ASSOCIATION FINANCES

On this page, we explain what good financial management of an association looks like.  

In good financial management, all decisions relating to money are written down in minutes and there are receipts for purchases. The budget is realistic. It means that the income and spending are reasonably estimated and based on real figures.  

In good financial management, the association has an operations inspector and a treasurer or accountant. The board is responsible for ensuring that the accounts are kept correctly and filed on time.  

The members decide on the association’s finances at meetings. The board implements these decisions. The association must have good financial management if it applies for grants, for example.  

Good financial management includes:  

Plan of operations and budget 

The board of the Association draws up a plan of operations and a budget each year. They are approved at the annual meeting.  The plan of operations tells you what the association does. The budget estimates how much money the association will spend during the year.  

Accounting 

The association’s accounts are kept in duplicate. This means that in the accounts, the money is entered in two places, the debit and credit columns. Debit means where the money has come from. Credit means what the money has been spent on. 

Accounting should be based on a payment basis. This means that in accounting, entries are made when money is transferred from one account to another. Not when the invoice has been sent or received.  

Financial statements and annual report 

The financial statements are drawn up after the end of the financial year. The financial statements must give an accurate picture of how the association has done financially and what its financial situation is now. It is important that the figures in the financial statements can be compared with the figures of the previous year, and with the budget and the annual report.  

The annual report tells you the most important things about what the Association did last year. It is important that the annual report can be compared with the plan of operations and the figures in the financial statements. This makes it possible to check whether the association has done what it planned to do and how the money has been spent.  

Operations inspection 

The operations inspector carries out an operations inspection of the association’s activities. The operations inspection examines the association’s accounts and the use of money. It also checks that the administration is operating in accordance with the law. 

The operations inspector prepares a report for the annual general meeting. The report includes a record and a memo. The record tells you what needs to be fixed immediately. The memo contains general points to consider for the next financial statements. For example, it may suggest that you plan more carefully how money is spent.