Fact Sheet 17: Keeping Accounts
As a non-profit organization you hold the publicís trust and the IRSís attention! Itís important to keep very clear records that reflect all your finances. These will be important when dealing with the IRS, responding to member or citizen inquiry, and for history.
- Keep receipts for everything in a chronological file.
- Copy checks before depositing them, or keep a detailed log (name and address on check, number, and amount).
- Petty cash: use receipt book to provide receipts (for example, at book sales) and to record expenditures.
- Compile your budget, and then put it to work as a useful planning and monitoring tool. Knowing your budget is the first step to keeping spending in check. If you donít have exact figures, estimate based on the previous yearís income and expense levels, keeping current and future estimates in mind.
- Create a 12-month cash flow chart to track where your spending levels should be at any given point in your fiscal year. Use budget item lines to divide up income and expense categories. The cash flow chart should be used as a road map to guide your spending.
- As your fiscal year progresses, create monthly or quarterly cash flow reports, as appropriate. Match these against the cash flow chart. Higher volumes of activity require more frequent monitoring.
- Reconcile monthly bank statements in a timely fashion.
- Keep check signing privileges current for your board. Make it a rule that checks over a certain amount have to be approved by more than one board member, or the accountant/treasurer.
- Accounting software programs can be helpful if you have a high volume of activity, especially when you need reports. If you use software, be sure to back-up files daily. Store backup diskettes in a fireproof safe on premises and keep another set in an alternate location.
- Ask an accountant from your community to volunteer on the board. This person can be a resource when the Friends need general financial advice, tax help, or have payroll issues. It may be necessary to have an independent audit on a regular basis if your group will be applying for grants at the state or national levels.