Auditing a sports club - how do I do it

div_ad

I am a member of a small sports club.

Our turnover is small - around £5000 p.a.

I have been selected to audit the books. I guess I have been chosen because I am a sensible, educated, and respected member rather than for any expertise in finance or auditing.

Does any one know of a simple - 'idiots guide' or checklist of how to go about this? Or can anyone offer any advice?

By the way the treasurer is a 'proper' accountant so the books are well organised and presented and that is another reason I want to have a more professional approach to my task.
Thanks

Savvy_Sue

My auditor (small walking group) takes the books away, checks I've been given a receipt for any payments I've made, looks at the bank statements and sees that they tally (or not), checks my end of year balance sheet balances ...

Exactly the same happens at the charity I work for!

Don't be afraid to ask questions if there's anything you don't understand. The potential for fraud by a 'proper' accountant is probably higher than if it was 'Joe Public'. I'm not suggesting there is fraud here, any more than there is in my own group, but a professional would have a better idea of how to commit it. Equally if you do have to ask, don't let yourself be led through the accounts, IYSWIM.

Can you ask whoever did it last year?

div_ad

I didn't get much response to this post, though quite a few readers.

There must be lots of people put in the position I was. Maybe clubs have a pool of people who know what they are doing...

I found very little to help me and am still looking (and conducting the audit as best I can).

I found this on the scout website and the last page of it Appendix 3 was what I needed. Can anyone do better?

http://www.scoutbase.org.uk/library/hqdocs/facts/pdfs/lt103950.pdf

runninglea

Do you have someone prepare a set of accounts which is given to you?

If so have you a balance sheet and profit & loss account?

If there is only 5k of turnover then looking at every transaction probably wouldnt take long

However I would get the bank statements and firstly check that the figure in last years accounts matches the bank statement as of that date. Then get the last bank statement and ensure matches your closing figure this year.

For turnover set a figure of £100 (2%) of turnover and match all transactions over this amount to back up records eg till rolls, grants etc

For expenditure likewise do the same but match to purchase invoice

When looking at purchase invoices make sure they have been approved for either by signature on invoice or any minutes the club might have made

I'm guessing any major purchase will have to be agreed by board, also make sure the purchases are addressed to the club

Also check a sample of the trustees expenses if they put any through

accountingbod

what you are looking to do like runninglea said is 'prove' that the financial documents of the club give a true and fair presentation of the position of the club at the time they were prepared (and sometimes after as well).

If you think about this most simply, what type of transactions occured and what did it take for them to happen?

You are looking to prove each transaction you look and for this you must take on the position of someone who is un-biased.

Not having any financial knowledge is not going to help here i'm afraid especially for the balance sheet side of the accounts but as said above, it's not a large turnover so you should be able to look at most things. When it comes to statutory reporting rules, you will not be able to judge if things are being accounted for in the right way - i.e. revenue recognition etc.. so this may be a big hindrance for a 'proper' audit.

My guess is that they respect your abilities so you are acting as a double check that amounts have been input correctly and costed to the right area etc... rather than judging them on statutory integrity.

Some things to look out for would be items bought and sold quickly (which should be shown on a fixed asset register or a list of assets) as this could be money-laundering or a different kind of trading to the one the club exists for.
Other things to check would be, are there different people that authorise payments against those who process the invoices?

You may find buying a second hand textbook on auditing useful if you get really stuck. My ACCA textbooks were published by Kaplan and we had a whole module on Auditing. It may give you some more insight if you are interested.

Main rule is... be un-biased and be critical of what you are looking at. Don't be afraid of asking for more information on things if they don't make sense.

Chances are there is a normal explanation, but one good thing that comes from auditing is that it also help those who prepare the accounts to be more aware of improvements they could make in the future also.

div_ad

Thank you all for your thoughts. I have taken the check-list I found and your comments and got stuck in.

I think all is going well and I am learning lots about this quite small organisation which actually moves round a lot of money and fortunately seems very well managed.

Not least is that treasurers of small clubs put in a lot of work. Oh and mine is brilliant and happy to answer questions and explain things - so far.

I have had to politely ask for a bank statement which proves the cash in a savings account - as opposed to a statement a few months before and a reconciliation. Most difficult is to ask to count the cash and reconcile to the current position (this hasn't been done before, the treasurers cash count has been trusted).

I have seen enough to be convinced all is well (as I expected). Issues which I would welcome advice on whether to comment on are:

The advisability of the club purchasing stock from relatives of the committee (I think to get a good deal).

Receipts which are a bit amateur from small caterers and suppliers (they are receipt books without addresses, or home-made invoices). What minimum info should be expected to verify that the spending took place?

The club has a lot of 'pass through' cash where players pay money for competition entries, registrations etc and it is all passed on to someone else. Since it balances out should it appear in the income and expenditure? Currently it doesn't.

I would like to write a brief report on what I did and what I found so that future auditors and the senior committee members/treasurer know what I looked at and my thoughts. Should I do this? How? And who should I give it to? I thought I'd draft one, show it to the treasurer for his thoughts, and try and get buy in. Is this appropriate? It hasn't been done before.

Any replies would be welcome but I have also posted this to indicate to future readers some issues they may find. I'm a bit of an anorak (probably why I got the job of doing this), I want to do it well and because the club are all friends I don't want to cause offence by being too picky or equally being seen as not thorough and responsible.

Thanks

spenderdave

And for a £5000 turnover you do not need an 'Auditor', the term to be used is 'Independent Examiner'. I have done this for a couple of organisations in the past and it is all pretty straightforward, just checking that everything tallies between bank and cash accounts and the presented annual accounts and there are no obvious errors.

div_ad

I agree. The term auditor is one I am uncomfortable with along with the 'declaration' I have been asked to sign. It is however the word the committee use and one which is more commonly understood. Scrutineer is the one I have seen used.

I guess your attention to detail like this is why you got the job:D

I do disagree that is straightforward - it certainly isn't to me! That's why I needed help. Perhaps I could come over and show you the books?

The turnover is actually a lot bigger than I thought - maybe 20k then there are assets as well.

Mistral001

Auditor usually means a chartered accountant. It appears that you have been asked to study the books as a sort of checker of the treasurer's work. However, this might give the committee and the members more comfort, but it is unlikely to satisfy the bank or any other authority.

heretolearn_2

If this were just an internal review for their own management purposes, it's fine to call it an audit.

But at their income level I take it they are a registered charity? In that case it mustn't be called an audit and you must not sign any declaration calling yourself an auditor. Only Registered Auditors can do this and you must not 'impersonate' them. Even most professionally qualified accountants such as chartered accountants are not qualified as Registered Auditors. It's about the only part of accountancy that is regulated to the extent that you MUST have the right registration in place to call yourself and auditor or do an audit. (again excluding informal use of the terms for internal purposes only). don't sign off anything calling yourself an auditor that will go outside the organisation.

If you look here you'll find the charity commission guidance on Independent Examination. http://www.charity-commission.gov.uk/Charity_requirements_guidance/Accounting_and_reporting/Auditing_accounts/default.aspx

It has its responsibilities and you need to take it seriously (although on the other hand the Charity commission has bigger fish to fry and in my experience wouldn't care if a small charity got a trained chimp to sign off their accounts). You are supposed to be an appropriate person with financial/accounting background for this.

However, an Independent Examination is not required by Charity commission until income is over £25k. You are saying £20k, so this is not a statutory requirement, so I guess we are back into the internal audit for their own management purposes area, so just do your best.

Two quick points -
charities and non profit orgs have 'income' not turnover. Turnover is for businesses.
Assets owned don't form part of income, so the £5k you were originally told may well be right.

Mistral001

In addition to my previous post, nobody expects you to be a free chartered accountant or have the expert knowledge or skills of one. I have been in sports clubs where unqualified members have "audited" the accounts and signed them along with the treasurer. No declaration was made. However, upon legal advice we changed our procedures to getting a chartered accountant to sign them off.

I would not sign a declaration without seeking legal advice, even if you have to pay for the legal advice yourself.