $17 809.13) x 100 = 25 per cent.

Cost of goods sold The cost of goods sold needs to be calculated so that your gross profit can be determined. The cost of goods sold is calculated as follows: Opening stock (saleable items on hand at start of period valued at cost) plus Purchases (the total value of items purchased for resale during the period) less Closing stock (saleable items on hand at end of period valued at cost)

Accounting for Parents and Citizens’ Associations 2003 The answer to this calculation equals cost of goods sold (the cost of saleable items sold during the period).

Net profit Your P&C will need to be aware of the net profit generated by a trading activity because this is the best indicator of whether an activity is worth continuing. If the net profit is small then your efforts may be better directed toward other activities. A small net profit can also highlight the need to increase profit margins or confirm that the service is very close to cost neutral. You calculate net profit by deducting from gross profit the operating expenses such as cleaning, wages, paper bags and other items that do not affect the cost of goods sold. See the example below.

Net sales income $17 809.13

Less cost of goods sold $13 357.13

Gross profit $ 4 452.00

Less operating expenses $ 2 854.14

Net profit $ 1 597.86

The net profit generated by this trading activity is $1 597.86. This trading statement forms part of the annual financial statements.

Tax registration

Registration for an Australian Business Number (ABN) All P&Cs must obtain an ABN. All P&C stationery, purchase orders, receipts and invoices must show the P&Cs ABN. Where a P&C makes a supply to another business and does not provide its ABN then the other business is required to withhold 48.5 per cent of the amount payable to the P&C in tax if the P&C does not provide its ABN.

Registration for Income Tax Exempt Charity (ITEC) endorsement All P&Cs must apply to the ATO for an ITEC endorsement. Details are in the ATO’s publication Charity Pack – A taxation guide for charitable institutions and funds. If you do not apply for an ITEC endorsement, the P&C may have to pay income tax on profits.

Deductible Gift Recipient (DGR) endorsement DGR status enables the P&C to receive donations and donors to receive tax deductions. P&Cs are eligible to establish tax deductible funds only for building funds, nothing else. You must obtain an endorsement (and have an ABN) before you establish your fund. When you obtain your endorsement, the ATO will require you to provide details of the rules under which you will be administering the DGR because certain clauses should be included within your constitution. Obtain the wording from the Queensland Council of Parents and Citizens Associations (QCPCA) or Executive and Legal Services Branch within Education Queensland (tel: (07) 3237 0485). The amended constitution will need to be approved by Executive and Legal Services Branch.

Accounting for Parents and Citizens’ Associations 2003 Separate bank accounts must be established for DGRs. If P&Cs have Library Fund DGR schemes they are advised to close them down. Options are: 1. Spend all the money and advise ATO that the P&C is no longer entitled to the endorsement. This can include donating the money to the school stipulating that it must be spent on the library. 2. Transfer the money to the P&Cs DGR Building fund and advise the ATO that the Library Fund DGR is no longer entitled to the endorsement. This may involve the setting up of a new School Building Fund DGR, if one does not currently exist. 3. Transfer the money to the school’s DGR Building or Library Fund (if these exist) and advise ATO that the P&C is no longer entitled to the endorsement.

Registration for Goods and Services Tax (GST) P&Cs who meet the annual turnover registration threshold of $100 000 must register for GST and submit a Business Activity Statement (BAS) every quarter. P&Cs that do not exceed the $100 000 turnover threshold may register for GST. However, you should conduct a cost/benefit analysis to decide whether this step is worthwhile. For example, you could review the activities of the P&C to see if any activities could be administered by the school. This step could keep total P&C turnover, excluding tuckshop and one- off annual event fundraising turnover (such as fete income), below $100 000 and thus preclude the necessity for GST registration. A P&C registered for GST must issue a tax invoice for taxable supplies when the recipient requests one. If you have any queries about GST registration, do not hesitate to get expert advice.

Completing an activity statement All accounts must be reported on every month. This information is then reflected in the quarterly activity statement to correctly show the P&C’s activity for the three-month tax period. Note: There are two types of activity statements:  P&Cs not registered for GST will receive an Instalment Activity Statement (IAS) to complete so that they can remit PAYG income tax deducted from employees wages.  P&Cs registered for GST will receive a Business Activity Statement (BAS) to complete so that they can declare their business activity and remit PAYG income tax deducted from employees’ wages. The ATO will send a personalised activity statement (IAS or BAS) at the end of each quarter. P&Cs are legally obliged to return the activity statement within the prescribed period of 28 days after the end of the quarterly tax period. Penalties now apply for late submission. This means the activity statement is due to be lodged on or before 28 October, 28 January, 28 April and 28 July. The activity statement must reflect all appropriate (for GST-registered P&Cs note that the activity of NPSEs is not included on the BAS) receipt and payment transactions for the quarter. P&Cs report GST using cash accounting. The BAS form records (for GST) the supplies and acquisitions made, the resulting GST debits and credits, PAYG liability and calculates the net effect that is then paid to or by the ATO. All appropriate transactions relating to the quarter must be taken into account for the BAS. Transactions cannot be delayed until the next BAS just for convenience. You may need to arrange meeting times so that subcommittees can meet just before the monthly P&C meeting to facilitate the flow of reports from the subcommittees back to the main P&C body.

Accounting for Parents and Citizens’ Associations 2003 Choose whether to operate the tuckshop/canteen as input taxed A GST-registered P&C may choose to have all supplies of food and drink (only) through the tuckshop treated as input taxed. These input taxed transactions are then included on the P&Cs BAS.

Non-profit sub-entities (NPSE) If you do decide to register for GST, you may also want to take advantage of the non-profit sub- entities (NPSE) provisions of the GST Act. An NPSE is a separately identifiable activity of the P&C, such as a uniform shop, tuckshop, swimming club, or book club. An NPSE should not be confused with a subcommittee, which is a group of people directed by the P&C to support and supervise certain activities, although a subcommittee may in fact run an NPSE. Where an NPSE’s turnover is equal to or more than $100 000 the P&C must choose whether to have its transactions incorporated onto the P&Cs BAS or separately register it for GST. It is recommended that you fold it back into the P&Cs BAS so as to reduce the workload of the Treasurer. If an NPSE registers it will have its own ABN and GST registration and produce its own BAS. It ceases to be an NPSE when it registers for GST. It is not recommended that you elect for your Outside Hours School Care (OHSC) service to be an NPSE. Childcare is a GST-free supply, so users do not pay GST. However, the GST legislation allows input tax credits to be claimed on purchases that the unit makes. Another option is to separately register the OHSC service for GST. Note that the OHSC cannot register for PAYG for the employees. This role remains with the P&C. If you have any queries about NPSE decisions, seek expert advice from the QCPCA. Managing NPSEs The P&C may pass a motion at a duly constituted P&C meeting to elect to use the NPSE provisions in Division 63 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act). Where the Division 63 election has been made the activities of the NPSE are deemed to be those of a separate entity for GST purposes only. The P&C must be registered for GST for the NPSE to exist. NPSEs must be separate by the nature of the activity and be separated financially to clearly define transactions that belong to the NPSE. A separate column or cost centre is sufficient. A NPSE does not require a separate bank account, although a separate bank account may be advisable for outside hours school care.

Registration for Pay As You Go (PAYG) If your P&C has employees it is required to register for PAYG. If your P&C is registered for GST, remittances of tax deducted from employee wages are included in your BAS. If the P&C is not registered for GST, you need to complete an Instalment Activity Statement (IAS), which is sent out quarterly by the ATO. Since subcommittees are not legal entities and should not have employees, all employees must be listed on one BAS or IAS submitted and paid by the P&C.

Summary of requirements These checklist summaries will help you to make sure you are complying with the law to your best advantage.

P&Cs not registered for GST

 Accounting required as per this manual including subcommittees.  Must have an ABN and an ITEC endorsement. Documents must display the ABN.  P&Cs with employees must comply with IAS requirements.

P&Cs registered for GST with NPSE with turnover under $100 000

 Accounting required as per this manual including subcommittees.  Must have an ABN and an ITEC endorsement. Documents must display the ABN.  A P&C with employees must fulfil the PAYG requirements on the BAS.  Decide whether to elect certain activities as NPSEs for GST.  Remember, you cannot claim input tax credits for an NPSE that is not independently registered for GST.

P&Cs registered for GST with NPSE with turnover more than $100 000

 If an NPSE achieves a turnover equal to or greater than $100 000 this particular activity can no longer be treated as an NPSE.  Where a former NPSE has a turnover greater than $100 000 it can apply for an ABN and register for GST. The NPSE then deals directly with the ATO. Alternatively the P&C may pass another motion withdrawing the NPSE status. This would result in transactions appearing on the P&Cs BAS.  Any deductions from wages of NPSE PAYG employees will still need to be shown on the P&C BAS.

GST advice You can get GST advice from the following sources:

 QCPCA www.QCPCA .org.au or tel: (07) 3352 3900  ATO www.taxreform.ato.gov.au/default.htm or phone 13 28 66  Education Queenslands (EQ) senior finance officer in your district (www.education.qld.gov.au/search/phone)  EQs Corporate Taxation Unit Taxhelp@qed .qld.gov.au or tel:1300 656 380/fax: (07) 3299 1767

Accounting for Parents and Citizens’ Associations 2003 Audits

Appointing an auditor You must appoint the auditor at the P&Cs AGM or at a special meeting. Appoint your auditor from someone on the list below. Try to get someone who, as far as possible, is a local person aware of the activities of the P&C.  an accountant in public practice  a qualified accountant  a public sector employee or an employee of an insurance company, financial institution or other financial or commercial organisation who has the maturity, commercial skills and experience to examine the books and accounts of the association. A P&C member may audit the P&C only with the approval of the Director–General of Education. If possible, appoint an auditor in an honorary capacity. If this is not possible, negotiate and confirm the auditors fees prior to appointment. After the meeting at which an auditor is appointed, the P&C secretary must advise the district Executive Director (Schools) of the name, address and qualifications of the auditor.

After completion of the audit The financial statements, with all signed certificates appended, are to be presented to the P&C president. Members of the executive should read the documents before they are presented at the P&C AGM. Example 6 shows the certificates that are appended to audited financial statements.

Qualified audit The auditor has a duty to form an opinion on the financial statements. In some circumstances it may be necessary to qualify the audit report:  If there is a disagreement of opinion between the auditor and the P&C on any aspect of the account and the auditor is of the opinion that the statement should reflect or highlight these aspects.  If the auditor has been denied access to any information, thereby preventing the completion of the audit to the satisfaction of the auditor.  If the P&C has failed to keep proper accounting records or provide satisfactory explanations to questions raised.  If, in the opinion of the auditor, any of the financial reports are not in agreement with the P&Cs accounting records. Where the auditor concludes that no reliance can be placed on the accounting records because there is little or no internal control, the auditor may disclaim any overall opinion on the statements. Example 6a shows the type of disclaimer that an auditor may append when these problems have been encountered. On receipt of a qualified audit report, the Treasurer must include a response addressing the reasons for the qualification when logging the audited financial statements with the District Office.

Accounting for Parents and Citizens’ Associations 2003 Records This section deals with the storage and management of P&C records and accountable forms.

Managing accountable forms Accountable forms are:  chequebooks  order books  receipt books. Label all books with book numbers in sequential order. (Pre-numbered books should be labelled A, B, C and so on.) Each book issued should be initialled and dated on the inside cover by the person taking possession of or returning the book. Normal practice is for the P&C treasurer to provide accountable forms to all subcommittees and to keep a single register for all P&C activities. Keep a register of all the accountable forms on hand, including those for subcommittees. See the example below.

Date Serial nos. Book Date Officer’s Date Treasurer’s no. issued initials returned initials

PURCHASE ORDERS 2/2/01 AA201 – AA300 AA 4/2/01 AH 6/7/01 TS AB301 – AB400 AB 5/7/01 BT 3/6/01 BA001 – BA100 BA 1/10/01 AH BB101 – BB200 BB

RECEIPT BOOKS 2/2/01 A001 – A500 A 4/2/01 AH 8/8/01 TS B501 – B1000 B 1/8/01 AH

CHEQUE BOOKS 20/1/01 268001-268100 A 4/2/01 AH 268101-268200 B 4/2/01 AH 15/7/01 268201-268300 C

Retention periods Keep all P&C financial records for the following periods. Bank deposit slips 3 years Bank statements 2 years Cash books 20 years Cash register strips 3 years Cheque butts/payment vouchers/invoices 5 years Financial reports 5 years Pay sheets and acquittance sheets 6 years

Accounting for Parents and Citizens’ Associations 2003 Petty cash and postage books 2 years Receipt books, order books, invoices 5 years Stock-counting sheets 3 years After the storage periods, the records can be destroyed. The treasurer should keep the records for the current year and the year before. All other records should be kept at the school, under the care of the principal. When a new treasurer takes up the job, the outgoing treasurer must pass on all records.

Other topics This section deals with other topics that P&Cs need to be familiar with to ensure sound financial management. Tuckshops and other businesses Most comments within this section apply to any trading activity run by the P&C or by subcommittees, such as uniform shops and stationery shops. Tuckshops are a common activity of many P&Cs. The P&Cs purpose for the tuckshop should be very clear — either to provide quality products at the lowest possible price as a service to the school community or to provide products at a price the market can stand in order to raise funds. Some P&Cs reach a compromise position between the two purposes. Whatever its purpose, the tuckshop is required to comply with financial management procedures. The financial transactions are many, often involve a large turnover and need to address daily operations and monitor profit and loss.

Accounts If the P&C wishes to have a subcommittee overseeing the activity of the tuckshop, open a separate bank account to be operated by the members of the subcommittee. Alternatively, transactions relating to the tuckshop may be recorded in a separate column in the cash receipts and cash payments book of the main P&C account.

Accountable forms Accountable forms include purchase orders, receipt books and chequebooks. The P&C treasurer supplies these and they are entered on the P&C master register of accountable forms. However, if the subcommittee organises its own accountable forms, the subcommittee must also keep a register of accountable forms for audit purposes.

Recording income Record income in an appropriate column in the cash book. Supporting documents include receipts, bulk receipts, takings book, cheques, cash registers, the cash sales sheet, credit card/EFTPOS payment and banking.  The P&C and/or subcommittee treasurer must keep a cash book.  All money received by the P&C should have an official receipt issued for it immediately it is received.  Bulk receipts for the tuckshop daily takings should be pasted in a takings book.  If a cash register is used in the activities of the P&C, follow standard procedures.

Cash sales sheet

Where cash registers are not available, using a cash sales sheet may help to track the sales and check takings. This is how a cash sales sheet works.  Create one cash sales sheet for each sales point.  Sales staff tick off individual sales.  At the end of the sales activity, total the amounts to show how much cash should be on hand. Look at this sample to see how a cash sales sheet record works. CASH SALES SHEET Date: 2 April 2003

SALES ITEM PRICE TOTAL

       Pies 1.00 7.00     Fruit 0.50 2.00                 Fruit salad 0.70 9.80         Sml milk 0.50 3.50   Lge milk 0.75 1.50

       Sandwich pack 1.50 10.50

TOTAL 34.30

Recording expenditure Neither a paid convener nor the principal can be signatory for the tuckshop account. The treasurer pays all accounts by cheque. Remember to take advantage of discounts wherever possible.

At all times Support all payments with original invoices. If a photocopy has to be used, make sure it is endorsed not previously paid. If a mistake is made while writing cheques, write cancelled across both the cheque and butt and leave the cheque in the chequebook. After payment, mark invoices paid to prevent double payment. File invoices and dockets in cheque-number order after payment. Pasting them in a scrapbook is ideal. The auditor will require this record.

Receiving goods

The tuckshop convener is in charge of recording how much has been spent and ensuring that these goods or services are received. This checklist shows what the convener should do as goods are delivered to the tuckshop.  Check that all goods listed on the invoice have been received into tuckshop stock.  Stamp the invoice with a Goods received/date stamp and sign the invoice to show the check has been carried out.

Accounting for Parents and Citizens’ Associations 2003  Return any substandard stock and obtain a credit note from the supplier.  Check all invoices for quantity ordered, price charged, credit for returned goods, discounts and other calculations. Errors do occur in suppliers’ invoices and, unless detected, can contribute to a trading loss.  Give certified and checked invoices to the treasurer.

Purchase orders Tuckshops must use purchase orders to obtain goods and services. You can use a petty cash float for purchasing minor or emergency items.

Stock control The control of stock is an important function of the P&C and an understanding of the way stock is consumed can aid in the reordering process and expense management. If stock records are not maintained accurately, the gross profit of the P&C may be over- or understated, giving rise to false expectations for the future. Stock control is an important factor in maintaining reasonable gross profit percentages (see Gross profit). Stocktaking You must complete a stocktake at least every quarter. Carry out the first stocktake at the end of term one and then at the end of each subsequent term. Monthly stocktakes can be carried out if considered necessary. One person should count while another checks and records. To help with stocktaking, prepare stock sheets in advance and printed with items that are regularly carried in stock. Prices used to calculate the value of stock are entered after the stock is counted and must be the cost price. Avoiding losses Small and seemingly insignificant daily wastage can very easily result in losses for a tuckshop. Losses or wastage occur mainly through:  soilage of perishables  end pieces of small goods, for example ends of cheese or hams, that are consumed by staff or voluntary help  over-ordering of foodstuffs such as buns, bread, pies, which are then thrown out or given away  high consumption of products by staff  pilfering. Stock management Tuckshops that return good profits have strong management to ensure the following.  Perishables such as milk are turned over regularly.  There is no over-supply of daily foodstuffs or loss of end pieces of foods.  Consumption of goods by staff is strictly regulated. All stock needs to be rotated so that older stock is sold first.

Trading statements See Trading statements in Procedures and processes.

Accounting for Parents and Citizens’ Associations 2003 Security  Tuckshop keys should be retained by the tuckshop convener, the principal and the cleaner.  Restrict entry to the tuckshop to tuckshop staff and volunteers.  Children under 12 years of age are not covered by the voluntary workers insurance held by most P&Cs. Outside school hours care (OSHC) OSHC is a subcommittee and is required to report monthly to the P&C meeting, as are all other subcommittees. This subcommittee must have a separate bank account. OSHC subcommittees are to be self funding. Although financially independent, this subcommittee is still required to comply with this manual and is subject to the direction of the main P&C. The P&C must be the employer of people working in OSHC and is responsible for their PAYG requirements. The office bearers of the OSHC subcommittee are to be appointed by the P&C (as are other subcommittee office bearers) at a P&C general meeting. For further information, refer to the detailed guidelines contained in the DOEM policy: SC-08: School Age Care Programs Outside School Hours Care and Vacation Care at http://education.qld.gov.au/corporate/doem/schoocom/sc-08000/sc-08000.htm Assets All equipment and funds held by the school, P&C or any subcommittee are held on behalf of the Minister. When the P&C intends to provide equipment for the school, donate the funds to the school and then let the school purchase the goods. This will ensure compliance with state purchasing policy. Any goods bought by the P&C must be registered on the school’s asset system. If the goods are required for the sole use of the P&C, flag them on the school system as in use by the P&C. While the P&C does not require a formal asset register, a list of equipment used by the P&C should be kept as part of security controls. Such goods do not show on the financial records of the P&C. The only assets to show on P&C financial records should be ‘trading stock’ and ‘cash held’ or ‘cash in the bank’ along with any investments. The P&C must ensure maintenance and security for its goods and insure these goods against loss. Loans P&Cs can apply for and receive loans for large projects, for example, construction activities that improve facilities such as swimming pools or to enclose covered areas.. When seeking loans, the P&C must comply with the detailed guidelines outlined in the DOEM. Ask the principal for a full copy of the DOEM module Loans Sought by Parents and Citizens’ Association or go to module SC-01 at www.education .qed.qld.gov.au/policies/doem/finanres/finanres.htm Ensure you follow these steps.  Record receipt of the loan in the cash book.  Enter loan repayments in the cash book.  Details of the loan balances are reported on in the annual financial statements.

Leasing Leasing arrangements should be administered by the school. The Queensland Government Leasing Policy states that all leases must be arranged with Queensland Treasury Corporation.

Accounting for Parents and Citizens’ Associations 2003 The Queensland Government Leasing Policy and further information on leasing is available at: http://iwww .qed.qld.gov.au/finance/procedure/guidelines/school/leasing.html Gifts Detailed information on these topics can be found in the Departmental Code of Conduct, available from your school. All gifts given or received must be:  reported at P&C meetings  recorded in the minutes  reported in the newsletter.

Giving Money raised by the P&C is to enhance the educational opportunities of current students. Only in exceptional circumstances should funds be used for purchasing gifts, dinners, wreaths or similar. Low-value mementos such as key rings, coasters, spoons, and mugs may be appropriate gifts on some occasions.

Receiving Be careful about accepting gifts or benefits from suppliers if there is a possibility that a conflict of interest could occur. The ideal solution is to avoid all such situations completely. Gifts of money to individual P&C members should always be refused. Donations to the P&C may be accepted to help the association achieve its objectives. The details of gifts valued at more than $250 must be provided to the school for reporting purposes. Textbook hire schemes The government pays a textbook and resource allowance on behalf of eligible students to help parents offset the cost of textbooks and other learning materials associated with secondary schooling. P&C association meetings are the forum for discussion and consultation on a range of issues. To reduce the level of transactions and workload on the P&C, it is recommended that the school administer any hire schemes. For further information, refer to the detailed guidelines contained in the DOEM policy FR-11: Student Contribution Schemes, Textbook and Resource Hire Scheme, and Textbook and Resource Allowance in State Schools: www.education .qld.gov.au/corporate/doem/finanres/fr-11000/fr-11000.htm

Accounting for Parents and Citizens’ Associations 2003 Raffle tickets P&Cs often fundraise by raffles, which involve selling tickets. You must adhere to the Charitable and Non-Profit Gaming Act 1999 provisions in these situations.

Managing raffle tickets

 Match the tickets sold and the total tickets available to the total takings from the raffle.  The raffle organiser does a reconciliation (see Example 13 for a ticket and takings reconciliation) and resolves any disputes about lost tickets. (A reconciliation gives an easy overview of the activity and ensures that all funds raised are accounted for and ticket handlers are protected from false accusations.)  Hand the funds to the treasurer who issues a receipt.  Bank the gross funds raised.  Make any payments required by cheque. Do not use the funds being raised to pay bills. Employees While most of the effort and hard work performed by the P&C is voluntary, often the P&C becomes an employer and pays employees for labour. Employees can include scheme operators and tuckshop conveners. Employees of the P&C cannot hold any official position in the P&C or any of its subcommittees.

Wages P&Cs should approve the employment of all people who perform work for payment. When wages for labour are due and payable, P&Cs are employers and thus bound by laws governing income tax, superannuation, fringe benefits tax, payroll tax, Workcover, industrial awards and agreements. Pay employees by cheque (never cash). You can make payments by direct debit from P&C bank accounts but this is not recommended due to the risk of errors, variable working hours, staff turn over, award changes, and other variations. You must keep wage records.

Taxation Income tax must be deducted, regardless of how small the wage payment, unless the employee is able to provide a declaration from the ATO exempting them from the deduction of tax. All employee wages and leave entitlements must be correctly administered. You may need to progressively set aside funds to provide for long service leave. Remember to discriminate between paying someone for labour as an employee and paying a bona fide contractor for a service. In the latter case no taxation requirements apply to the P&C. Work cover for employees and details of the P&C’s Retail Employees Industrial Agreement are obtainable through the QCPCA. Details of taxation requirements should be obtained from the ATO or its agents.

Accounting for Parents and Citizens’ Associations 2003 Legislations governing P&Cs All executive members of the P&C are responsible for ensuring that the association fulfils its legislative requirements. The procedures and processes outlined in this manual will ensure compliance with the applicable Acts, Regulations and Policies.

 Part 7 of Chapter 7 of the Education (General Provisions) Act 2006 details financial responsibilities of an association.

 Section 133, Part 7 of Chapter 7 of the Education (General Provisions) Act 2006 defines associations as statutory bodies.

 Part 2B of the Statutory Bodies Financial Arrangements Act 1982 sets out the way in which an association’s powers are affected.

 The Financial Administration and Audit Act 1977, Section 46M (3) states that this P&C Accounting Manual is mandatory for ensuring the correct handling of finances.

Exemptions from the Financial Management Standard While compliance with the applicable Acts and Regulations is mandatory, on 8 December 1998 the Treasurer for Queensland granted exemption to P&Cs from the Financial Management Standard 1997 on the following matters: Part 2 Planning: Strategic and operational planning It is considered acceptable that P&Cs partake in the strategic and operational planning of the school and those P&C objectives are to enhance the schools delivery of educational services.

Part 3 Management of resources: Section 56(4): Requirement to consult with audit prior to changing financial systems P&C accounting records may be handwritten in appropriate forms, recorded in computerised spreadsheets or commercially available accounting software may be used.

Part 4 Performance management It is accepted that any major assets produced by a P&C are handed to the school and accounted for in other departmental systems. Performance of P&Cs is documented through annual financial statements.

Part 5 Corporate management: Sections 65–66 Not required, as members are from the school community and the Department is represented by the principal.

Part 5 Corporate management: Sections 72–74 System appraisal procedures are not required, as procedures used are controlled by observance and compliance with the P&C Accounting Manual.

Part 5 Corporate management: Sections 85–87 Safeguards and controls over P&C operations exist through observance and compliance with the P&C Accounting Manual.

Part 5 Corporate management: Sections 90–93 Gifts received of value greater than $1000 must be put on the schools fixed assets register. Gifts made or received under $1000 must be reported at meetings, noted in the minutes and reported in newsletters.

Part 6 Reporting

P&C operations are primarily financial and are reported through the annual financial statements. P&C financial accounting is to be cash accounting. To access this legislation in full via the web go to www.legislation .qld.gov.au/Legislation.htm

Where to find help

For help, contact any of the following:  community participation officer  senior finance officer and/or senior internal auditor in your district at www.education.qld.gov.au/search/phone/  principal  registrar  QCPCA tel: (07) 3352 3900 fax: (07) 3352 3911 [email protected] POB 67 Kelvin Grove Q 4059 www.qcpca.org.au

Accounting for Parents and Citizens’ Associations 2003 Examples Example 1: Budget and cash flow Sample SS P&C Proposed budget for 2003 Opening Cash at Bank 5 500 RECEIPTS Totals $ January February March April May June July August September October November December Donations 400 200 100 50 50 Bank Interest 600 50 50 50 50 50 50 50 50 50 50 50 50 Fundraising 8 000 5 000 3 000 Tuckshop Sales 22 200 600 2 400 2 400 1 800 2 400 1 800 1 800 2 400 1 800 1 800 2 400 600 New Loan 10 000 10 000 Monthly Receipts 41 200 650 2 650 7 550 1 900 2 500 1 850 1 850 12 450 4 850 1 850 2 450 650 YTD Totals 650 3 300 10 850 12 750 15 250 17 100 18 950 31 400 36 250 38 100 40 550 41 200

PAYMENTS Totals January February March April May June July August September October November December School Programs 18 002 100 4 000 200 3 200 2 10 000 500 Bank Charges 120 10 10 10 10 10 10 10 10 10 10 10 10 Fundraising 3 350 2000 200 1 000 150 Audit fees 200 200 Registration 300 300 T/shop Direct 7 300 200 800 800 600 800 600 600 800 600 600 800 100 T/shop Indirect 600 300 300 T/shop Wages 1 850 50 200 200 150 200 150 150 200 150 150 200 50 Loan Repayments 8 700 600 600 600 600 600 600 600 900 900 900 900 900 MISC 240 20 20 20 20 20 20 20 20 20 20 20 20 Monthly Payments 40 662 880 3 930 6 130 1 580 1 630 4 880 1 682 11 930 2 680 2 330 1 930 1 080 YTD Totals 880 4 810 10 940 12 520 14 150 19 030 20 712 32 642 35 322 37 652 39 582 40 662

Closing Cash at Bank 6 038 5 270 3 990 5 410 5 730 6 600 3 570 3 738 4 258 6 428 5 948 6 468 6 038

Accounting for Parents and Citizens’ Associations 2003 Example 2: Cash book (list of receipts and payments) February 2003 RECEIPTS MONTH NAME RECEIPT TOTAL OF Bank BANKED 1 2 3 DATE NUMBER RECEIPT $ Rec Donations Bank Interest Fundraising 5 Sample SS 123458 201.00 $201.00 6 Joan Soap 123459 598.73 1 $799.73 27 Joan Soap 123460 599.10 1 $599.10 28 CBA Bank 53.78 1 $53.78 $53.78 0.00 TOTAL RECEIPTS FOR MONTH 2 675.74 $2 675.74 $201.00 $53.78 $0.00 PLUS BALANCE C/FWD 695.14 $50.00 $47.80 $0.00 TOTAL YEAR TO DATE 3 370.88 $251.00 $101.58 $0.00

February 2003 PAYMENTS MONTH NAME CHEQUE PAYMENT Bank 1 2 3 4 DATE NUMBER $ Rec School Programs Bank Charges Fundraising Audit fees 4 Fete Supplies 54324 1 500.00 1 1 500.00 6 Joan Soap 54325 50.00 1 6 AA Printing 54326 500.00 1 500.00 8 AJ Accounting 54327 200.00 1 200.00 11 Sample Fuel supplies 54328 100.00 1 100.00 15 Sample Bakery 54329 437.90 18 Drink Supplies 54330 401.20 1 20 CBA Bank 600.00 1 20 Joan Soap 54331 50.00 1 . 0.00 TOTAL PAYMENTS FOR MONTH 4 228.93 100.00 9.83 2 000.00 200.00 PLUS BALANCE C/FWD 892.24 0.00 12.34 0.00 0.00 TOTAL YEAR TO DATE 5 121.17 100.00 22.17 2 000.00 200.00

These examples have been cut down for display purposes.

Accounting for Parents and Citizens’ Associations 2003 Example 3: Bank reconciliation statement

Sample SS P&C

Bank Reconciliation Statement

As at 28 February 2003

Balance as per Bank Statement: CR $3 687.61 Plus: Deposits in cash book not in Bank Statement: $0.00 Less Unpresented Cheques this period Unpresented Cheques from previous periods Cheque No Amount $ Cheque No Amount $ 54329 437.90 54001 50.00 . $0.00 . $0.00 . $0.00 . $0.00 50.00 . $0.00 . $0.00 . $0.00 Total of all Unpresented Cheques $487.90 . $0.00 Calculated Balance as per Cash book: $3 199.71 . $0.00 Plus investment Balance at end of month $0.00 . $0.00 Total Available $3 199.71 . $0.00 . $0.00 . $0.00 Cash book Balance at beginning of year $4 950.00 . $0.00 plus Receipts YTD $3 370.88 . $0.00 less Payments YTD $5 121.17 . $0.00 Cash book Balance at end of month $3 199.71 . $0.00 plus Investment Balance at end of month $0.00 . $0.00 Total Available $3 199.71 . $0.00 $437.90

Treasurer: Date: President: Date:

Accounting for Parents and Citizens’ Associations 2003 Example 4: Statement of receipts and payments (monthly)

Sample SS P&C

STATEMENT OF RECEIPTS AND PAYMENTS FOR THE MONTH OF February 2003

RECEIPTS February YTDPAYMENTS February YTD

Donations $201.00 $251.00School Programs $100.00 $100.00 Bank Interest $53.78 $101.58Bank Charges $9.83 $22.17 Fundraising $0.00 $0.00Fundraising $2 000.00 $2 000.00 . $0.00 $0.00Audit fees $200.00 $200.00 . $0.00 $0.00Registration $0.00 $0.00 Tuckshop Sales $2 420.96 $3 018.30T/shop Direct $839.10 $1 040.10 . $0.00 $0.00T/shop Indirect $280.00 $280.00 . $0.00 $0.00T/shop Wages $200.00 $250.00 New Loan $0.00 $0.00Loan Repayments $600.00 $1 200.00 . $0.00 $0.00MISC $0.00 $28.90

TOTAL $2 675.74 $3 370.88 TOTALS $4 228.93 $5 121.17

Treasurer: Date: President: Date:

Summary – School Programs Summary – Miscellaneous Payments

Details February YTD Amount Details February YTD Amount Fuel $100.00 $100.00Postage $28.90 . $0.00. $0.00 . $0.00. $0.00 Total $100.00 $100.00 Total $0.00 $28.90

Accounting for Parents and Citizens’ Associations 2003 Example 5: Trading statement

Sample SS P&C

TRADING ACCOUNT – TUCKSHOP February 2003 % of turnover

SALES YTD $3 018.30

Less cost of goods sold

Purchases Paid YTD (T/shop Direct) $1 040.10

Purchases unpaid (total of invoices on hand) $0.00

Opening Stock value at start of year $324.55

$1 364.65

Less value of closing stock $100.00 Cost of Goods Sold $1 264.65

GROSS PROFIT YTD $1 753.65 58.1%

Less operating expenses

Wages YTD $250.00

Indirect Costs YTD $280.00 $530.00

NET PROFIT YTD $1 223.65 40.5%

Accounting for Parents and Citizens’ Associations 2003 Example 6: Audit certificates

…………….. SCHOOL (school name)

PARENTS AND CITIZENS’ ASSOCIATION

ANNUAL FINANCIAL STATEMENTS

For the year ending …..………………….

CERTIFICATE OF THE PRESIDENT, SECRETARY AND TREASURER

We have prepared the foregoing annual financial statements pursuant to the provisions of the Financial Administration and Audit Act 1977–1988, and the manual Accounting for Parents and Citizens’ Associations and certify that:

a) the financial statements and notes to and forming part of the accounts are in agreement with the accounts and records of the ...... School Parents and Citizens’ Association;

b) in our opinion:

(i) the prescribed requirements in respect of the establishment and keeping of accounts have been complied with in all material respects;

(ii) the statements have been drawn up so as to present a true and fair view, on a basis consistent with that applied in the financial year last preceding, of the transactions of the association for the financial year to which they relate and, where they show the financial position as at the close of that year, of that financial position.

...... (signature) (signature) (signature) President Secretary Treasurer ……...... (name) (name) (name) / / / / / /

PURPOSE AND SCOPE OF FINANCIAL STATEMENTS

The Parents and Citizens’ Association was established pursuant to the Education (General Provisions) Act 1989. The Association’s function is to promote the interests of the State school and benefit all students at the school. The financial statements have been prepared in accordance with the requirements prescribed by:

 the Education (General Provisions) Act 1989;

 Section 46F of the Financial Administration and Audit Act 1977, with the exception that the statements are to be submitted to the appointed auditor;

 the Accounting Manual for Parents and Citizens’ Associations.

The statements have been prepared so as to provide a full disclosure of the financial operations of all of the association’s activities during the financial year and the general state of affairs at the end of that year.

STATEMENT OF ACCOUNTING PRINCIPLES

Significant accounting principles applied to the annual financial statements:

(a) basis of accounting:

The foregoing financial statements have been prepared on a cash accounting basis consistent with that which applied in the previous year.

(b) stock on hand:

All stocks are valued at cost.

(c) fixed assets:

Items of plant and equipment, amenities and facilities when purchased from P&C funds immediately become the property of the Corporation of the Minister for Education, and as such, are listed on the Department of Education Equipment Register.

(d) contingent assets/liabilities:

There were no known contingent assets/liabilities of a significant nature at ...... ……………... (end of year)

AUDITOR’S CERTIFICATION for the financial year ended ......

I have examined the accounts of the ...... School Parents and Citizens’ Association and I certify that, in my opinion:

1. The attached financial statements of the Parents and Citizens’ Association Fund established under the Education (General Provisions) Act 1989 are in agreement with the accounts and are in the required form.

2. The prescribed requirements in respect of the keeping of accounts by the association have been complied with, in all material respects.

3. The statements have been drawn up so as to present a true and fair view, on a basis consistent with that applied in the preceding year of the transactions for the financial year and the financial position as at the close of the year.

......

Auditor ...... /...... /......

...... (Qualifications)

Accounting for Parents and Citizens’ Associations 2003 Example 6a: Auditor’s disclaimer

(Name) State School Parents’ and Citizens’ Association CERTIFICATION TO ACCOUNTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER

I have examined the accounts of the (Name) State School Parents’ and Citizens’ Association and I certify that, in my opinion, because there is evidence of significant control breakdowns in cash receipting and custody during the period I have been unable to satisfactorily discharge my duty by the use of alternative procedures. Therefore:

a) I have not obtained all the information and explanations I have required; and

b) Proper accounting records have not been kept in accordance with the provisions of the P&C Accounting Manual.

...... Auditor: / /

......

Accounting for Parents and Citizens’ Associations 2003 Example 7: Statement of receipts and payments (annual) Sample SS P&C STATEMENT OF RECEIPTS AND PAYMENTS FOR THE YEAR ENDED:31 December 2003

PREVIOUS CURRENT PREVIOUS CURRENT YEAR YEAR YEAR YEAR 2002 2003 2002 2003 RECEIPTS $ $ PAYMENTS $ $ Donations 3 067.00 461.00 School Programs 8 945.95 18 000.00 Bank Interest 1 376.50 609.97 Bank Charges 500.00 127.07 Fundraising 2 000.00 8 101.50 Fundraising 400.00 3 350.00 . 0.00 0.00 Audit fees 350.00 200.00 . 0.00 0.00 Registration 375.00 1 075.00 Tuckshop Sales 21 803.45 22 502.05 T/shop Direct 4 100.00 6 576.70 . 0.00 0.00 T/shop Indirect 2 010.00 580.00 . 0.00 0.00 T/shop Wages 1 500.00 1 850.00 New Loan 0.00 10 000.00 Loan Repayments 4 490.00 8 700.00 . 0.00 0.00 MISC 2 987.00 160.60 25 657.95 40 619.37 Surplus Receipts over Expenditure 2 589.00 1 055.15

TOTALS 28 246.95 41 674.52 28 246.95 41 674.52

Accounting for Parents and Citizens’ Associations 2003 Example 8: Statement of financial position (balance sheet)

Sample SS P&C

Statement of Financial Position 31 December 2003

PREVIOUS THIS YEAR YEAR 2002 2003 $ ASSETS $ 4 950.00 Cash at Bank 6 005.15 0.00 Cash on Hand 0.00 324.55 Stock on Hand 140.50 0.00 Investment Balance 0.00

5 274.55 TOTAL ASSETS 6 145.65

LIABILITIES

15 760.00 Balance of Loans 23 190.00

15 760.00 TOTAL LIABILITIES 23 190.00

($ 10 485.45) NET ASSETS/(LIABILITIES) ($ 17 044.35)

EQUITY

(7 884.00) Accumulated Funds (10 485.45) (2 601.45) Surplus/(Deficit) for year (6 558.90)

(10 485.45) (17 044.35)

The negative net worth is due to the donation of assets to the school

Accounting for Parents and Citizens’ Associations 2003 Example 9: Statement of financial performance (profit and loss)

Sample SS P&C Statement of Financial Performance FOR THE YEAR ENDED:31 December 2003

PREVIOUS CURRENT PREVIOUS CURRENT YEAR YEAR YEAR YEAR 2002 2003 2002 2003 REVENUE $ $ EXPENDITURE $ $ Donations 3 067.00 461.00 School Programs 8 945.95 18 000.00 Bank Interest 1 376.50 609.97 Bank Charges 500.00 127.07 Fundraising 2 000.00 8 101.50 Fundraising 400.00 3 350.00 . 0.00 Audit fees 350.00 200.00 . 0.00 Registration 375.00 1 075.00 Tuckshop Profit 8 100.00 13 311.30 0.00 . 0.00 0.00 . 0.00 0.00 0.00 Loan Interest 3 587.00 6 130.00 . 0.00 MISC 2 987.00 160.60 17 144.95 29 042.67

Profit/Loss for year (2 601.45) (6 558.90)

TOTALS 14 543.50 22 483.77 14 543.50 22 483.77

Accounting for Parents and Citizens’ Associations 2003 Example 10: Cash register readings book UNIFORM/STATIONERY SHOP

Date Register Register Day’s Adjustments Net Daily Sub Manager Authority for August Reading Reading Total Total to Manager Adjustment (Progressive) (Previous Cash book Day)

2 201.10

3 567.30 201.10 366.20 366.20 ABC CBA

4 980.98 567.30 413.68 4.87 407.81 ABC CBA Cancellations

Accounting for Parents and Citizens’ Associations 2003 Example 11: Daily balancing total sheet UNIFORM/STATIONERY SHOP

Date: 2 August 2003

CASH BOOK AMOUNT Cash COLUMN register docket pasted here

Uniforms 29.20 Stationery 67.00 TOTAL 366.20

Cash $263.20 Cheque $24.50 Visa Card $78.50

Receipt A345

Issued by: Signature:

Banked: $366.20 Signed:

Accounting for Parents and Citizens’ Associations 2003 Example 12: Petty cash book

Date Particulars Rec’ts Payments Postage Stationery Misc.

1/1/03 Cheque no.123 $50.00 3/1/03 Stamps $1.00 $1.00 Account Book $3.15 $3.15 7/1/03 Stamps $1.00 $1.00 21/1/03 Matches $0.50 $0.50 22/1/03 Butter $2.20 $2.20 25/1/03 String $2.95 $2.95 Total Spent $10.80 $2.00 $3.15 $5.65 Cash on Hand $39.20 $50.00 31/1/03 Balance on hand $39.20 Cheque no.128 $10.80 Reimbursement $50.00

Accounting for Parents and Citizens’ Associations 2003 Example 13: Raffle ticket and takings reconciliation State School Parents’ & Citizens’ Association Raffle drawn on 2 December 2003

Raffle Book Issued to Signature Number Number Receipts Signature of Number of book Sold Returned Organiser seller (upon return of tickets and money)

1 Mrs Harris A H 50 0 50.00 A T 2 Mrs Harris A H 45 5 45.00 A T 3 Mr Johns P J 50 0 50.00 A T 4 Ms Smith K S 40 10 40.00 A T Receipt Number

TOTALS 185 15 $185.00 AA138

Note that the gross amount of $185.00 was given to the treasurer and a receipt obtained.

Accounting for Parents and Citizens’ Associations 2003 Proforma 1: Daily takings sheet

Daily Takings Book Date Gross Less Net Cash Count Banked Receipt takings float takings counted checked (signature of (signature of counter) checker)

Accounting for Parents and Citizens’ Associations 2003 Glossary asset Something with residual value in the next year. It could be tangible — for example, a piece of equipment — or intangible — for example, money stored in a bank. Items bought for immediate use, such as stationery, are consumed and do not become assets. accountable Defined as cheque books, order books and receipt books. forms accounting Are calendar months. Also see financial year. period accrual Financial transactions are recognised when the liability or obligation is created. accounting In accrual accounting the expense is recognised when the goods are received. Compare with cash accounting below. annual financial The set of reports is required to be completed each year. The section ‘What to statements Report’ will fully detail the required documents. annual turnover The annual turnover registration threshold is based on current or projected registration turnover (net of GST) for a rolling (backwards or forwards) 12-month period. threshold Total turnover is gross receipts of all activities and subcommittees (for example, Outside School Hours Care (OSHC) subcommittee or uniform shop), but excludes the turnover from sales of food and drink from the tuckshop and specified non-regular fund-raising events such as the annual fete. auditor The person appointed by the P&C Association to audit (officially examine and verify) its accounts. authorised Someone who has been approved by the P&C (by motion at a meeting) to act on its behalf. balance The amount of funds in a bank account at a point in time. For example, a monthly balance is the amount of funds in the bank account on the last day of the month. balance sheet One of the annual financial reports. See Example 8. blank cheque A cheque that has the amount or the payee sections blank. Never sign a blank cheque. bank Verifying that balances in the bank match those recorded in the books of the reconciliation association and explaining any differences that exist, such as unpresented cheques. This is a critical process in achieving financial accountability. Example 3 details budget A planning document to show plans for expenditure and expectations of income for the planning period (usually the financial year of the P&C). business activity An Australian Taxation Office return is required to be lodged by P&Cs that have statement registered for GST. cash accounting The process of recognising financial transactions only when there is a cash impact as opposed to accrual accounting (see accrual accounting above). In cash accounting an expense is recognised only when the invoice is paid. cash book A book detailing the cash receipts and cash payments. See Example 2. cash flow The process of ensuring that funds will be available for planned expenditure at the time the payment is required. Usually done in conjunction with the budget on a monthly basis. While total income may exceed total expenditure, the funds must be available at the time of payment. To avoid a cash flow crisis, it may be necessary to revise the budget or delay expenditure until more income is available.

Accounting for Parents and Citizens’ Associations 2003 cash flow A report detailing the timing of receipts and payments. See Example 1. statement consolidated Where more than one set of accounts is generated, a combined or summary statements statement must be produced. This consolidated report is simply the sum of the individual reports, for example, a summary receipts and payments report. cumulative totals Cumulative totals are the accumulation of a total with a previous total. This process is used in cash books and similar. To show the grand total up to the present (YTD figures). daily takings A daily report completed by the tuckshop, uniform shop or other business sheet activity detailing the gross takings. See Proforma 1. deficit budget Where budgeted annual expenditure is greater than budgeted annual receipts. direct debit A process where a debt (payment) is taken directly from the bank account. Loan repayments may be arranged to use direct debit from the association’s account. electronic funds A method of making payments directly into the payee account. Wages may be transfer (EFT) paid this way. The process saves withdrawal of funds from one account for deposit into another account. executive P&C president, vice president/s, treasurer and secretary. members financial year The 12-month reporting period. P&Cs can choose their financial year to be January–December (the preferred option), July–June or October–September. float Temporary loan to allow for expenditure before income is returned. A float may be required for a fete, for example, to allow payment of expenses before the fete is held and money raised. imprest system A cash advance system, for example a petty cash float. A process to advance a certain amount to fund the purchase of minor items. input tax credits The tax credits available to GST-registered P&Cs on purchases that include GST. These credits are claimed on the quarterly BAS return submitted to the ATO. input taxed A non-profit sub-entity that is input taxed does not pay any GST on income received and cannot claim any input tax credits on expenditure. instalment An ATO return that is required to be lodged by a P&C that has employees but activity does not complete a BAS. P&Cs that are registered for GST and turn over more statement than $50 000 per year put these details in their BAS. inventory Stock on hand invoice The bill associated with ordering goods and services. It should match an order in all details. monitoring In the accounting context, the comparison between planning (budget) and actual results. Monitoring is essential to provide early warning of problems or to show trends. night safe An after-hours deposit box facility provided by banks so that cash taken late in the day can be stored safely in the bank outside banking hours. Never store P&C money in private homes. official Official business relates to the business of the P&C rather than to private business for an individual. Private and official business must never be mixed. payment Documentation supporting payments, for example, an invoice vouchers profit and loss One of the annual financial reports. See Example 9.

Accounting for Parents and Citizens’ Associations 2003 qualified audit The auditor has had to qualify his/her report because of a problem with the accounts. See Example 6a. receipt Can describe income or payments to the association, but is also the document issued to a person making a payment to the P&C to give proof of payment. recurring Payments that recur every year. For example, insurance is a recurring payment payments as opposed to the purchase of a photocopier, which is a one-off capital payment. register Used in the manual to describe a list. A register of accountable forms is a listing of all forms and their location or who has possession of them. reporting year See financial year above. revenue A program or activity that generates revenue. For example, a chocolate drive. programs senior internal An employee of Education Queensland, usually located in a district office of the auditor department. statement of One of the annual financial reports. See Example 7. receipts and payments stock Merchandise purchased for resale (inventory). Stock control is essential to prevent losses and to monitor value of stock on hand. subcommittee The Education (General Provisions) Act 1989 provides for P&Cs to have subcommittees. While they may have other names, such as Swimming Club or Parents’ Group, they are still subcommittees and are obliged to comply with this manual in all respects. trading activity An activity that generates a profit or loss, for example, the tuckshop or uniform shop trading One of the annual financial reports. See Example 5. statements transfer In the context of this manual, a transfer is the swapping of funds between accounts. These can be internal transfers, such as when profits from the tuckshop are transferred to the main account, or external, such as when invested funds are transferred back to the main account. Internal transfers need to be accounted for in consolidation of annual statements. variance The difference between what was planned and what actually happened. Variances are part of budget monitoring and causes of variances should be found to permit total understanding of the current position. voucher Documentation supporting a transaction. For example, an invoice when making a payment to a supplier, for an investment a suitably worded minute, etc. year to date Progressive totals for the year (to date) (YTD)

Accounting for Parents and Citizens’ Associations 2003 Activity answers

Accounting for Parents and Citizens’ Associations 2003 Activity 1 Budgeting Reasons for budgeting Sample answers: 1. An essential component of goal and direction setting for the school. 2. To get the best outcomes for students 3. A budget will:  assist in the accountability process.  reduce the likelihood of your bank account becoming overdrawn during the year.  confirm that funds are available to support planned activities.  help best utilise available funds.  allow P&Cs to develop longer-term goals such as building a tennis court.

Parties who should be involved in creating a budget Sample answers: The P&C and the school must develop plans together. The key people to involve are:  Treasurer  other executive members  Principal  other P&C members

Activity 2 Receipting Scenario 1 Your P&C and the school will need supporting documentation to account for the transaction. A receipt should be provided to the school. This receipt will contain the following information: 1 April 2002, Sample SS, Catering for Council meeting, $55.00. This receipt is to be signed by the holder of the receipt book. Note that the receipt will identify the full name of your P&C. Scenario 2 Again a receipt should be provided to Mrs Helper who counted and handed the money to you. You should count the money so that you can agree with the amount and then issue a receipt. This process removes any doubt as to how much was collected and you both can be satisfied that your accountabilities have been met. Ideally, Mrs Helper shouldn’t be left on her own to receive the money from students. However, we do have to be practical and accept on occasions that we will not get two people to help at the same time. Scenario 3 You will issue a receipt to Mrs Soap identifying all details including: date, who, purpose, $520.00 and that it was paid by credit card. The EFTPOS facility will also issue a receipt. Both receipts need to be provided to Mrs Soap. Scenario 4

Daily takings sheets are a great way to account for tuckshop collections.

Accounting for Parents and Citizens’ Associations 2003 Using a copy of the daily takings sheet (Proforma 1), enter the relevant information given in the case study.

Daily Takings Book Date Less Net Cash Count Banked Receipt float takings counted checked Gross (signature of (signature of takings counter) checker) 23 $3 $50.00 $3 Jane Sue $3 May 687.00 687.00 Arnold Beattie 687.00 2002 signs signs

The Receipt column would only need to be used when Jane and Sue hand the $3 687.00 to the treasurer to bank. If this occurred the treasurer should confirm the amount by counting the money and issuing a receipt for this amount.

Activity 3 Petty cash

Date Particulars Rec’ts Payments Postage Stationery Misc.

21/6/02 Cheque no.345 $50.00 21/6/02 Ream of paper $6.45 $6.45 Pen – one box $9.99 $9.99 2/7/02 Stamps $2.25 $2.25 3/7/02 Coffee $6.99 $6.99 4/7/02 Sugar $1.90 $1.90 18/7/02 Stamps $9.00 $9.00 Total Spent $36.58 $11.25 $16.44 $8.89 Cash on Hand $13.42 $50.00 31/1/03 Balance on hand $13.42 Cheque no.128 $36.58 Reimbursement $50.00