Things to Take Care in Bookkeeping for Not for Profit
What Is Bookkeeping For Not-For Profit Organizations?
With regard to nonprofit organizations, bookkeeping includes customary accounting principles and tasks which businesses make use of for analyzing, tracking, and recording transactions relating to finance, even though certain parts of bookkeeping are impacted by the differences between for-profit and nonprofit organizations.
Important Things to Consider In Not-For Profit Organization Bookkeeping
If one is going to start a non-profit organization or there is already an existing non-profit organization, there is a need to know about the important features of bookkeeping for non-profit organizations.
Budgeting: The budget is considered to be an important element of internal control. While making a regular comparison of the results with the budget would show irregularities of any kind. It is significant in regularly revisiting the budget and in making any forms of adjustments in preventing the pitfalls in case donations are not matching with the expectations or when expenses arise which were not totally expected.
Financial Reports: There is a need to have all-inclusive information relating to finances for making improved decisions. By making a comparison of cash flow statement, balance sheet, and income statement with similar documents or budget of the previous year would help to understand crucial variations and trends which help in making wise decisions. Financial reports are very important in making important planning.
Control over Finances: Non-profit organizations of any size need bookkeeping expertise for doing monitoring, implementation, and in formulating a financial control system which will assist in avoiding any financial errors or misuse and thereby provide liability safeguards for the management and the board.
Creating Internal Controls: For non-profit organizations, internal controls are considered to be very important due to the fact that they create accountability and would assist in formulating an atmosphere of ethics and integrity. Precise and timely reporting,auditing on a periodic basis, accurate management of finances are some of the important safety methods.
Separating Duties Relating To Monetary Activities: For preventing fraud, there is a need for dividing responsibilities relating to finance among various persons. One single individual should not be given the responsibility of doing bookkeeping, and in making and approving invoices. In addition, one must not be making assumptions just on the basis that the person is being known to you.
Process for Donations in Cash: There should be at the minimum two persons present while collecting or managing the cash. It is important to ensure that every donor should be provided with a receipt which is numbered. It is important to make sure that in the receipt book, the amount is being correctly being recorded. In addition, there is a need to keep in a safe both the cash and receipt books having limited accessibility till the cash is being deposited.