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Nonprofit Financials - Get Them Done Faster at Month-End

By: Nancy Church

A nonprofit's monthly financial reports reveal critical data to the organization's management and board. But these users can sometimes want to see the reports so soon that they ask accountants to hurry up the process and cut short procedures that are necessary to avoid distributing wrong or misleading results. Below are some problems accountants experience, along with some suggestions for speeding up completion of the reports while preserving their integrity.

Bank statements arriving late in the mail: Reconciling the accounting records with the bank statement is necessary to assure complete recording of income and expenses, and when the bank statement arrives a week after month-end, it can try your patience. But you don't have to wait! Accountants can - and should - have read-only access to all their organization's bank accounts on the internet.

Waiting for invoices to come in the mail: First, estimate the amount due on each invoice you're waiting for and decide whether that amount will have a material effect on the results of operations. If an invoice is small, ignore it and don't post anything. If the amount is too big to ignore, contact the vendor and request an estimate or an electronic version of the invoice. Post estimates to Accrued Expenses rather than Accounts Payable, and reverse the entries on the first of the following month. When you get the bills, post them 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.

Requests for reports or projects at the last minute: It's hard to say no to your boss, so urgent requests can be difficult to manage and often lead to overtime. It helps to know what's coming up, so be proactive. Make sure you have a calendar showing when grant or project reports are due. At month-end before the closing process starts in earnest, ask your executive director about other requests that may hit your desk in the next week or two.

Don't expect to resolve all of these difficulties in one month. Tackle what you can, and it won't be long before you see results.

Article Source: Main Articles

Want to find out more about the help that's available to you in nonprofit accounting? Remember to check out the free article on how to prevent fraud by Nancy Church of Not-for-Profit Accounting Help.

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