Accounting Systems
Proper financial management of a tax-exempt organization differs from ordinary business accounting in two very important ways:
- The tax-exempt organization must comply with unique IRS record-keeping and reporting requirements, and
- The organization must fulfill its Fiduciary Responsibility for proper handling of its Revenue and Support in accordance with its mission statement and donor restrictions.
Benchmarks for nonprofit accounting systems:
- Proper classification of income into appropriate subcategories of Support and Revenue
- Donor restrictions recorded and discharged properly
- Expenditures properly classified into Program Services, Management, and Fundraising
- All income recorded immediately, deposited and verified promptly, and all expenditures properly authorized and approved
- Timely, accurate, detailed financial reports to Board Members that are thoroughly reviewed and discussed
- Internal control system to safeguard assets and provide segregation of duties
How does your system measure up?
Back to Non-Profit Financial Management
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