Library and Information Association of New Zealand Aotearoa
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From The LIANZA Treasurer No. 5 - Financial Controls Explained

This is the fifth and final entry in a series of blogs from our treasurer, Steve Graves, about how LIANZA finances work. We often get a lot of questions about how money is spent, what we do with any profit, how we prevent fraud and so on. We hope these blogs will help to explain a few of our financial ins and outs.

  1. Income
  2. Expenditure
  3. Reserves and Held Funds
  4. Committed and Uncommitted Funds

Over LIANZA’s history, we’ve had our share of fraud or dishonesty occur with our finances. One of the key duties of the LIANZA Management and National Council is to ensure that appropriate controls are in place to prevent this from happening again.   This is one of the reasons that my firm – Kendons – is used, as we provide an additional set of checks to those provided by the office staff.

One of the key controls to prevent fraud that most businesses use is something called “segregation or separation of duties”.  In practice, this means you split up the various parts of an accounting function or task so that one individual doesn’t have responsibility for an entire area.   This can be quite challenging for an organisation of LIANZA’s size where we have one person primarily responsible for all of LIANZA’s financial tasks but here are some of the checks we have in place:

  • Two bank signatories must authorise EVERY financial transaction
  • Anna – who raises the financial transactions – is not a signatory
  • No invoice can be paid without the individual who organised the purchase, and the Executive Director, confirming the purchase was legitimate
  • No payments to LIANZA are received into the office in cash
  • All payments to LIANZA are invoiced so that there is a record in the accounting system of the transaction
  • Payroll (which is handled by the Executive Director) is reconciled quarterly by the Treasurer
  • GST returns and other tax returns are handled by my team at Kendon’s

The need for robust financial controls is one of the reasons that there are written procedures in place at SIG and Region level too, as this helps prevent the opportunity for fraud throughout the organisation.  

Annually, when we have our audit, we are asked to declare the potential for fraud to the auditors and one of their main checks is whether or not good controls are in place.  Any that are missing are noted in a letter to management for them to fix in the coming year.  

That’s it for my series of blogs! I hope you’ve found them helpful. If you have any questions we’re always happy to answer them. You can contact me via steve@kendons.co.nz or email LIANZA’s Executive Director Joanna Matthew at any time.

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