1. Financial Management Part 2

2. An initiative of the NSW Government FM II: End of Year Cash vs Accrual Accounting Auditor Audited Financial Statements Acquittals

3. An initiative of the NSW Government How does financial management fit in? Financial Management Operational Management Strategic Management

4. An initiative of the NSW Government What is financial management? Strategic Goals Planning Reporting Forecasting

5. An initiative of the NSW Government Just a Reminder… Board members must be able to: »Read financial reports »Understand compliance requirements »Ensure compliance »Set financial direction »Monitor and review finances

6. An initiative of the NSW Government Cash vs Accrual Accounting

7. An initiative of the NSW Government Cash vs Accrual Accounting

8. An initiative of the NSW Government My Income Statement for the Fortnight ended 31 March 2007 Income Wages Birthday Money Total Income Expenditure Bookshelf Delivery Rent Food Phone Bill Total Expenditure Surplus/Deficit $1,000 $400 $50 $450 $550 CASH ACCOUNTING

9. An initiative of the NSW Government My Income Statement for the Fortnight ended 31 March 2007 Income Wages Birthday Money Total Income Expenditure Bookshelf Delivery Rent Food Phone Bill Total Expenditure Surplus/Deficit $1,000 $1,250 $400 $50 $100 $50 ACCRUAL ACCOUNTING $250 $500 $150 $1,200

10. An initiative of the NSW Government Accountant vs Auditor

11. An initiative of the NSW Government What to expect from your auditor »A good track record »A pre-audit meeting »List of required information »Explanations of any issues »Audit management letter »Independence

12. An initiative of the NSW Government Changing auditor »Not as easy as you might think… »Determined by basis of incorporation (NSW or ASIC)

13. An initiative of the NSW Government What do they do? They dont look for fraud They do: »take samples »review and test internal controls »look at trends and ratios, and investigate anomalies

14. An initiative of the NSW Government Internal Controls

15. An initiative of the NSW Government Audited Financial Report 1.Directors Report 2.Auditors Declaration 3.Audited Financial Statements 4.Notes 5.Directors Declaration 6.Auditors Report

16. An initiative of the NSW Government Directors Report »Period being reported »Names of directors »Principal activities »Review of operations »Significant changes

17. An initiative of the NSW Government Auditors Declaration »Standards inferred from basis of incorporation »Professional conduct

18. An initiative of the NSW Government Audited Financial Statements A closer look…

19. An initiative of the NSW Government Audited Financial Statements »Statement of Comprehensive Income – P & L »Statement of Financial Position – Balance Sheet »Statement of Cashflows – Cashflow Statement »Statement of Changes in Equity

20. An initiative of the NSW Government Profit and Loss Statement Reports income and expenditure over a period of time »Income – what we earn »Expenditure – what we spend

21. An initiative of the NSW Government

22. The Balance Sheet »Lists assets and liabilities at a given date »Asset – we own it »Liability – someone else owns it »Called a balance sheet because the two sides balance

23. An initiative of the NSW Government

24. Cashflow Statement »Cash in and out over a period of time »Revision – cash and accrual accounting »Turns P&L from an accrual basis to cash

25. An initiative of the NSW Government

26. 1.

27. An initiative of the NSW Government Equity Statement »Movement in net assets/equity position »Affected by annual profit/loss

28. An initiative of the NSW Government STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2010 20102009 $ $ Accumulated surplus/(deficit) at the beginning of the year (33,682) (47,780) Surplus for the year 17,517 14,098 Accumulated surplus/(deficit) at the end of the year (16,165) (33,682)

29. An initiative of the NSW Government Notes

30. An initiative of the NSW Government Directors Declaration »True and fair view »Solvency statement: The Directors have reasonable grounds to believe that the organisation is able to meet its debts as and when they fall due.

31. An initiative of the NSW Government Auditors Report »Scope »Audit opinion »Independence »Statement of Compliance

32. An initiative of the NSW Government Auditors Report

33. An initiative of the NSW Government ADHC Acquittals »ADHC acquittals to be completed annually »Or else… »ADHC resources: Acquittal Guide, Acquittals Hotline 1800 739 872

34. An initiative of the NSW Government Type 1 Service Providers Less than $100,000 funding Signed Acquittal Summary Statement An Income and Expenditure Statement for each Acquittal Group ADHC Statement of Expenditure for each group Reconciliation statement (if required) Surplus Retention form (if required) Completed Checklist

35. An initiative of the NSW Government Type 2 Service Providers Greater than $100,000 funding Audited Financial Statements Asset Register (if required) Signed Acquittal Summary Statement Income and Expenditure statement for each group ADHC Statement of Expenditure for each group Reconciliation statement (if required) Surplus Retention form (if required) Completed Checklist

36. An initiative of the NSW Government Acquittal Requirements »Signed Acquittal Summary Statement »Surpluses »Standard Chart of Accounts

37. An initiative of the NSW Government Next steps »I»IYB Checklists »T»Tailored consultancy »R»Register for Quality »Y»Your suggestions »E»Evaluation

38. An initiative of the NSW Government Financial services Management support Financial literacy Training (RTO) NFP experienced staff Thank you! Matrix on Board provides financial and management support to non-profit organisations Matrix is part of the NDS Good Governance consultants panel Contact us on 02 9281 1700 or at admin@mob.com.au