Nonprofit Reports - How to Complete Them Sooner Each Month
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.
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.
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.
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.
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.
