|
Responsibility for the control of business of any organisation
rests with the organisation's board of directors. Directors are
subject at law to two broad categories of duties:
1.
The duty to act in good faith; and
2.
The duty of care, diligence and skill.
As directors of clubs come from all walks of life and diverse
backgrounds, it is recognised that club directors often need to
rely on the skills of others in order to discharge their duties.
Traditionally, this support has come from club management (and
occasionally external accountants) who perform the day-to-day
management and accounting functions of a club.
Λ Back to Top
Auditors are primarily used by clubs to ensure that the
financial statements of clubs are prepared in accordance with
specified criteria, namely the Australian Accounting Standards,
i.e. the audit of financial statements.
Audit standards developed by the Australian Accounting Bodies
recommend that auditors, before establishing their audit program
and the scope of their audit activities, closely review business
operations, particularly the control of cash and stock.
They must also determine the effectiveness of any internal
control procedures. While audited financial statements may be
thorough, the scope and nature of these audits often indicate
that not all areas of a club's operations have been thoroughly
examined.
The auditor should be able to identify any omissions or
weaknesses in controls and be in a position to advise management
of a club. Auditors should also be able to identify any
statutory requirements that a club has not complied with.
Investigations of registered clubs by the Department of Gaming
and Racing have shown that in many cases, if club auditors had
been used to target and examine key areas of a club's
operations, some of the irregularities identified such as fraud,
misappropriation of funds and other abuses, could have been
avoided.
These irregularities have in the past resulted in disciplinary
proceedings being initiated against a number of clubs in the
Licensing Court resulting in:
- Directors and/or secretary managers being declared ineligible to
hold office;
- The imposition of monetary penalties; and
- Conditions imposed on a club's certificate of registration.
In some cases, these irregularities were perpetrated by club
management and directors.
Λ Back to Top
Directors should consider their auditor's role to include
additional measures such as:
- Internal controls
- Security measures
- Financial transactions and records
The use of an auditor in these areas can be instrumental in
detecting instances of fraud, misappropriation or other abuses.
If further checks or improvements to financial systems are
required, directors can consider using an auditor to conduct
either operational audits and/or compliance audits.
As a general principle, and recommended best practice, the tasks
of completing the annual accounts and conducting the audit
process should not be carried out by the same person.
It is suggested that directors meet with their auditor to
discuss these matters and consider the best ways to implement
the recommendations outlined.
Λ Back to Top
Operational audits review specific parts of a club's operating
procedures and methods, such as a petty cash system, or cash and
cheque control systems. At the end of this audit, it can be
expected that recommendations will be made to the directors to
improve specific operations.
Λ Back to Top
Compliance audits are primarily designed to determine if a club
is following specific procedures or best practices adopted by
the board of directors or required by authorities such as the
Department of Gaming and Racing, the Liquor Administration Board
or relevant legislation.
These audits protect the security of a club's assets, as well as
providing greater protection to a club's management in carrying
out its functions.
These audits can also be used in mitigation against proceedings
taken against a club in the Licensing Court by police or the
Director of Liquor and Gaming to defend any allegations of
irregularities in the club's transactions, records or
procedures. They can also assist in proving that a board of
directors had taken reasonable steps to recognise and prevent
such abuses from occurring.
Λ Back to Top
While there may be additional costs associated with an auditor's
fee, this needs to be balanced with the benefits that flow from
review procedures and internal controls being implemented.
Auditors must comply with a number of statutory requirements.
However, they can also undertake a broader review of a club's
operations.
Auditors should be used to carry out checks in key areas to
enhance the integrity and compliance of a club's operations. The
key areas should include the matters outlined in this
Information Sheet.
This list should be used as broad guidance and recommended best
practices to assist directors. At all times, directors should
also be guided by the recommendations made by their auditor
about the areas that need to be targeted, as well as the
specific nature of these checks.
Small clubs can carry out these specialised audits on a yearly
basis, while large clubs should undertake them on a six monthly
basis.
The following recommendations should not be adopted by auditors
as the sole audit requirement, but as part of, or complementary
to, their normal audit procedure.
Λ Back to Top
a.
Detection of Theft
i.
Checking of machines at least on a monthly basis, with jackpot
payments shown in the payout book to the individual amount for
that combination shown on the prize schedule of the machine. For
example, record three aces as "3xA" rather than "AAA", which can
be altered in the shape of a fourth or fifth "A".
ii.
Check clearances from cash boxes with cash box meters on at
least a monthly basis.
b.
Reconcile the club's financial records to the net income from
poker machines on at least a monthly basis to ensure all poker
machine revenue is accounted for in the club's income records.
c.
Check on at least a monthly basis, that cancel credit payments
balance with the book payouts.
Λ Back to Top
a.
General
Records of payments should be appropriately maintained in either
a pre-numbered book providing full details of transactions, i.e.
Cheque number, date, payee and amount, or in a computerised or
electronic cheque register.
b.
Cheques
- i.
The pre-signing of cheques should be prohibited and all blank
cheques kept in a secure place.
- ii.
All expenses payable by cheque should be detailed on a cheque
requisition form, where appropriate, and supported by source
documents signed by an authorised officer. Cheques should only
be signed by approved signatories, who examine and initial any
supporting documentation.
c.
Petty Cash
i.
Petty cash vouchers should have supporting documentation
attached and be properly authorised.
ii.
Petty cash accounts should be reconciled on at least a monthly
basis.
Λ Back to Top
a.
General
i.
Reconciliation of bank statements should be undertaken regularly
- at least on a monthly basis.
ii.
Records of receipts should be accountable and provide full
details of the transactions including the area of operation
(i.e. bar, poker machines, etc), the date of banking and the
amount banked.
iii.
Check for any delays in banking which can result in funds that
are not banked promptly, being used improperly (the reason for
any delay should be noted).
b.
From Functions (including those held under section 23 of the
Registered Clubs Act)
i.
Proper records should be kept of each function. Statutory
records must be kept for functions held for non members or
minors under section 23 of the Registered Clubs Act. These
records should include the date the function was approved by the
club's board, the date and nature of the function, the location
and time of the function, and the name and address of the
person/s booking the function.
ii.
Each function should be costed and the net income or loss from
each function should be traceable to the club's financial
records.
c.
From Membership Subscriptions
An annual reconciliation of the number of members of the club,
compared with the number of membership subscriptions received,
should be undertaken.
Λ Back to Top
a.
Proper records of wages should be kept, including employment
application forms authorised by the club. Staff time sheets
should be maintained in ink, showing the hours worked and be
signed by both the employee and the supervisor, or
alternatively, ensure appropriate mechanical or electronic time
records are maintained and authorised.
b.
Written authorisation and signing of all wage advances should be
undertaken (any wage advances should be in line with existing
club policy).
Λ Back to Top
a.
Stock Control
i.
Proper records should be maintained of stock movement within the
club.
ii.
If external stocktakers are used, their monthly reports should
be reviewed by the auditor and reconciled with the bar trading
accounts at least on an annual basis, and be properly
categorised. The reports must, as a minimum, show any variation
of actual turnover to expected turnover for each category and
explanations for any excessive deficiencies.
b.
Gross Profit Percentage
Ensure that profit on bar trading is operating at an acceptable
level, which is normally at least 50%. If it is not, inquiries
should be made to determine what factors are impacting on bar
trading profit, and whether any remedial measures are necessary.
Λ Back to Top
a.
Over Charging
Ensure that prices charged to the club for the supply of goods
and services are consistent with quotes obtained from other
suppliers for the same goods and services.
b.
Short Deliveries
Proper procedures should be in place to enable deliveries to be
checked with invoices and delivery dockets, to ensure complete
deliveries are received. This could include the person who
receives the delivery, signing the invoice or delivery docket
and noting any short or incorrect deliveries, or damaged stock.
c.
Supply of Goods
Ensure that the goods delivered are the same type and quantity
ordered by the club.
d.
Tendering Procedures
Tenders should be sought for the supply of goods and services,
with a minimum number of quotes obtained. Documents relating to
tenders/quotes should be maintained for a reasonable period of
time.
Λ Back to Top
a.
Records should be kept of all loans to the club, including the
name of the creditor, the amount of the loan, the amounts
repaid, the balance outstanding and the interest rate, if
applicable. A review should be undertaken to ensure that
repayments are made in accordance with the loan conditions (if
applicable) and that the interest rates being charged are not
greater than commercial rates. Recommendations should be made
accordingly.
b.
If cheques are allowed to be cashed, procedures should be
implemented to ensure that they are banked immediately and not
held for redemption. Cheques that are repeatedly dishonoured
should be reviewed to ensure that the person's cheques are no
longer accepted.
c.
Cash advances on credit card transactions through EFTPOS / ATM
terminals within the club should not be available.
Λ Back to Top
a.
Comprehensive and accurate records of cash floats should be
maintained. Where the float does not balance, any "unders and overs" should be investigated.
Cash floats should be balanced regularly (preferably daily) and
the balancing documents retained as an accounting record.
b.
Random cash and float checks should be undertaken at least three
times a year.
Λ Back to Top
All cash generating areas of the club, particularly gaming
areas, should be reviewed so that duties are divided amongst
staff and, if appropriate, directors to provide adequate
internal controls. Staff and directors, should be rotated in
their duties so that the same staff and directors are not
continuously working together, particularly on cash clearances
of gaming machines.
Λ Back to Top
Ensure any cash shortfalls are reported to the club's management
and, where appropriate, to the relevant authorities.
Check to ensure that the appropriate registers are in place for
assets, secretary and directors.
Λ Back to Top
Our dedicated team can assist you with all your auditing
needs.
Complete
and submit the Express Enquiry form on the top right hand side
of this page and we will contact you to discuss your enquiry
or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223
9166 to arrange an
appointment.
|
