Cash audit for your association: how the finance committee does it right

What is the audit committee?

The audit committee is an independent body within the association that checks the treasurer's financial administration. The committee consists of at least two ordinary members, as board members may not be part of it, because you would be auditing your own work.

The audit committee is appointed annually by the General Members' Meeting (ALV). The law (Book 2 BW) and most statutes require that the committee serves for at least one year, and that one member rotates each year to ensure continuity.

What does the audit committee check?

The audit typically covers:

• Annual accounts: Does the balance sheet balance? Are all income and expenditure properly recorded?
• Bank statements: Do the balances correspond with the accounting records?
• Cash: Is the cash balance correct against the cash book?
• Invoices and receipts: Are all expenditures documented?
• Subscriptions: Is the subscription income fully accounted for?
• Expense claims: Are all expense claims supported by a receipt and approved?
• Subsidies: Are the subsidies received properly accounted for?

The audit committee does not perform an audit. You do not need to be a registered auditor. It is a factual check, not an assessment of the accuracy of the annual accounts in accounting terms.

How does the cash audit proceed step by step?

Step 1: Preparation

Ask the treasurer to have the administration ready in good time: the annual accounts, the cash book, bank statements and the receipt book. Plan the audit well before the ALV. At least two to three weeks earlier.

Step 2: Completeness check

Are all bank statements present? Are there missing months? Are all invoices numbered and traceable? Check that the opening balance of the new year matches the closing balance of the previous year.

Step 3: Random sampling

You do not need to check every invoice. Take a sample of at least 10 to 20% of the transactions. Include both small and larger amounts. Check that the payment corresponds to the invoice and that there is board approval.

Step 4: Balance check

Tally the cash balance and compare it with the cash book. Review the bank statements: do the opening and closing balances balance? Are there any unusual transactions you cannot explain?

Step 5: Noting findings

Record everything you come across: minor discrepancies (missing receipt, cash balance not matching exactly) but also more serious findings. Prepare a concise report.

The audit committee report at the ALV

At the ALV, the audit committee presents its findings. The committee advises the meeting whether to grant the board, and especially the treasurer, discharge for the financial year in question. Discharge releases the board from liability for the relevant financial year.

A simple report might look like this:

"The audit committee has audited the financial administration for the financial year 2024–2025. The accounts have been kept in a complete and clear manner. The bank statements align with the annual accounts. The audit committee recommends that the members' meeting grant discharge to the board."

What if something isn’t right?

In case of minor discrepancies: a missing receipt or a small rounding error, a recommendation to the treasurer suffices. For more serious findings, such as undocumented expenditures or a significant cash or bank balance difference, the audit committee recommends no discharge and asks the board for clarification. In that case, the audit is postponed until the findings are clarified.

Tips for a smooth cash audit

• Have the treasurer provide a summary of notable items in the year (large expenditures, shortfalls)
• Also check digital payments and do not accept "trust me" when documentation is missing
• Save the audit committee report as part of the ALV minutes
• If in doubt, call in a third audit committee member to review