I recently hosted a successful NGO governance seminar and had quite a bit of questions relating to the right accounting package and where to begin with regards to good record keeping. I have audited a couple of NGOs and the main reason NGOs outsource their accounting is because it is often too costly to hire a full-time accountant or just fear of having to do bookkeeping in-house.
Here are some of the questions I have been asked and my best response to it:
I need to start recording the NGO’s income and expenses. Where do I begin?
- Well, if you have opened a bank account for the NGO at the very beginning, then processing entries from your bank statements is not a bad idea;
- Another option is to use the slips and whatever supporting documentation you have with regards to the various financial transactions that have taken place in your organisation and sit down with a person knowledgeable in the area of accounting to assist you with the appropriate record keeping approaches.
What is the correct basis of accounting for transactions?
- From funder agreements that I have read through, the most acceptable basis is generally accepted accounting practices or the cash basis of accounting;
- The cash basis is recording expenses as you pay them and income as you receive it.
What accounting package is best for us to use?
- As an auditor, I know of some very good accounting solutions that have helped many of our NGO clients;
- The one package is Pastel Express. It is a start up package for small businesses and organisations. I still find it a bit expensive and the annual renewal license fee required can be a bit costly for smaller organisations;
- A free solution available is TurboCash. Many use this, but support is required if you want to start using this package;
- Another package that comes highly recommended is Omni Accounts. It is not well recognised in the market, but coming from an auditor, believe me, this is a great accounting solution;
- Omni Accounts is easy to use and easy to learn. Pricing starts from about R399, with no renewal licence fee and you can create up to three companies;
- I am working on releasing a useful NGO Accounting Pack very soon, but I will certainly keep you posted.
For more valuable Accounting tips and financial management advice, be sure to join us on 31 March 2012 at Radio CCFm for our Accounting and Tax Seminar.
For more about the Seminar, refer to www.ngoaccounting.org/accounting--tax-management-seminar.html.
- Cheryl-Lynn, Freeman, auditor and creator of NGO Accounting.