M1: Learner Manual

10. Financial Reporting

One of the reasons for incorporating an organisation is to create a legal entity that can own property and raise money to conduct business.

Once an organisation holds funds raised from either it’s members or any other source it is responsible, through the Board for keeping financial records and reporting on expenditure. Sources of funds for which a Board may be responsible include:

• Public donations
• Subscriptions
• Sales of goods
• Grants from State and Commonwealth government 
• Philanthropic foundations and trusts
• Loans from banks and other financial organisations

There are particular requirements for accountability attached to grants provided to the organisation by governments and philanthropic trusts.

Governments need to know that the organisation has spent the funds provided in the agreed manner, so the government can in turn meet its accountabilities to taxpayers. Philanthropic trusts have Boards of trustees who ensure that use of trust funds meets the goals of the trust and that organisations that receive funds use them appropriately.

Incorporated associations are also required to report annually on their financial situation. This requirement is for a comprehensive reporting of all financial dealings on an annual basis and is called the Annual Statement of Accounts.