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Nonprofit Reports - How to Complete Them Sooner Each Month

Jul 1, 2008
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 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.

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.

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.

Smoothing the road to a quicker monthly close isn't likely to be accomplished all at once. Take on what seems to be the easiest task first and move on to the more difficult ones later. It won't be long before you see results that make the effort worth it!
About the Author
Want to learn more about the help 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.
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