Entries in cash books
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Original documents
This simply means that you can look at the records at any level in the accounts, and trace the figures up or down to any other level. For example, the published church accounts for 2006 say you spent £23,997 on building work. From this you look at the trial balance and see that it comprises these amounts:
Note that whatever figure you find at one level must be there at the next level above or below in the accounts. Whatever figures are included in the published accounts must be present on the trial balance. No one should have to hunt or guess how any figure has been derived.
You turn to February’s page in the cash book. There is a column headed ‘Repairs and maintenance’. At the bottom of that column you see the total £4,629.23. In the column above, you see that there are three entries:
You note that the figure of £4,629.23 found at trial balance level appears at the adjacent level. The column marked ‘Folio’ is your reference to the next layer down. You look in the file of bills for number 127, and find an invoice from K. Bloggs dated 9 January for:
On the invoice the treasurer has written 127 in a circle in the top right-hand corner and ‘Paid 11 February 2012 ’ on the invoice.
You have now managed to go from the published accounts right back to one of the invoices.
Similarly, it is possible to follow the audit trail in the opposite direction. You could look at the invoice and see ‘Paid 11 February 2006’, which tells you where to find the item in the cash book. The cash book shows that this is included in the monthly total of £4,629.23. The trial balance shows that this total is included in the annual total of £23,996.83.
Vouchers
The lowest level of accounting record is the voucher. This is a document which gives the details of an item of income or expenditure. Normally the treasurer keeps two sets of vouchers:
remittance advices (income)
invoices (expenditure).
These documents are usually kept in lever-arch files in numerical order.
Sometimes it may be convenient to keep different types of voucher separately, such as keeping weekly cash sheets of collections in a separate folder from forms detailing other sources of income.
Every item of income and expenditure has a voucher unless its details are otherwise known. Two examples of the latter include:
bank charges (which appear on the bank statement)
transfers to or from other accounts (which match an equivalent entry in that account).
Sometimes the treasurer may need to create a voucher for the records. Vouchers may also comprise sheets prepared by other people, letters, statements, appeal literature or photocopies from other books. A voucher is any document which gives information about a payment.
Never pay a statement or reminder, nor regard either as an invoice. A statement is basically a list of unpaid invoices at a particular date. Statements are commonly issued about once a month by suppliers. Reminders are sent when an invoice is overdue. The purpose of a statement or reminder is to check that you have received all invoices. If you find that you are missing an invoice, ask for a copy.
One common reason for losing invoices is that they are sent with the goods and thrown away with the packaging. The best practice for suppliers is to send a delivery note with the goods, and send the invoice separately. However, not all suppliers do this. A delivery note simply allows the recipient to check that everything that should be there has been supplied. Once that check has been performed, the delivery note is no longer needed and can be discarded. Delivery notes are not part of the accounting system.
It is quite acceptable for invoices to be sent by fax or e-mail. It is not essential that an invoice must be a piece of paper sent by post.
Vouchers for the expenditure side usually take the form of invoices, sometimes called bills (though the word ‘bill’ can be applied to other documents). However, vouchers can take the form of receipts, letters, statements, tickets or other documents.
An invoice is not a demand to pay a sum: it is a statement that one party to a contract has completed his part and is entitled to payment. So an invoice is properly issued even when you have already paid for the work. Such invoices should have ‘Invoice paid on 4 May 2012’ or similar words on them, but this is not a legal requirement. If you receive an invoice for work already paid for but where this is not indicated, it may be advisable to check that your payment has been recorded.
Where a remittance advice does not comprise an invoice, it is necessary to show that the payment was properly incurred.
For a donation to a charity, a copy of a covering letter from the treasurer is probably the appropriate remittance advice. It clearly identifies the payment as a charitable donation and not a payment for a visiting speaker or supplies of literature.
For internal expenditure, such as reimbursing the minister’s expenses or paying the choir, the voucher should be signed by the person you paid (particularly if paid in cash) or a note made when paying by cheque. Supporting paperwork should be attached as appropriate. For example, the minister should identify the cate-gories of expenditure, such as stamps, coffee, petrol, etc. Some of these items may have vouchers, such as a receipt from the post office, supermarket or petrol station, stapled to the form or paper which notes the payment. These additional receipts should be filed when provided, but they are only normally required if the amount is particularly large or the expenditure unusual. A church may wish to set a limit when a receipt must be produced or may wish to state what items constitute usual or unusual expenditure. However, that is a matter for the church authorities.
For accounting purposes, there is no real difference between an invoice and an expenses claim. They can be kept in the same file or separately, as you prefer.
Occasionally, you may receive an expense claim with a huge pile of receipts attached. In such cases, it can be acceptable to note on the form that you have seen the receipts, and then throw them away.
Payment of the choir may comprise a photocopy of a page from the choir register on which the choirmaster has calculated the amount payable to each member. The treasurer should have sufficient details to know how much was payable to each member, even when the choirmaster makes the actual payment.
Sometimes a payment is accompanied by a form, such as payment of tax or insurance. In such cases, a photocopy of the form can serve as the document.
Sometimes one cheque may be written to pay for several invoices, such as when the church handyman has submitted four invoices for the four jobs he did that month. The four invoices should be stapled together under a single folio number. The principle of the audit trail applies even at this level, in that the figure entered in the cash book must appear on the document. The treasurer must produce a slip or piece of adding
