Accounting
The system for recording, organizing and summarizing financial information. The process of keeping track of the money coming in and going out.
Accounts Payable
Money the water co-op owes to others (like suppliers, contractors or other service providers).
Accounts Receivable
Money owed to the water co-op by members. Keeping track of these ensures the rural water co-op gets paid regularly for services delivered.
Annual Filings
Documents the water co-op is required to submit to Rural Utilities (or other regulators) every year, including audited financial statements, list of officer appointments, and AGM minutes.
Annual General Meeting (AGM)
A yearly meeting of the water co-op members where they elect the Board, review the financial statements and vote on other important business.
Arrears
Money that should have already been paid.
Audit
An independent check of the water co-op’s financial records, usually done by a professional auditor, to make sure the books are accurate and follow proper accounting rules. In smaller co-ops it may be done by a competent person not on the Co-op Board.
Auditor
The independent person or firm who examines financial statements and provides an external opinion to members about whether the co-op’s financial records are fair and accurate.
Balance Sheet (also known as the Statement of Financial Position)
The balance sheet is a snapshot of what the water co-op owns (assets) and what it owes (liabilities) and members’ equity, at a specific point in time.
Bank Reconciliation
The act of comparing the water co-op’s internal financial records with the monthly bank statements to ensure accuracy and correct any discrepancies.
Bookkeeping
The day-to-day tracking of financial transactions, often done by the Treasurer, sometimes done by a staff person or hired bookkeeper.
Budget
A plan of the expected revenues and expenses for the upcoming year.
Budget Amendment
Any approved change to the budget outside the usual annual process, often to cover new projects or unexpected costs. If budget amendments are needed they will be voted on at Board meetings.
Capital Budget
The financial plan for completing infrastructure projects and long-term asset purchases.
Cash Flow
The movement of money coming in and out of the water co-op. Good cash flow means there’s enough cash on hand to cover costs as needed.
Chart of Accounts
This is the master list of all the categories used in your bookkeeping or accounting system to track where money is going (income, expenses, assets, liabilities and equity). For example:
If 1000 = Assets
âž” 1010 - Cash - Operating Account
âž” 1020 - Cash - Reserve Fund
âž” 1030 - Accounts Receivable
If 5000 = Operating Expenses
âž” 5010 - Repairs and Maintenance
âž” 5020 - Utilities (power, phone)
âž” 5030 - Insurance
Delinquent
An account that is well past due and has not been paid after multiple reminders and communication attempts to make payment arrangements.
Duty of Care
The responsibility every Director has to make thoughtful, informed decisions.
Duty of Due Diligence
Taking the time to adequately and thoroughly collect information, review reports, ask questions and understand facts before making decisions.
Equity / Members’ Equity
The value that collectively belongs to all members of the water co-op. A co-op’s equity is a representation of its net worth.
Expense
Money that has to be spent (usually to operate).
Fiscal Year
Not always the same as the calendar year, the fiscal year is the 12-month period used for budgeting and financial reporting.
Income Statement (also known as Profit and Loss)
A financial report that shows how much money came in (revenues) and where it went out (expenses) over a certain amount of time. The report shows whether the water co-op ended the time period with a surplus or a loss.
Internal Controls (also control measures)
These are the internal checks and balances, rules and procedures put in place to protect the water co-op’s money and sensitive information.
Liabilities
In financial terms, a liability is any money that the water co-op owes to others.
Operating Budget
The operating budget is the plan that shows the expected income and expenses for operating the water co-op over a fiscal year.
Operator / Management
The person the Board hires to manage the day-to-day responsibilities of running the water system. They do the testing, maintenance and repairs, and report to the Board.
Reserve Fund
The money saved and set aside for future needs like larger capital projects.
Revenue
The money the water co-op receives or earns, the primary source of revenue is member payments.
Succession (and Succession Planning)
Succession is the process of passing knowledge and leadership from current Board members (or staff) to newer ones.
Surplus (Net Income)
A surplus is the amount of money left over after all the water co-op’s bills and expenses have been paid.
Secretary-Treasurer
A combined role where one person handles both the record-keeping (minutes, correspondence) and the financial duties (bookkeeping, payments, reports).
Treasurer
The person (usually, but not always, a Board member) who oversees the water co-op’s finances. The Treasurer prepares reports, answers questions, helps develop the budget, and ensures the money is being managed responsibly and transparently.
Transactions
A transaction happens every time money moves. Paying bills, receiving member payments, transferring funds to reserves, are all transactions.
Two-Signature Policy
A two-signature policy is a specific control measure that ensures two authorized people are signing off on the co-op’s payments, cheques or transfers.
Variance
Variance is the term used to describe the difference between the planned number in the budget and the actual numbers reported. Knowing the variance can help the Board ask good questions and adjust future plans if needed.