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While a group’s committee or trustees are jointly responsible for managing a group’s resources responsibly, the position of treasurer in an amateur music group is an important one – they are the person who receives money and makes payment on behalf of the group, and keeps an eye on the bank balance to make sure that the group remains solvent.
Although it is a responsible position, it’s not as daunting as it may at first appear, and anyone can be a treasurer regardless of their accounting experience. The key qualities required are good organisation and good record-keeping skills. You can also use our template accounts spreadsheet.
Contents
1. Responsibilities
What does a treasurer do?
The tasks and responsibilities of a treasurer will be slightly different in every group, but the most common tasks are:
- Ensure that all incoming invoices and payment requests are processed and paid in a timely fashion.
- Promptly issue invoices or payment requests on behalf of the group and make sure payments are received.
- Ensure members subscriptions are received promptly, keep records of who has/hasn’t paid and chase those who have not.
- Be responsible for petty cash, including providing floats where appropriate.
- Reconcile these transactions to the group’s bank statements.
- Act as the main contact for the bank in respect of the group’s bank account.
- If appropriate, receive, manage and return deposits in respect of music hire.
- Establish financial procedures – such as how payments are authorised, who has authority to make financial commitments on behalf of the group and which members are signatories on the bank account.
- Prepare accounts summarising the income and expenditure of the group for the financial year. If the group is a registered charity, submit these annually to the regulator (Charity Commission in England and Wales, OSCR in Scotland).
- Submit an Annual Return to the regulator. In England and Wales, if your group is not registered as a Charitable Incorporated Organisation (CIO) and has income below £10,000, this will be limited to confirming or updating your charity’s registered details. In Scotland, all charities must submit annual accounts to OSCR.
- If income exceeds the relevant thresholds, arrange for the group’s accounts to be examined or audited on an annual basis.
- On an annual basis, provide a summary of the year’s financial activity at the group’s Annual General Meeting (AGM).
- On an annual basis, prepare a budget for the committee make sure the group’s planned activities for the coming year are affordable.
- If required, input into and/or submit any funding applications on behalf of the group, for example prepare a specific budget for the application.
- Advise the committee on the financial consequences of proposed actions.
- Prepare and submit any Gift Aid claims on behalf of the group (see our resource on How to Claim Gift Aid).
- Be aware of the wider tax, VAT and regulatory issues affecting charities and the level of income at which these become relevant. There are special rules around paying Trustees and persons connected to them. The Charity Commission website has lots of good guidance and Making Music can help you with any questions or concerns.
- Be the custodian of the group. Follow the charity regulator guidance and make sure controls are in place to protect your group’s resources from fraud, loss and error. For example, limits are placed on any one individual being able to make financial decisions without the prior approval of the committee; all bank payments are authorised by two people; charity funds are safely invested with reputable institutions taking advantage of the Financial Services Compensation Scheme (FSCS) limits.
- Consider and discuss a reserves policy with your committee if you regularly receive more income than you spend in a year.
- England and Wales: Charity financial reserves
- Scotland: Charity reserves factsheet
- Bring a questioning mind and best practice to your group.
Many groups could probably add more to this list, but these are the key elements of the role.
Additionally, the treasurer will almost always be a committee member and in most cases will also act as a trustee of the group. There are extra responsibilities around these requirements which are summarised in our Trustee handbook
Finally, the treasurer is the person Making Music will contact when your group’s membership and insurance are due for renewal (in November each year).
Bank accounts
Every group needs a bank account – it’s almost impossible to function without one these days. Your group probably already has an account set up but if you are starting a new group or considering switching bank accounts then it pays to shop around. The majority of high street banks and building societies will offer accounts specifically for small charities, community groups and not for profit organisations (nfpos) and we have a resource comparing some of these. Be sure to tell the bank about your organisation and its structure so that they can offer you the correct product for your needs. There are some good options that are not on the high street – the Charities Aid Foundation (CAF) Bank specialise in banking for charities and NPOs, using HSBC for day-to-day banking needs.
You will need a separate bank account for each legal entity you manage but you don’t necessarily need more than one to manage special projects and events. These can be managed with good accounting records.
It is good practice to specify that transactions on your bank account require two signatures – this means that the responsibility for the finances don’t rest solely on one person in the group, and also helps to protect your organisation from potential fraud. This means that every cheque you write will need two signatures, and if you are making payments electronically one person will need to create the transaction and the second person will need to authorise the transaction in order to release the money. For this reason, we recommend that you have three or four people authorised as signatories on your bank account – if you only have two signatories and one of them is incapacitated, it will have implications on your group’s ability to make prompt payments.
Some online bank accounts don’t have the facility for a second person authorising a payment. In this case, it is still good practice to have an internal authorisation – this could be as simple as the treasurer emailing another signatory a list of payments to be made for their approval. It is still preferable to have dual payment authorisation in place and you may find your bank can now offer this, if it didn’t previously.
We suggest that you make as many of your bank transactions as possible through the BACS system. In addition to avoiding the potential problem of cheques going missing or not being paid in, this helps to make your bank statements really clear as each transaction will have a name next to it rather than a cheque number or paying in reference. This also makes it easier to reconcile your bank account with your own financial records. Try to pay your invoices by BACS wherever possible, and ask your members to pay their subs by bank transfer or standing order, rather than by cash or cheque.
You will need to notify your bank of any changes of signatory by using an appropriate form (supplied by the bank). Usually at least two and sometimes all of the existing signatories must sign the form to authorise the changes. If you are adding a new signatory, they will be subject to an identification and credit check by the bank just as they would when opening a personal bank account.
Contactless methods of accepting payments, such as Goodbox and iZettle, work with a mobile phone app to take card payments and are quickly replacing cash. If you are thinking of using these methods, make sure that the reports you will receive provide you with adequate information to separate different types of transactions (e.g. ticket sales from membership subscriptions) and do not jeopardise your ability to claim Gift Aid where eligible (see our How to Claim Gift Aid resource).
2. Keeping records
The main part of the treasurer’s role is the keeping of accurate and up-to-date records. There are two key decisions to make here: the format you will use and the type of accounting method.
Accounting format
The two main options are a spreadsheet, or accounting software.
Spreadsheet: this is by far the most popular choice. In its most basic format, you can simply list all the transactions in date order and reconcile this against your bank account.
You can take things further by having different columns for different types of income and expenditure. For example, one column (the first or the last) is used for the total of each payment or receipt and then other columns are used to analyse each of these entries according to their nature. The headings of the columns should be chosen to be useful to your group but also feed easily into the catagories shown in the annual accounts. You can use formulae to calculate totals and subtotals, to break down your spend per term or to compare actual transactions against budgeted transactions.
Accounting Software: Use of accounting software is a more comprehensive way of handling the accounting process, especially where there are numerous transactions , several bank accounts, special projects or funds. Reporting is also easier than most spreadsheet or manual systems.
There are different accounting packages and we are not in a position to comment on them all but cloud based packages such as Xero, QuickBooks and Sage Accounting are designed for non-accountants and offer discounts for charities. Prices vary according to requirements.
Both format options have their merits. For smaller groups with lower incomes accounting software is probably more sophisticated than necessary. In our experience keeping accounting records on a spreadsheet is fine for the majority of our members (see our accounts template).
The main attribute of good record-keeping is a clear audit trail. Essentially, every transaction going in or out of your bank account should have a supporting document, such as an invoice or petty cash slip which is stored safely in a folder (either physical or electronic).
- These should record the key facts of the transaction:
- The date of the transaction
- The name of the person or group paying the money
- The name of the person or group receiving the money
- What the money is for
- The sum of money being paid/received
It is permissible to keep digital or scanned records in place of paper. Make sure you have back-up versions in place and that personal membership details are held in compliance with data protection legislation (GDPR).
Copies of invoices, bank statements and any other relevant financial information must be retained for 6 years following the end of the current tax year. When a new Treasurer takes over, make sure all records are handed over in good order.
Accounting methods
There are two accounting methods, but you may not have a choice.
- Cash accounting (or receipts and payment): this is where you only record the transactions that have gone in or out of your bank account on the date that the bank transaction occurred. Any monies that have not been paid or received will not be recorded in this method, but your records will match your bank account
- Accrual accounting: this is where you record transactions when the activity took place and the entitlement, or obligation is established, irrespective of when the transactions were paid. Your records will show unpaid invoices and monies not yet received. You will get a truer picture of your financial situation, but your records will not match your bank account.
The accounting method you choose will often depend on the size of your group. For smaller groups (and the majority of our members) cash accounting is normally the best option. However, all charitable companies, and non-company charities and CIOs with gross income of over £250,000, must use accrual accounting and prepare accruals accounts that comply with the applicable Statement of Recommended Practice (SORP).
In both cases, it is vital to monitor and predict your cash needs and make sure you are keeping on top of chasing amounts owed to your group.
Keep it simple, clear and transparent
It is important for the purpose of clear and transparent records that all transactions are handled individually and not offset against each other. For example, if your marketing officer pays to have some flyers printed, don’t deduct this cost from her next subs payment. Process each transaction separately, making it is easier to match your records with your bank transactions and enabling you to claim Gift Aid on the full amount of any eligible income.
However, It is permissible to pay in several transactions together, for example, if 10 members have paid their subs to you in cash: you can bank all 10 payments together, as long as you keep a separate record of whose payments were included in that transaction.
Membership subscriptions
In the majority of groups, membership subscriptions are the transactions you are least likely to be able to keep a paper trail for – if your members are paying subs 3 times a year, and there are 40 members, that’s a lot of paper!
Best practice here is to ask every member when they join to sign a membership form (or provide agreement by email), committing to paying their subscriptions on a regular basis, and keep a record of these forms which serve as their agreement to pay. Then they can simply make their payments without the additional burden of a paper trail each time.
Gift Aid
See our separate How to claim Gift Aid for your group guidance.
3. Reporting and auditing
Preparing your budget
You should prepare a budget in advance of each year, showing how much you think you will spend for each category of income and expenditure. For example, you might divide your expenditure into the following categories: rehearsal venue costs, music purchases, soloists’ fees, concert venue costs, marketing and printing, insurance, website hosting, etc. Some of these will be easy to predict – for example, you know how many members you have and what the subscription fee is, so you should be able to make a reasonable estimate of income from membership subscriptions. But for other items you may need to set targets such as number of tickets to sell for a concert, or you may need to obtain quotes for specific items that you wish to purchase, in order to make your budget as realistic as possible. You can also look at your accounts from previous years and use those figures to make an estimate.
Review your actual income and expenditure against your budget on a regular basis to check your plans are still affordable. Reforecast your budget if there are significant changes, so you always have a realistic estimate of the impact of your plans.
Preparing your accounts
Every year at your group’s AGM, you should present to the membership a summary of the group’s finances for the year just completed. You don’t need to show them a record of every single transaction, but you need to summarise how much you have spent or received in each category.
When your final accounts are ready, compare them to the budget you put together at the start of the year. Have you over or under spent in any areas? Have you exceeded or failed to meet your income targets? Investigate any areas of discrepancy thoroughly and have explanations ready to answer questions from your committee and members at the AGM.
Your committee will need to discuss the impact of your financial result on your plans for the coming year.
Audit and reporting requirements
You may also need to have your accounts examined or audited depending on the requirements of your constitution and the Charity Commission or OSCR. Check what your constitution requires you to do, and when you are required to do it in relation to your AGM. The legal requirements for your accounts are:
England and Wales
- Gross annual income up to £25,000: no formal external scrutiny is required by legislation. However, accounts should be scrutinised by someone independent of the committee. This does not have to be an accountant but should ideally be someone with some financial knowledge and experience. It could be someone from the wider membership or someone a member knows, or you could find another local music group and arrange to swap accounts.
- Gross annual income above £25,000 and up to £1 million: an Independent Examination of accounts is required. If income is above £250,000 this must be undertaken by a qualified person. We suggest contacting a local charity accountant.
- If either total income exceeds £1 million or total assets exceed £3.26m and income is above £250,000, a full audit is required.
You can find out more about accounting in the Charity Commission Guidance: Charity reporting and accounting: the essentials (CC15b).
Scotland
All charities must have some external scrutiny of accounts.
For groups with income under £500k this can be an independent examination. Groups with over £500K a required to have an audit.
If your income is under £500k:
- If your accounts are on a receipts and payments basis the examiner should be someone the trustees consider is able to carry out an independent examination in line with the relevant requirements.
- If your accounts are prepared on a fully accrued basis the examiner must be someone who is professionally qualified to undertake the role.
You can find out more about accounting in the OSCR Guidance: Independent Examination - a guide for charity trustees.
4. Long term planning and legacy - potential issues and contingency plans
The main issues that a treasurer might experience are:
- The group is running out of money
If there are signs that your group is running out of money, then it is vital that you alert your committee and sit down with them at the first opportunity to discuss a plan of action. Consider where you can cut costs, and where you can increase income. You might need to make some drastic decisions, and you might even decide you need to close the group down. It is important to fully discuss every option with your committee before making a decision, and to make the decision together. The Charity Commission and OSCR offer guidance or you may need to seek some independent professional advice (though bear in mind the cost implication of this).
- The treasurer becomes suddenly unavailable and no-one else can access the accounts or authorise payments
It is important that someone else on the committee is always ‘in the know’ about the treasurer's role and can access the necessary records if required. It can happen that for whatever reason, a treasurer is suddenly unavailable to carry out their duties, and someone else needs to take them over to ensure that the group can keep running smoothly. Think carefully about what would happen to your group if your treasurer became indisposed – how would you authorise payments? Who would issue invoices and chase missing subs? Who would provide petty cash and floats when required? How could other committee members access the group’s accounts? It is recommended that you have a contingency plan for this which should include allowing at least one other committee member access to all relevant records and a sufficient number of authorised bank signatories to allow payments to continue.
- The group is subjected to an audit by the charity regulator, HMRC or other body
From time to time, an organisation such as the Charity Commission, OSCR or HMRC will let you know that you are going to be audited. It is very rare that this happens to amateur music groups, but it’s not impossible that it will happen to you. The auditors will tell you for which particular years they would like to see financial records for. You will need to show them your bank statements, your accountuing records and all your supporting paperwork, and you will need to answer any questions they may have about these. If you have managed your accounts in an efficient and transparent fashion, this should be a relatively simple process.
Finding and handing over to a new treasurer
Your time as treasurer of your group can be as long or as short as you desire and your group’s constitution allows. However there will come a time when you decide to step down from the role and someone else takes over.
If you have organised and robust systems in place, then handing over should be relatively easy. Do however allow plenty of time for completing the change of signatory forms that will be required by your bank and also by HMRC if you are claiming Gift Aid. The outgoing treasurer will need to continue authorising any payments until the changes have been completed.
If you already know when you plan to stand down from the role, it may be useful to identify some potential successors and start to talk to them about the role a few months in advance. Members of your group are likely to feel some trepidation about taking on the role: remember how you felt when you first started and don't put too much pressure on people if they are feeling uncomfortable.
If you do find someone who could be interested, start the handover early – a little at a time is less daunting than everything at once, and working side by side for a while will ensure a smoother handover. Encourage the rest of your committee to be supportive of any potential treasurer. When the date for handover arrives, you should be able to give everything over to your successor with minimum disruption. Although you may feel this is the time you can finally close the door on the role, try to be available to answer any questions that may still be necessary for the next couple of months, but don’t feel obliged to take back any of the tasks you have now handed over.
We hope you find this Making Music resource useful. If you have any comments or suggestions about the guidance please contact us. Whilst every effort is made to ensure that the content of this guidance is accurate and up to date, Making Music do not warrant, nor accept any liability or responsibility for the completeness or accuracy of the content, or for any loss which may arise from reliance on the information contained in it.
