Manual for AEGEE locals and working groups Financial Report 2008 prepared by Audit Commission – Nico Huurman, the president, Miroslaw Krzanik and Enrico Borella. A small comment from the current Audit Commission for the beginning. Dear Reader, This manual was prepared to help you filling in your Financial Report 2008. We hope it will be useful for you. The deadline for submitting the Financial Report is the 1st of February 2009. Please send your file to firstname.lastname@example.org. First of all you probably have noticed that the Financial Report form is very similar to the previous one. The same is true about this manual. It is also very similar and it was upgraded only by adding some new information about fundraising. There are only small changes so if you succeeded last year with filling it in there won’t be any problem this year either! Now let’s move to the content of our work. As you might know the financial report consists of two different things which are very closely linked to each other. The results and the balance sheet. Firstly the reporting period. Most organisations have a bookkeeping period from the first of January until the 31st of December. AEGEE-Europe also has these dates as beginning and end. Some bodies within AEGEE however start their financial year at another point. This is not wrong. Therefore we do not ask you to “translate” your numbers, if this is the case, but you can hand them in for instance for a period from the 1st of September until the 31st of August. It is important to remember that the financial year should be consistent every year. So if you started this year at the first of September, the following year you should start at the same date. Otherwise the results and the balance will not be consistent. More about that later. Enjoy your work! The Audit Commission: Nico Huurman (President) Enrico Borella (Member) Miroslaw Krzanik (Member) Results Here you fill in the expenditures and incomes of your body. Expenditures are amounts you spend on different things. Income speaks for itself. Expenditures side: Overhead costs Overhead costs are the most basic expenditures, which every association has. The different types mentioned are most likely not all of them made by your body . If they are not, there is of course no need to fill in an amount. Fees This is the money paid to AEGEE-Europe. It should consist with the amounts paid at the AGORA(e) and the amount you still have to pay for this financial year. Only the money for your financial year should be included. Money paid for previous years, should have been in one of the earlier financial report. All other expenses speak for themselves. A tiny remark on the Chamber of commerce. Most student associations are a member of the national Chamber of commerce. There you handed in your Statutes. For this membership you pay an amount of money. Also if you extract information about previous years, for instance the board members of the last couple of years, you also pay a certain amount. This is an example of “other overhead costs”. Income side: Subventions and sponsors Subventions are funds you get from certain institutions when you apply for them. For instance if you have asked a foundation for money you need to put the amount you got at subventions. If the amount granted is for a special project please add a remark so we can compare the incomes and expenditures of this project. The new point in here is “Subvention European Union”. It was added because grants from mostly Youth in Action are becoming more and more popular among AEGEE locals. If your application for a YiA grant was accepted do not forget about a short description of this project in the bottom of Financial Report 2008 form. As there were many doubts about sponsoring in-kind we wish to make it clear that you always have to estimate a real value of things you received. It could be done by checking prices of similar products or services. In this case these items appear as “inventory” on the balance sheet, unless you use them before the end of the financial year. Then the value of the sponsoring in-kind should be both under incomes and under expenditures. Fees The amount put here should NOT be your membership fees multiplied by the number of members you have. It should be the amount you received from your members and still should receive for this financial year (of course that should be your fee times your members, but only if you really expect that all your members will pay). For the SU applications goes the same. If you do not ask the people going on SU for the 2.50 euro fee it should not be there. Of course you still have to pay the amount you owe to AEGEE-Europe for the number of people applying for a SU. As AEGEE is a non-profit organization the total amount of expenditures and income should be equal. If your subtotals are exactly the same you are a either a very good planner or you did something wrong, because usually they are not the same. The difference between them is your profit or loss. Balance The opening balance is the same as the closing balance of last period. With the exception that you added your profit or loss to your owner’s equity. As we have received the closing balance of the previous financial year from your predecessor, this will be one of the things we check. Assets are things you own, your possessions. Like the money in your cashbox or on your bank account. Liabilities are debts you have towards other people. For instance if you get a loan from a bank it should be on the right side of your balance. Owner’s equity is nothing more then your assets minus your liabilities. This makes that the total of your assets must be the same as the total of your liabilities and owner’s equity. Differences between money flow and income/expenditure Not every euro you pay is a cost, neither is every euro you receive an income. To account for the difference between these two things there is a balance sheet. If you pay an invoice now for an event that is going to happen next financial year, this transaction should not be in your results. Instead the company you paid to is a debtor. They owe you a service for the amount you paid. They will be delivering that service next year. The same goes for an invoice paid this year about an event that took place in the previous financial year. If the previous treasurer was right he/she should have put that company as a creditor. You can just pay the invoice and remove the creditor, without any change in the results. If your predecessor forgot to put a company as creditor, the payment you make unfortunately is an expenditure in your year. You have to put this amount in the budget line suited for it. Debtors People within or outside of your body who owe you money, they for example still haven’t paid their membership fee, are called debtors. In the example that one of your members at the end of your financial year still didn’t pay their fee, the amount will be in your results, but as it has not been added to your cash box or account you need to add this number to the balance at the debtors post. When they pay in the next year it will not be in the results, but you will see the amount in your bank account or in your cash box increasing with the same amount that your debtors will decrease. If you pay by cheque you have to wait deleting the amount of the invoice under debtors until it is cashed and your bank account will decrease. Another form of debtors are prepaid expenses. You already paid an invoice for a company, but still have to receive the service in the next year. Inventory Inventory is only relevant for body’s who sell clothes, towels or other items. Usually when the items were purchased they would be at expenditures in the results and if people buy them the money you receive from buyers will be on the income side. However, when items stay longer within your body then just this financial year, they are put on the balance. The best way to approach this is to put the total amount of the items on the asset side of the balance at inventory. If you sell one item you will add the amount by which you sold it on the income side of the results. The amount which it cost to buy the one item you will need to add on the expenditure side (you can calculate this by dividing the total amount your body paid to the supplier by the number of items). You then deduct the costs for one item from your inventory and automatically the amount on your account or in your cashbox will be increased by the amount the buyer paid for the item. Not a very easy thing to do if you don’t have a bookkeeping program, so try to sell everything within the year or ask us (the Audit Commission) for our bookkeeping macro we made in excel. Liabilities and Owner’s equity Owner’s equity is calculated as mentioned before by deducting your liabilities (debts) from your assets. Organisations like ours usually don’t have debts in the usual way. The only liability mentioned in the balance are creditors. The opposite of debtors. For instance, being the very bad body you are, you still didn’t pay your fees of this year. DO IT NOW! Well, then at your expenditures you won’t have an amount by fees, or a lesser amount if you paid only a portion. The amount you still owe AEGEE-Europe will be (one of) the amount(s) mentioned at creditors. If you pay the amount the next financial year it still will not be in the results as expenditures, but you will deduct it from the amount stated at creditors. Another form of creditors are prepaid incomes. If some members already paid a fee for an event, next year you still owe them the service attached to this money and having the same value. Opening balance The opening balance is everything your predecessors left you with. It can not be changed as it is the same as his closing balance. During the year you will hopefully have paid al your creditors and, as the very functional treasurer you are, persuaded all your debtors to have paid the money the owe your body. Most likely you will still have some (hopefully new) amounts at both debtors and creditors, which will tell your successor what he still needs to pay. It is handy to keep record of who owes your body and to who your body owes money. Connection Now comes the big connection between the results and your balance. The result of your financial year, the profit or loss, needs to be the same amount as the one in your closing balance. So if you made a profit of 200 Euros, then in the closing balance under result should be the same amount. Of course if you made a loss, the result is negative. If it is not the same, you made a mistake. Doube-check all your figures, it’s the only way to find the mistake. Life as a treasurer sucks!