On 27/01/2011 21:18, Per Jessen wrote:
Basil Chupin wrote:
I have read what you wrote above which
is really a repetition of what
that URL you provided also contains.
So, the intention is to use a spreadsheet to record any revenues and
to record expenses?
It's not such a bad idea - double-entry book-keeping
software as that
from Banana Software (www.banana.ch
) is nothing more than a glorified
If it doesn't do a reconcilation with what's in the books and what is
shown on the bank statement then it is not worth a pinch of horse manure
- and therefore would be equivalent to a glorified spreadsheet.
OK, and you
are going to keep any monies you receive in a shoe box
kept by someone under his/her bed and when some monies are received
some mysterious person - obviously the person who goes to the post
office to check for any mail - will place the cash or cheque (US
lingo: check) into the shoe box. But what happens if s/he puts the
cash/cheque into her/his pocket? Won't there be anyone to ensure that
what was received is actually placed into the shoe box?
I would assume shoe box =
No, don't assume this at all.
There is nothing stated anywhere where there has been any serious
thought given to keeping a proper control over the monies, coming in or
going out, and the accounts overall except for the very simplistic
statement that a spreadsheet with some (?) 6 categories would quite
Any cash payment should be made
to the cashier who would also issue a receipt on behalf of the
Again, there has been no mention of any procedures.
And then some
bills have to be paid. Who is going to take the money
out of the shoe box and pay the bill?
Whoever has access to the bank account.
Presumably again the cashier or
someone to whom the task was delegated.
Again you "presume" :-) .
And will there
be anybody to make sure that what is taken out of the
shoe box (by whoever - in fact, who IS it going to be?) is actually
the right amount and not some many dollars over what the bill is which
then ends up in the pocket of the person who is taking the money out
of the shoe box to pay that bill?
I assume the organisation would appoint an
auditor who would carry out
an annual audit etc.
There are 2 types of auditors: internal one who ensures that the daily
activities of the organisation are properly recorded and that no
hanky-panky is going on so that funds don't go missing when they
shouldn't be going missing - and to this end there is a proper auditing
section/department created in a large organisation but in a smaller
organisation the accounting system should take care of this if properly
administered and controlled by the treasurer or the financial controller
(or whatever one wants to call him/her).
The second type of auditor is the external one who is independent of the
organisation being audited and it is this auditor's job to see that the
accounts of the organisation being audited have been properly kept.
NOW, and this is where most people fall for the trap and do not
understand how this external auditor works.
The external auditor ASSUMES that the internal auditor is doing his/her
job properly and therefore only does a broad audit of the organisations
accounts - he doesn't go into every little nitty-gritty detail of the
accounts, unless he finds something seriously wrong, and if he does do
some checking, for example regarding stocks held by an organisation, he
only does a sample check to see if the figures are representative and no
hanky-panky has occurred.
The external auditor is a requirement by law as a check on the checking
which the internal auditor is supposed to have been done over the past
(Now, if you have been reading your newspapers you would read that an
external auditor can be made to "look the other way" and give a set of
accounts a clean bill of health...... You recall that famous case some
years ago in the USA? :-) . The problem usually, but no always of
course, develops when an organisation keeps using the same external
auditor year after year in which case there develops a "buddy-buddy"
type of a relationship and no serious auditing then takes place as there
is "gold in them there hills". I'll say no more.......)
And there will
be cases when the revenue "you" may receive is subject
to tax. Somebody will be able to record on the spreadsheet what part
of such a payment is subject to tax and which part is not and how much
tax is to be paid on the taxable bit, right?
This sounds like income tax in which
case it is applied annually to
whatever profits the organisation has made.
Well, not necessarily as simple as this, Per.
I take it that the Foundation will be called something.org
- that is, a
not for profit organisation and it's income in the form of membership
fees, grants, whatever, should not be subject to tax.
But even this is unknown because nobody has bothered to get legal advice
about how to structure this foundation.
However, this is not to say that the foundation cannot obtain an income
from selling something commercially, for example DVDs with openSUSE on
it, in which case this income would be taxable.
I speak from what I have had to deal with here locally but what it may
be where the foundation will be formed and registered I don't know.
But if you only have a spreadsheet to keep your "accounts", how would
you differentiate between non-tax income and taxable income and if it
taxable how much has to be paid every month/quarter/whatever (depending
on the tax regime of where the foundation is registered).
And this doesn't even recognise that the foundation will most likely
employ people and pay them wages and mandatory health insurance cover
and other security benefits and keep track of their holiday/sickness
days? All this by using a spreadsheet?
I stop here.
Left to themselves, things tend to go from bad to worse.
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