GETTING YOUR FINANCES IN SHAPE
It's not too late to review your accounting and financial practice to ensure your organization is ready to handle whatever may come its way for the the remainder of the year.
Consider the following:
1. Get Your Chart of Accounts in Shape
Your chart of accounts is the framework upon which your financial reports are built. If your reports don’t tell you at a quick glance what you need to know, then your chart of accounts may be the ultimate culprit. Check your chart of accounts for these following common problems:
Are you mixing and matching?
Don’t mix up variables in the same section. Your account code should have a distinct section for type of expense, activity, program/department, and funding source. For example, don’t have expense codes for training and travel, because employees who travel for training won’t consistently use the same code, which will distort your comparisons of expense to the overall budget. Travel is the expense code and training is the activity code.
Are you all over the place?
Similar account codes should be grouped together to simplify report writing and summarization of data and reduce the risk of missing or double counting of the data. For example, don’t mix salary and fringe benefit codes.
Are you living in the past?
Your accounting systems shouldn’t show inactivated or deleted accounts that are no longer relevant. For example, if you have closed a site, close down its account code as well.
Great article with more in depth information available on Accounting Management Solutions website.
Look forward to hearing feedback on this article.