This article includes a comprehensive overview of the legal obligations, best practices, and practical steps involved in financial management for Finnish associations, including budgeting, accounting, grant management, and taxation. Additionally, it covers the responsibilities of key personnel, such as the treasurer's. The aim is to help Finnish associations (or organizations) manage their finances effectively and in compliance with the law.
Table of contents
Why Financial Management is Important?
Effective financial management ensures that associations operate transparently, use resources efficiently, and comply with legal requirements. In Finland, associations must fulfill several legal obligations, such as maintaining accurate accounting records, preparing annual financial statements, and submitting them to authorities or members as required. Demonstrating financial responsibility builds trust with members, donors, and the public.
Moniheli's guides
Creating an invoice
Creating an invoice and downloadable invoice template
Opening a bank account
How to open a bank account, what documents are required and how to apply.
Financial management resources for associations
Scope skills - Financial Management
A module introducing the basic principles of financial management, providing the skills necessary for managing the finances of an association. The module covers budgeting, accounting, financial planning, and resource management to ensure open and efficient operations.
Suomen Pakolaisapu - Association administration in easy Finnish
Article on the essentials of nonprofit financial management for associations, covering budgeting, bookkeeping, and reporting. It emphasizes transparency, double-entry bookkeeping, audits, and proper documentation. The roles of the board and members in financial decisions are also discussed.
KSL - Euros to the rescue - an association's financial guide (in Finnish)
Practical guide for managing the finances of small associations. "Eurot ojennukseen" covers budgeting, bookkeeping, and the roles of the board and treasurer, making financial management clear and accessible, especially for beginners.
What is accounting and how does it work?
The purpose of accounting is to ensure financial management, as well as monitor and supervise finances. It is a legal obligation (🔗Accounting Act).
Associations are required to keep accounting records regardless of the amount of the association’s income (e.g., grants). Accounting must follow the double-entry system which facilitates financial tracking and helps anticipate situations with appropriate solutions. Entries are made on two different sides: debit and credit accounts. This allows for tracking the budget and ensures it stays on track.
An association’s accounting can be managed individually, and learning it is easy, especially when the association’s income is small. The use of accounting software is recommended if the association’s income is significant.
Types of accounting
Small and micro-associations accounting
Simplified option for associations with annual income under €30,000. Uses single-entry accounting, recording transactions only when money changes hands. Requires board approval and adherence to funders' requirements, as some may mandate double-entry bookkeeping.
Double-entry accounting
Standard for larger associations or those with complex finances. Records each transaction in two accounts, ensuring accuracy and a clear financial trail.
Citizens' Forum - Association Finance Workshop: Micro-association accounting (Training, in Finnish)
Accounting for micro-associations and its clarification. Practical approaches and guidelines to support associations in their financial and accounting management.
Accounting Components
Receipts and Supporting Documents:
All financial transactions must be documented with receipts or invoices. These serve as the foundation for accurate bookkeeping.
Chart of Accounts (Tilikartta):
A structured list of accounts categorizing income and expenses, e.g., "Travel Expenses" or "Event Income." Can be adjusted annually to reflect the associations financial activities. Serves as the foundational framework used to generate the financial statements.
Cost Centres (Kustannuspaikat):
Used to track income and expenses related to specific projects or grants. Helps in detailed reporting and budgeting.
Recording Transactions:
Transactions are documented in two ways:
- Chronologically (Diary/Päiväkirja): Tracks transactions by date.
- By Category (General Ledger/Pääkirja): Groups transactions by type.
Transactions must align with their supporting documents and declared purpose.
NOTE! Receipts and Petty Cash:
- Receipts: Always provide and request receipts for all transactions, ensuring they contain the payer and payee’s information, the transaction amount, date, and purpose.
- Handling Petty Cash:Use petty cash only when it is impractical to use bank transactions. Limit the petty cash fund to a maximum of €300. Track all cash inflows and outflows in a detailed cash balance sheet.
Useful tools for financial management
Payroll and Invoicing - Palkkaus
A user-friendly platform for handling payroll, taxes, and payments.
Accounting software for small businesses - Tilitantti (in Finnish)
A Finnish-language service for bookkeeping
Kirjanpito-ohjelma yhdistyksille – Kitsas ja Holvi
Edullinen ja helppokäyttöinen vaihtoehto yhdistyksille, jotka tarvitsevat kirjanpitoa ja maksujen hallintaa.
Accounting software for small businesses - Netvisor
Comprehensive accounting software tailored for organizations.
How to find an accountant?
Facebook group - Looking for an accountant? (in Finnish)
This group is for small businesses and associations to find a bookkeeper. The group includes bookkeepers from various sectors, and members can ask for quotes or advice.
Financial statements:
A Summary of the associations Finances
Financial statement:The treasurer or bookkeeper prepares the financial statement for the financial year. The financial statement includes the income statement (which shows how funds have been used and how the activities were financed) and the balance sheet (which shows the association's assets, receivables, liabilities, and loans). The auditor or operations inspector checks the financial statement, and it is then approved at the association's meeting;
🔗Glossary of association administration – Suomen Pakolaisapu
Preparation of the financial statement
The association is obliged to produce financial statements for each financial year. The financial year is the period for which the Association's financial statements are prepared. According to the Accounting Act, the financial statements must be drawn up within four months of the end of the financial year. The financial statements generally include at least the profit and loss account, the balance sheet and the balance sheet breakdown, together with the necessary attachments.
- The income statement presents the association’s income (revenue) and expenditure (expenses) for the period. The association’s income refers to, for example, contributions, collection and seller income and expenses arising from fundraising.
- The balance sheet reporting can be used to assess the financial condition of an association. There are two sides to the balance sheet, the side named (vastaava) corresponding to how much property the association has at its disposal and in what form. The responsible (vastaattava) named side, on the other hand, tells where the wealth comes from.
- In the balance sheet breakdown, the totals recorded in the balance sheet are recorded unpacked.
Budgeting and Financial Planning
Budget: Each year the association composes an annual budget, which covers the activities outlined in the action plan. The budget is prepared by the executive committee and approved by the general meeting.Talousarvion laatii hallitus ja se hyväksytään yhdistyksen kokouksessa.
🔗Glossary of association administration – Suomen Pakolaisapu
When planning the association's activities, a budget is drawn up to estimate how much money will be budgeted for activities. The budget is made together with the action plan. The budget is used to estimate and plan the cost of the objectives set out in the action plan. Whether the amount of the grant is large or small, budgeting is always worthwhile because it makes it easier to monitor and evaluate activities.
An useful tool for budgeting - Finazilla (in Finnish)
Finazilla is a user-friendly financial management software designed for budgeting, forecasting, and reporting. It helps associations simplify financial planning, track cash flow, and integrate data across systems. Finazilla supports business intelligence tools like Power BI and automates processes to save time and improve accuracy.
Financial Oversight and Auditing
Good financial management makes an association’s operations transparent and trustworthy. That’s why financial activities are monitored and reviewed regularly. In Finland, associations may have a treasurer, operations inspector, or auditor, depending on the size and financial activities of the association.
Treasurer
The treasurer monitors how the association uses money and often also takes care of the bookkeeping.*
Their duties often include managing bookkeeping, monitoring the budget, and overseeing the use of funds. The treasurer ensures that all income and expenses are recorded correctly and that money is used according to the association’s decisions.
Treasurer’s responsibilities:
- Monitors the association’s income and expenses
- Manages bookkeeping and budgeting
- Prepares financial reports for the board
- Drafts the financial statements at the end of the year
A treasurer is not mandatory, but it is recommended to appoint someone for this role.
Operations inspector
The operations inspector supervises the activities of the association. Operations inspection is done once a year, when both the administration (annual report) and the finances (financial statement) are reviewed.*
An operations inspector is a person who reviews the association’s administration and finances once a year. They are not a professional auditor, but their role is to ensure that the association follows its own rules and the law. If the association has small-scale financial activities, it does not need a professional auditor; an operations inspector is sufficient.
How does the operations inspection work?
- Administration review – Ensuring that the association’s decisions comply with its rules and legal requirements
- Financial review – Checking that funds have been used responsibly and bookkeeping is in order.
- Inspection report – The inspector writes a report on their findings. This report is presented at the association’s meeting and attached to official records.
Operational audit - TJS Opintokeskus (in Finnish)
This guide from TJS Opintokeskus helps associations understand operations inspection. It explains when an inspector is needed, what they review, and how they report their findings. The guide also includes templates for both short and detailed inspection reports, making it easier for associations to complete the process correctly.
Auditor
The association must appoint an auditor if its financial activities exceed certain limits. If the upper limits are not crossed, the association only appoints an operations inspector. The auditor reviews the financial statement.*
The association must appoint an auditor if its financial activities exceed certain limits (🔗More details – suomi.fi). The auditor is a qualified expert who ensures that the association's financial management is done correctly and in compliance with the law. They check the association's bookkeeping and financial statements and report their findings to the association's meeting.
Auditor's duties:
- Review of financial documents – Goes through the association's bookkeeping and financial statements
- Monitoring the use of funds – Ensures that funds are used in line with the association's goals and responsibly
- Monitoring the use of funds - Writes a report to be presented at the association's meeting
If the association's financial activities are smaller, it is sufficient to appoint a financial reviewer instead of an auditor.
Auditing of associations and foundations - Tilintarkastajat (in Finnish)
Do you want to know more? This page helps associations understand the importance of auditing. It explains when an audit is mandatory, what the audit includes, and how it improves financial transparency. The page also describes the auditor's duties and how they ensure that financial matters are handled correctly.
Payment of expenses and tax-free allowances
Reimbursement of expenses
Reimbursement of expenses means that the association reimburses members or employees for expenses directly related to the association's activities. This can include travel expenses, material purchases, or other approved costs.
Important to know:
- All reimbursements must be justified and documented with receipts.
- The board must approve reimbursements in advance.
- Tax-free reimbursements, such as per diems and mileage allowances, can be paid according to the guidelines of the Tax Administration.
Citizens' Forum - Association Finance Workshop: Expense reimbursements (Training, in Finnish)
A guide to reimbursing expenses for associations. It covers travel expenses, daily allowances, and tax regulations for volunteers and employees. It explains the required documentation, reporting obligations, and limits for tax-free travel allowances.
Travel reimbursements
Tax-free travel allowances can be paid when employees have work-related trips other than commuting between their home and the workplace. Travel reimbursements support the association's activities and help cover travel expenses in compliance with Finnish tax laws.
What to do:
- Pre-Approval: The association’s board must approve all travel expenses in advance to ensure they align with the association's objectives.
- Reimbursement Conditions: Only expenses supported by receipts will be reimbursed, such as tickets, fuel costs, or accommodation. Use the travel reimbursement form, which should include the purpose of the trip, route, distance, and times.
- Documentation:All receipts must be kept to ensure accountability and clear tracking of financial expenditures in compliance with regulations.
Tax-free reimbursements - Palkkaus (in Finnish)
Guide to tax-free reimbursements for work-related travel in Finland. Covers meal allowances, daily allowances, mileage reimbursements, and lodging costs, explaining eligibility and tax compliance. Includes links to official tax authority guidelines.
Kilometre and per diem allowances
Kilometre allowances
Kilometre allowances are tax-free reimbursements for using a personal vehicle for association-related travel.
The allowances cover vehicle usage costs (e.g., fuel, maintenance).
Daily Allowances
Daily allowances compensate for extra costs (e.g., meals) incurred during travel but do not include travel or accommodation costs.
- Eligibility: Per diem is payable only for a day when the destination is more than 15 kilometres away from the place where travel begins. This place can be either your main workplace or your home.
- Duration: The length of the trip determines the allowance amount.
The amount of the reimbursement varies from year to year, so we recommend you check Vero's website.
Useful tools
Travel expense report - eTasku (in Finnish)
Example of an online tool that simplifies the creation of travel invoices and expense reports. It provides templates to enter travel details such as per diems, meal allowances and mileage reimbursements.
Travel reimbursement form
Excel template for employees to claim travel expenses based on receipts and tickets. It ensures accurate calculations and tax compliance for 2025, following the rates set by the Finnish Tax Administration (Vero). Filling out the form digitally is recommended.
Reporting and compliance
- Income Register: All reimbursements, including tax-free allowances, must be reported to the income register (🔗Income register).
- Recipient's Tax Card: A tax card may also be required for tax-free allowances.
- Record Keeping: All receipts and forms must be kept to ensure accurate and clear bookkeeping.
