This is how you efficiently handle the mandatory cash check of your association!

There are 42,560 associations in the Netherlands in the second quarter of 2023, according to the figures of the Chamber of Commerce. The best-known association is ANBW, followed by the KNVB and FNV. Characteristic of an association is that the goal is not to make a profit. In most cases, social activities are organized. It is allowed to make a profit, but this amount must be used for social activities.

It is a legal requirement for every association to have an audit committee. This is stated in Section 2:48 of the Dutch Civil Code. Read in this article how you can approach the mandatory cash check as efficiently as possible.

How do you perform a cash audit as efficiently as possible?

If you are designated to become a member of the audit committee, it is necessary that you have access to all books and records of the association, such as the membership records, minutes of meetings and financial records. The board is obliged to share with you all the information you need. Below, 7 steps are explained to you to perform the check as efficiently as possible. Please note: these steps can be seen as a basic guide. Depending on, among other things, the size of the associations, other laws and regulations may apply.

Step #1 Get an accounting package to minimize the chance of errors

You can choose to perform the cash audit manually or with the help of special accounting software. The big advantage of this program is that you have less chance of making mistakes. In addition, you can view the current financial data anytime, anywhere.

An example of accounting software is e-Bookkeeping. With this program you can easily keep track of your accounting, invoices and time registration. Associations benefit from a greatly reduced rate with this software. The first 30 days are a trial. You then pay 9.50 euros per month for bookkeeping and 8.50 per month for membership administration. Regardless of how many members your association has.

Step #2 Check opening and closing balance

Once you have chosen a software for your accounting, in the second step it is time to check the opening balance of the balance sheet with the closing balance of the balance sheet of the previous financial year. It is essential that the amounts in the annual report correspond to the final amount of the accounts and cash. In case of any deviations, it is necessary to look for explanations. These statements are important to share during the General Meeting of Members.

Step #3 Check list of all charges

On the cost specification you can read what the booked costs are, including details such as the date of payment and the description. This detailed information is usually provided to you by the treasurer. You check whether proof of payment is available for each expense. This can be an invoice or a statement. You can perform the checks on the basis of samples. Have you purchased special accounting software? Then you can more easily look up all costs in the general ledger.

Step #4 Verify that all invoices have been paid

If an invoice or declaration is available for all expenses, it is important to check whether each invoice has actually been paid. You can check this by checking daily statements of the account. Keep track of which invoices you encounter that have not been paid.

Step #5 Is the income in the annual accounts correct?

In addition to expenditure, it is also necessary to check which income there is and whether it is correctly stated in the annual accounts. With income you can think of, among other things, the contribution of the members, possible donations, sponsorship and other income. Also during this step, keep a close eye on whether there are members who have not paid their dues or if you encounter other anomalies.

Step #6 Budget vs reality

In step 6 you check the budget. You look at the actual yield and the costs incurred. If you discover differences, it is necessary that you look for a possible explanation. In addition, it is advisable to check the sums in the annual report. If you use e-Bookkeeping, you will find the totals under the ‘Profit & Loss’ overview.

Step #7 Reporting results

In steps 1 to 6, you mainly focused on checking and explaining any deviations. In the last step, you compile a report describing the results of all checks. Deviations must be stated in this report. In addition, you also share this with the board and during the General Meeting of Members.

Everything about the legal obligation of the audit committee

The audit committee at an association is mandatory if the financial data are not checked by an external accountant. In this case, at least two persons are appointed by the General Assembly to take on this responsible role of an external accountant.

The description of the committee states that the balance sheet and the statement of income and expenditure are examined, including explanatory notes. The members then submit their report during the General Meeting of Members. Any errors that are not discovered by the members may result in incorrect decision-making, with a threat to existence in the extreme case.