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bookkeeping

bookkeeping

  • NGO Bookkeeping Tips

    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.

  • Important Questions to Ask on Presentation of AFS

    1. How long ago was the last audit conducted?
    2. What does the Auditor’s Opinion say – is it qualified or unqualified?

    Balance Sheet

    3. Does the organisation have enough ready cash (see ‘Cash at Bank’ listed under Current Assets) to pay off its immediate debts (see Creditors)?
    4. How long could the organisation survive if all of its funding dried up? (Calculate the ‘survival ratio’) How does this compare to last year?

    Income & Expenditure (or Profit and Loss) Account

    5. Is income and expenditure broadly in balance? (Look for net income/expenditure)
    6. Is there a significant increase or decrease in activity levels from the previous year?
    7. What is the balance of direct project costs vs. admin costs? Is it reasonable for the size and nature of the organisation?
    8. How ‘donor dependent’ is the organisation? (Calculate the ‘donor dependency ratio’)

    Budget Monitoring Report

    9. Is expenditure broadly in line with the budget? (+ 10 percent)
    10. Is income broadly in line with the budget?
    11. Are there any significant variances? If so, have they been satisfactorily explained?
    12. What action is being taken to correct significant variances – e.g. under-spending as a result of delayed activity plans?
    13. Are there any large bills outstanding which could substantially affect the figures shown?
    14. Are we owed any large sums of money? What is being done to retrieve them?
    15. Are there any un-budgeted expenses which may occur in the rest of the year?

    Taken from Management Accounting for Non-governmental Organisations

    For more useful financial information for NGOs, refer to www.ngoaccounting.org.

    Cheryl-Lynn Freeman
    Auditor and creator of NGO Accounting

     

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