Nonprofit Financials - Get Them Done Faster at Month-End

By: Nancy Church

A nonprofit's monthly financial statements communicate critical information to the executive director and the board. Sometimes, these readers can be so eager to see the year-to-date results that they want accountants to by-pass procedures they believe must be performed to avoid distributing misleading information. Here are some common problems accountants experience, as well as some ways to speed up completion of the financials without compromising important procedures.

Waiting for bank statments to arrive: Sometimes, your checking account statement doesn't arrive in the mail for a week after month-end, and you have to hold up other procedures because you haven't reconciled your accounting records to the bank. But you don't have to wait anymore! Thanks to internet banking, you can have access to the checking account on-line. Internal controls over cash are not compromised if you have read-only access.

Waiting for invoices from contractors, suppliers and vendors to arrive: Ignore any that will have a negligible effect on either the reports you're preparing or on billing to funders. If they're too big to ignore, contact the contractor and ask for an emailed invoice or an estimate. You can post estimates to Accrued Expenses using a reversing entry to the GL; then when the bill comes in, post it to AP as you normally would.

Balance sheet accounts that are difficult to reconcile: It's great to tie out all balance sheet accounts every month, but don't let minor discrepancies hold up your reports. Unless you have large, unexplained differences, go ahead and issue your reports and complete the reconciliations later. What's a large amount? One that's big enough to cause users to make different decisions than they would if the amount were explained.

Waiting for back-up for credit card purchases: Some employees just can't seem to get their receipts turned in by the time you want to close. Rather than hold-up reporting while you wait, you can post the charges to Employee Receivables, an asset account, and continue with your close.

Vendor invoices missing expense coding, or with coding that's wrong: It's worth your time to get accurate and complete expense coding - account, program, and funding source - before you post transactions. You can help managers and others get it right by using a custom-made rubber stamp that has a blank space where they are to write each bit of data that you need. Or you can set up a purchase order system, which requires the coding to be provided before a purchase is approved.

Requests for reports at the last minute: Fielding a request for a grant report by tomorrow can rapidly lead to overtime as when it come from your boss! It's very hard to say 'no' under these circumstances. Knowing what reports are scheduled by keeping a calendar of upcoming due dates can be quite helpful. At month-end before the closing process gets going, ask your management team about other needs they will need your help meeting 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!

Article Source: http://www.dxarticle.com

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

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