Book-keeping is the recording of all financial events and transactions. There are numerous systems for keeping books – which one is right for you depends among other things on the type of accounts your organisation needs to produce. Organisations should consider taking advice from whoever is going to be auditing/examining the accounts to make sure that the system you use is fit for that particular purpose.

Some organisations with an income of under £100,000 use the simplest form of bookkeeping – a ‘cash book’. This should include:

• details of all receipts
• details of all payments
• balance of cash

Smaller transactions, for things like postage and minor travel expenses, should be monitored as petty cash, which is usually kept separately. Often it is kept within a ‘float’ that could be as little as £20.

As well as recording all financial transactions within some form of cash book (manually or on a computer), you need to keep all the paper records that go with these transactions – receipts, invoices, grant claim forms, bank statements and deposit slips.

To prevent fraud, the person responsible for the cashbook should not be the person managing the bank account.

Good financial procedures and internal controls are just as vital in smaller voluntary and community organisations as large ones. Ensuring these are in place and adhered to is the responsibility of the management committee.

A key principle is proper segregation of duties, so that one person does not process a complete transaction. Proper references should be taken up for all staff and volunteers who handle money.

The following internal controls should be in place:

• two people should always open the post and count cash receipts cheque payments should require two signatures 
• goods and services should have an authorisation procedure 
• banks accounts should only be open to the management committee. In larger organisations, a senior staff member may also have access, but there should always be restrictions
• personnel records should be kept by someone other than the person who pays salaries

All charities, community and voluntary organisations and social enterprises need to consider how to present their annual accounts and more information about this is available our overview on Keeping Accounts. Voluntary and community organisations are not exempt from tax unless they have charitable status – but even charities have to be aware of tax issues. Tax is extremely complex, and the financial cost of a bad decision could far outweigh any savings on professional fees. See our overviews on Tax and VAT .