Article Advise

submitted: Aug 29th 2008 | by: NancyChurch | Total views: 1 | Word Count: 599 | |

Monthly financial statements convey critical information to a nonprofit's management and board. Sometimes, though, these people are in such a hurry to get the results after month-end that accountants feel pressure to take short-cuts and eliminate procedures they believe are necessary to create complete and accurate reports. Following are some problems accountants commonly face, and some suggestions for increasing month-end efficiency without compromising or distorting the message in the numbers.

Waiting for bank statements: Complete recording of revenue depends in part on reconciling accounting records with the bank, as can complete recording of expenses, and it's good to have this done before financial statements are distributed. Do you have to wait for the bank statement to arrive in the mail? Not any more! Thanks to the internet, financial managers can - and should - have read-only access to all their organization's bank accounts.

Late invoices from vendors: When you know you owe but the invoice hasn't arrived, you don't need to hold up your month-end close. If the amount you expect to owe is large enough that it will have a material effect on the results of operations, contact the vendor and ask for an email or fax of the invoice, or an estimate of the amount they'll be billing. Post an estimate to Accrued Expenses as a reversing entry to the GL. Then, when the bill arrives, post it to AP as you normally would.

Difficulty with a reconciliation: Some accounts need to be reconciled before you issue financial statements - these are the ones where missing or incorrect data would cause managers to make different decisions than they would if that data were included or correct. But if only small amounts are involved - $50 here or $5 there - the financial reports will be just as useful before the reconciliations are done as they will afterwards. Weigh the benefits of timely reporting against the benefits of absolute accuracy, the disadvantages of missing information against those of tardiness.

Gathering back-up for credit card purchases: It's common for some employees to be late in turning in their receipts to support charges they've made to organization credit cards. While you're waiting for your reminders to be effective and cause the receipts to be turned in, you can code the unsupported expenses to an Employee Receivable account and close the month (or pay the bill).

Lack of appropriate expense coding to programs or funding sources: Help managers and other employees responsible for coding to accomplish this timely! You can stamp each invoice that arrives with a custom-made stamp (they cost about $20) with a blank space for each bit of coding information they need to supply. You can use purchase orders so the coding is required before the purchase is made.

Executive directors or other colleagues' urgent requests for reports or projects at the last minute: We're all familiar with this one, and it can be difficult to manage without putting in overtime. It helps to be proactive: make sure you have a calendar showing when grant reports are due. At month-end before the closing process starts in earnest, ask your executive director about other requests that may be coming in the next week or two.

It may be a few months before you manage to clear all of these obstacles out of the way and even then, some of them will require monthly attention to make sure they don't come back. The results will be worth whatever energy it takes, so stick with it until you experience the rewards!

About the Author

Want to learn more about the support that's available to you in nonprofit accounting? Remember to order the bonus article on how to prevent fraud by Nancy Church of Not-for-Profit Accounting Help.

Comments

No comments posted.

You do not have permission to comment. If you log in, you may be able to comment.