Why Associations Need Accountants
It has been observed that new business owners and freshly-founded organizations often overlook the importance of having in-house accountants while being trapped in daily operational chaos. However, an accountant is needed for every association as they play a crucial role in various areas for running the association.
Financial Reporting and Cash Management
Financial reporting and analysis is a significant function that accountants provide. Accountants prepare financial statements periodically according to different groups of readers’ needs including: the Treasurer, President, members, bank, and government. They keep a clear track of all transactions, identify possible adjustments to the financial statements including note disclosures, and show highlights of the association’s financial performance. This financial analysis could pertain to specific areas that different readers might have more interest in. For example, membership renewal and new recruitment, conference and certification. The customized reporting and analysis will help the association set up a more realistic strategic plan and budget for the future.
Cash management is also an indispensable service that accountants provide. Associations need enough cash and reserves to fund the daily operations and accountants are needed to monitor the cash balance and budget for cash flow.
The Canadian Revenue Agency (CRA) and the government generally reserve the right to go back seven years to audit the association’s financials and tax filing. Therefore, it’s important for associations to keep consistent and proper bookkeeping and file the tax accurately each year on time. Missing the deadline or filing the incorrect amount could result in a future penalty and interest. Accountants protect associations from the audit risk and conduct tax planning when needed.
General Governance and Control
The accountants usually provide insights into the strategy and governance of the association. They analyze the association’s governance policies, design the internal control system and make sure the governance structure as well as the control system work effectively and are in compliance with the association’s mission, vision and regulatory. When there is lack of internal control system, inefficiencies usually arise in the association which can easily lead to a cash crisis. The accountant can help with setting up the procedure and monitoring the work flow to mitigate the risk. The effective internal control also provides extra assurance to the association’s financial health and can alleviate the burden of the annual audit.
Accountants usually will not only provide financial management with the association but also offer consulting services and professional recommendations. If you plan to start an association, it’s better to bring an accountant in sooner than later.