Nonprofit Financial Statements-How to Speed up the Monthly Close

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Nonprofit Financial Statements-How to Speed up the Monthly Close

By: Nancy Church

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.

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.

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.

Problems reconciling a balance sheet account: We'd all like to tie out every single balance sheet account to the penny, but sometimes perfection gets in the way of timeliness. If your reconciliation of deferred revenue is off by $5 or your prepaid expenses seem a tiny bit low, will the statement's users make different decisions than they would if these accounts were completely reconciled? Probably not. Issue the statements and complete the reconciliation later.

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.

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: http://www.trade4net.com/articles

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

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