Changes to CFNZ Accounting Practises as a result of changes to the Charities Reporting Structure
The way in which charities report their finances has been changed as of 1 April 2015, and will affect
CFNZ from the 2016 Financial Year (1/7/15 – 30/6/16)
The most obvious change is that the CFNZ must now show consolidated accounts that incorporate
reporting on the income and expenditure of the branches as well as for the National Office. Instead
of the current one-line entry of ‘branch operating results’ in the statement of financial performance
and the ‘branch assets’ on the statement of financial position, these entries are now expanded and
as a result the whole report structure will change.
In order to consolidate the accounts into one report, we all need to be reporting on the same line
items, with the same interpretations as to what should be included in each line. This will mean that
the branches have to add some further lines to their reports to enable this to be done clearly.
National will also have to change the structure of their MYOB system to incorporate this.
The New Structure
Each branch will report with the usual Statements of Financial Performance (Income & Expenditure)
and Financial Position (Balance Sheet) but with a few added categories (to be clarified later in this
report).
These reports will then be entered into a spreadsheet form (see Pages A & B) which will include the
results from each of the twelve branches. The line totals from this sheet are then added to the
National office results and reported as the CFNZ’s Consolidated Report (Page C).
The work comes when transfers made between branches and the National office (or between two
branches) need to be zeroed out. For example: the branch making a contribution to the National
Raffle. This cannot show as both an income for National and an expense for the branches. The same
would be true for branch contributions (grants) to general funds, subs and a number of other cases.
NOTE: The pages A, B, & C are only mock-ups to demonstrate the process and have not been
consolidated (internal transfers sorted).
Moving directly to the new reporting structure in 2016 will mean that the 2015 and 2016 reports
would not be comparable, therefore for 2016 only, the financial reports will be prepared in both the
old and new formats.
Review by an appropriately qualified professional is now compulsory for branches with assets or
income over $10,000 [CFNZ Constitution 10.1, Policy: Branch Operations 3.3]. The deadline for
audited branch financial reports to be at National Office will be extended to mid-September to allow
this to be completed.
Branches with income and assets below the threshold shall provide full accounts with all
applicable invoices/receipts and proof of expenditure and income (bank statements). [CFNZ
Constitution 10.1, c]
What the Branch Treasurers need to do…
Now…
Your cashbook / accounting system will need to be reviewed so that you are recording your
transactions into the correct line headings when they are entered. It is much easier to ensure the
correct headings are being used now rather than having to jostle them all at the end of the year.
You can choose to continue using your current book-keeping system or National can assist you to set
up a simple cashbook that will do most of the work for you. We have some simple cashbook files
that run in Excel and we have access to software if you need an upgrade in order to be able to run
these files. Some branches already use this cashbook spreadsheet. Those that do will need to have
theirs updated to add a few more columns in to meet the new requirements. Some branches run
other accounting systems. This is fine so long as the end-of-year reports show the appropriate
lines/groupings.
I have tried to keep the number of line headings short and simplified for the branch accounts, and
you will notice that the National accounts have quite a few more that you will need. Some branches
may need to have more lines particularly those that employ staff, use contractors or maintain
offices. I will be liaising to each Treasurer separately to ensure that we have the best fit for your
branch. You can record into more lines if you need to for clarity when reporting to your own branch,
but for the purposes of consolidating the accounts I have highlighted the main headings that I would
like you to use. (See Page A)
What else the Branch Treasurers need to do…
Now or later… (before March 2016)
The financial reports always have the previous year’s data for comparison, so we are going to be
required to prepare the 2015 accounts in the same format (retrospectively) so that this comparable
data is available.
2015 data will need to be reprocessed to meet the new criteria, please see my comments in the next
section about what should be included in each line heading. Some of the changes that may apply
are:
Income:
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separate fundraising income from expenses, show gross income
grants: any unexpended portions identified
any income from other branches identified
Expenses:
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welfare spending divided into sub groups
o heating (eg. clothing/bedding/firewood or electricity for winter heating)
o nutrition (eg. grocery assistance, supplements, weight gain, probiotics)
o medical (eg. flu vaccination, prescription charges, dentures, medic alert, St John’s
Ambulance, diabetic needles)
o quality of life / end of life (eg. counselling)
o discretionary (extras approved by your branch that fall outside the pre-approved
purposes, or amounts approved above the $500 cap)
o equipment
o funeral grant (top-up added to National grant)
o breath4CF grant (top-up added to National grant)
o physiotherapy services
social impact grants: separate from welfare
education, newsletters and conference costs separated
identify expenses/contributions paid to National or other branches
review classification of administration expenses into appropriate lines
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show all fundraising expenses
Balance Sheet:
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stock of merchandise and vouchers as at 30 June 2015
unexpended grants
accounts payable / receivable
Are we on the same page? Interpreting what should be assigned to each line heading:
INCOME
Donations & Bequests: Donations are unsolicited gifts, the donation arrives through no work of your
own (other than maybe increasing Awareness of CF). Bequests from estates are treated the same as
donations, whether they are solicited or not.
Examples: Donation boxes, online donations
Fundraising: Any solicited funds. Asking in any format is considered fundraising (grants are
fundraising but they are grouped separately, see commentary below)
Examples: shaking a bucket for Awareness Week, direct mail request, donation slip with the
newsletter, events, gross income from the sale of chocolate fish
All funds from fundraising should be recorded as the gross income. The total funds received should
be recorded before any costs are taken into account. Fundraising costs should be recorded
separately under expenses.
Grants: Whilst grants are solicited they are treated differently as they are not the CFNZ’s funds until
such time as they are spent and reconciled with the Grant Funder. Until they are spent they are a
liability, and would have to be repaid if not spent. This liability criteria can be used to distinguish
whether something is classified as a grant or fundraising/donations. If the funds do not require a
reconciliation report to the Funder on completion or repayment in a set timeframe, then they can be
looked at as a donation / fundraising.
Unexpended Grants: At the end of each financial year those grants that you have received but not
yet spent are not recorded as income and are journaled to show as a liability on your balance sheet
Example: Your branch has received a grant of $5000 for equipment in June, but you have not been
able to purchase all of the items in the short time before the end of the financial year, and you have
only used $2300 of the grant. Only $2300 should show in your Grants income, the remaining $2700
should not show as income in your P&L and should be recorded as an ‘unexpended grant’ in your
liabilities. After the year has rolled over this is reversed and the $2700 can be brought back from
liability and expressed as income in the next financial year.
If you need assistance with managing these transactions I am happy to help you sort them. Please
ensure you keep track of when a grant has been fully expended or not.
Interest: All interest earned on your funds in your cheque account, savings and investments.
Membership Subscriptions: Some branches collect subscriptions, some don’t. If yours does please
record it here and not as a donation or other income.
Other Income: This should be very small or non-existent. It is only for those items that simply do not
fit anywhere else. If the value that you are putting into this line heading seems larger than expected
then we should be looking at whether another line heading is required.
Example: Financial support offered by another branch. For consolidation purposes this must be
clearly identified as movement of funds between branches and needs to be zeroed out.
OPERATING EXPENSES
Welfare Grants: The grants that are recorded in this section are those for the welfare of the client
and are on a basis applied equally throughout all branches. The reason must be CF-related and meet
the criteria set out in the CFNZ Welfare Policy.
The approved range of needs have been grouped heating, nutrition, and medical-related needs such
as prescription charges, medic alert, St John, and Quality of Life & End of Life needs. Equipment
grants are recorded in another line.
This does not include the grants made at the branches discretion such as a top-up to the Breath4CF
allowance and top-up to the CFNZ Funeral grant and Physiotherapy Services. These also have their
own lines.
For the portion of the current year where the branches have been administering the welfare grants
then the four groupings listed above should be used, and reported individually. This allows CFNZ to
have a full picture of how our support is being utilised.
Equipment: The costs of items of equipment that are supplied to members as a necessity for
treatment should be recorded here. It should be recognised that the CFNZ is the official ‘owner’ of
any equipment supplied to members. CFNZ would never ask for it to be returned (except with very
high cost items such as oxygen concentrators and only when they are no longer being used) but for
the purposes of GST recording CFNZ owns the equipment.
Some branches offer to supply items that are extra to what the branch normally provides for
treatment, such as mobile nebulisers or e-flows. In order for this to remain within the legalities for
GST purposes these items cannot be ‘purchased’ by the member at the GST exclusive price charged
to branches. Alternatively the member can make a contribution which is receipted as a donation,
and the ownership of the equipment remains with CFNZ.
These items of extra equipment are invoiced to the branch as with normal supplies, and it is up to
the branch’s discretion as to how much they accept as a donation.
Physiotherapy Services: Some branches provide the services of a physiotherapist for their members.
If your branch provides this service all the expenses for the provision should be in this line.
Funeral Grants (at branch discretion): Some branches have indicated that they have a standing
amount that they will contribute to the funeral of a CF client. This is usually administered by the
Fieldworkers and included with the National office grant, and paid directly to the funeral director.
The branch is then invoiced once the payment has been finalised.
Breath4CF Top-up Grants (at branch discretion): Some branches have indicated that they have a
standing amount that they will contribute to top-up the Breath4CF allowance of a CF client. This is
usually administered by the Fieldworkers in conjunction with the Administrator and invoiced back to
the branch as with other welfare grants.
Social Impact Grants: Included in this line are all the items that are the ‘nice to haves’ as opposed to
those ‘welfare’ needs. These social impact grants are administered by the branch and are at their
complete discretion.
Example: Hospital packs, inpatient support, birthday and Christmas acknowledgements, Trip of a
Lifetime, and social gatherings (but not branch meetings).
Advertising & Promotion: any expenses incurred as part of promoting general CF Awareness
through advertising such as in newspapers, magazines, website etc. This does not include the
advertising for specific fundraising events which should be recorded as fundraising expenses. If your
branch has a website then the costs incurred should be recorded in this line.
Example: A number of local newspapers offer advertising available in Volunteers Week, or general
advertising of the CFNZ / Branch services.
CF Newsletters: Expenses related to the publication of newsletters for your community.
Example: printing costs, mailing of newsletters
Education Programmes: If your branch runs education programmes or provides assistance for
members or Allied Health Professionals to attend personal development or training programmes, or
assists members to attend conferences (other than the CFNZ conference). These expenses should be
included in this line.
Example: coffee mornings with speakers on CF topics, assisting Allied Health Professionals to attend
conference here or overseas for professional development
CFNZ Conference: This is a separate line as it is usually a fairly large cost to the branches and should
be itemised separately.
ADMINISTRATION EXPENSES
Some of the line headings below will apply to only one or two branches
Fundraising Expenses: All expenses associated with fundraising for events or general fundraising
activities should be accounted here. For reporting in the end-of-year accounts one total amount is
all that is required. Your branch may want to have more detailed income/expense reporting on
individual events, so you may choose to use more lines under this heading.
Example: purchase cost of chocolate fish, posters & flyers, lapel stickers, costs associated with
running events
Printing / Stationery / Photocopying: All stationery related costs and general printing costs. If you
are printing a newsletter the costs should be applied to the ‘CF Newsletter’ line.
Postage / Freight / Courier: Costs of delivering letters and equipment should be recorded in this
line. As above, costs of mailing newsletters should be applied to the to the ‘CF Newsletter’ line.
Bank Fees: All bank associated fees.
Accounting / Audit Fees: Audit Review costs itemised separately.
National Association: Subscriptions, raffle contributions and any other contributions to the National
Office should be recorded here. For consolidation purposes this must be clearly identified as
movement of funds between Branch/National needs to be zeroed out.
Travel Costs: Costs of travel for staff or volunteers to carry out administration duties
Example: Travel and accommodation to attend Chairs Conference, mileage reimbursed to volunteers
for travel to meetings (Registration cost recorded in Other Staff Costs)
Other Staff Costs: Any other costs associated with staff/volunteers completing their duties
Example: Chairs Conference registration, attending training courses, meeting expenses
Office Rent / Electricity / IT Support / Office Cleaning: Self explanatory.
Insurance: Self explanatory.
Telephone & Internet: Self explanatory.
Staff Salaries / Contract: Administrative staff only. Contracts for provision of physiotherapy are
included in the line Physiotherapy Services.
General Expenses: This should be very small or not existent. It is only for those items that simply do
not fit anywhere else. If the value that you are putting into this line heading seems larger than
expected then we should be looking at whether another line heading is required.
Example: Financial support offered to another branch. For consolidation purposes this must be
clearly identified as movement of funds between branches needs to be zeroed out.
Depreciation: Fixed assets owned by your branch should be recorded and the depreciation on these
assets is shown as an expense on your P&L. A fixed asset is usually valued at greater than $500 at
purchase and has an expected life span greater than 12 months.
Examples: computers, printers, Christmas trees
A list of these items, (called an Asset Register), should be maintained and the depreciation
calculated each year. This can be a complex procedure. If you would prefer the national Office can
include your branch’s depreciable assets in the national register.
BALANCE SHEET
The balance sheet shows a summary of the assets (current – cash, and non-current – investments &
stock) versus the liabilities (unpaid bills & unexpended grants)
Some areas of the current reporting need to be tightened to make this report accurate.
ASSETS
Accounts Receivables: Incoming funds that should be included in the current year, that remain
unpaid at end-of-year, should be recorded as outstanding Accounts Receivable. These are funds that
you can reasonably expect to have earned in the current year and are included in your year’s
income.
Merchandise in Stock: Stock value of merchandise items such as pens and chocolate fish should be
recorded as a current asset. Stock value is the price at which you purchased it.
A physical stocktake should be done at end-of-year to validate this value.
Vouchers: Vouchers are a form of cash and as such should have similar controls in place as cash
handling does.
A record of where vouchers are spent/granted/used and their value should be maintained and this
should be balanced against stock in hand on a regular basis (monthly/bi-monthly). The value of
vouchers on hand at the end-of-year is to be included in the stock on hand value for the balance
sheet.
LIABILITIES
Accounts Payable: any invoices that you have received for activity within the current year, that
remain unpaid at end-of-year, should be recorded as outstanding Accounts Payable. These are bills
that you have incurred in the current year and will be included in your current year’s expenses.
Unexpended Grants: As previously mentioned any unused portion of grant funds are a liability until
such time as they are fully utilised. This only requires notice at the end-of-year, when an unused
portion is subtracted from income and listed as a liability. This transaction is reversed at the start of
the new year and the unused portion shows as income in the next financial year.