Nonprofit Financial Statements-How to Speed up the Monthly Close | Bookkeeping

By NancyChurch
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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.

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 receipts and other back-up for credit card purchases or travel expenses: Sometimes, receipts and coding guidance for charges to cards entrusted to employees is missing when it's time to close the month or pay the bill. In order not to hold up financial statements, post debits for missing charges on employee cards to Employee Receivables so they appear on the balance sheet as an asset. Think about them as rough equivalents to cash advances for travel. Once you have the receipts in hand, you can journal-entry them to the appropriate expense account.

Inaccurate or missing coding of expenses to accounts, programs, or funding sources: There's no substitute for getting accurate coding information before you post transactions, so help managers and other employees responsible for providng this information get it to you. You can have a rubber stamp custom-made that has a blank space for each bit of information you need from them. Or you can use purchase orders, which require the coding to be supplied before a 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.

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

Are you curious 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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