Changing Your Perspective

Surely an institution like the church or your local trade union need not worry about their finances

. After all, any donation given to them can easily be recorded in a log book or in a simple spreadsheet as Cash In and Cash Out. After all, whats there to monitor when your primary objective is not in line with earning profits?

Unfortunately, this can somewhat be far from the truth. In reality, even non profit organizations are guided by various accounting principles and would also need to have an updated and accurate book of accounts, albeit a bit different from what commercial organizations have on hand. For one, non-profit organizations need to consider three types of funds unrestricted funds, temporarily restricted and permanently restricted. Each of these fund groups are treated as separate and unique from each other.

Although fund accounting is the primary method of accounting method also used for state and local government agencies, the accounting procedures of NFP (Not-for-profit) organizations still differ from what these agencies employ. With non profit organizations, accounting procedures need to focus more on how the funds were used and not how much the organization was able to make as compared to the previous year.

If you are looking at a career doing accounting for non profit organizations, the first thing that you would need to do is have a change in perspective. Keep in mind that your objective right now is not about making profits but about monitoring where each cent goes. Your customers and clients are now your donors and sponsors. As opposed to your clients and customers, they do not require any product or service in return but they do need a proper accounting of how their money was spent. If it was given for a feeding program, every cent should be spent on the said program.

Doing the accounting for non profit organization would also mean setting up a different chart of accounts than the one you are used to in commercial firms. This time, instead of Accounts Receivables, you would be dealing with Members Receivables, Grant Receivables and Donors Receivables. You would also need to familiarize yourself with the standard set by the FASB when preparing your financial statement. This would usually entail breaking down expenses and revenues.

Fortunately, if you think you do not have enough skill to handle the accounting for non profit organizations, you have the option of checking online various resources to help you with your plight. You can also opt to purchase software applications aimed specifically at non profit organizations.

by: Tom Hope

POST COMMENT

The Truth In Non Profit Organizations Help! I Am Not An Accountant When Money Does Not Count Easymove 6.1- Transcription Reports At Less Than A Click Away Computer Performance Optimization - Defragmentation And Virtual Memory Setting Defrag Xp And Speed Up Your Computer In Minutes Why Choose Advanced Defrag? Disk Defrag - Windows Tips And Tricks Of Defragmenting Disk Regain A Faster Computer ---three Easy Ways Make It Come True Disk Defragment - Defragment Hard Drive And Keep Your File Safe Real-time Defragment Makes The Pc Fragment-free Forever ---my Brief Review On Advanced Defrag Disk Defragment - Important Tips Of Defragging Disk Is It Worth Using Advanced Defrag?