Accounting Manual

From Open Source Ecology
Jump to: navigation, search

Note: this is a work in progress. Some of the parts below are inconsistent or incomplete.

How do I:
Bookkeeping - Log Transactions video
Log a transaction?
Purchasing
Request a purchase?
Make a purchase?
Receipts
Submit a receipt after making a purchase?
File a receipt in the accounting filing cabinet?
Reconciling Accounts & Logs
Reconcile bank statements with account ledgers? video
Reconcile the petty cash log?
Financial Statements video
Create a financial statement?
Publish a financial statement to the wiki?
Cash
Handle cash?
Petty Cash video
Use petty cash?
Checks
Write checks?
Handle checks?
Void checks?
Chart of Accounts video
Revise the company's chart of accounts?
Budgets video
Make a budget?
Questions

Accounting System Assets

Asset Description
Accounting Software GnuCash is personal and small-business financial-accounting software, freely licensed under the GNU GPL and available for GNU/Linux, BSD, Solaris, Mac OS X and Microsoft Windows.
Accounting Filing Cabinet Accounting-related paperwork is stored in a locking file cabinet with restricted access.
Online Accounting Archive Digital copies of accounting-related paperwork and other documents are stored in an online archive with restricted access.
Transaction Examples Examples of how to log various transactions into account ledgers
Templates
Chart of Accounts (GnuCash) The chart of accounts template can be used by any OSE community as the basis for their bookkeeping.
Chart of Accounts (Spreadsheet) The chart of accounts template can be used by any OSE community as the basis for their bookkeeping.
Budget The budget template is based on the chart of accounts template and projects expenses for the year on a monthly basis.
Purchase Request Form The purchase request form template is used to request a purchase.
Cash Count Worksheet The cash count worksheet template is used to log cash receipts.

Top of Page

Purchasing

Procedures

This procedure describes how to request a purchase.

  1. Go to the Purchase Request Form Log and fill in the next available row.
  2. Follow the link in 'Column E' to the corresponding 'Purchase Request Form' and fill out the section in gold.
  3. Email the form link to the supervising agent (Operations Manager) with the following Subject heading: Purchase Request Form - #
    Example: Purchase Request Form - #542
    Note: if the Operations Manager is making a purchase, they clear it with the Executive Director.
  4. The supervising agent will either clear the purchase, decline it, or ask for more information.

Comments

Who - These procedures should be followed by anyone who is not a budget owner who would like to request a purchase.

When - These procedures should be followed as soon as a purchase is needed with a large enough window for the purchase to be made before it is needed.

Time Requirements - Submitting a purchase request should take five to ten minutes.

  • Purchase Request Forms allow the bookkeeper to know how to log transactions.


Top of Page

Receipts - Submitting

Procedures

Physical Receipts

This procedure describes how to submit a physical receipt to the bookkeeper after a purchase has been made.

  1. For receipts that are smaller than a standard sheet of paper (8.5”x11”), staple them to a blank sheet of paper with one staple in each corner of each receipt (only one receipt per sheet of paper). Receipts that are the size of a standard sheet of paper or larger can be submitted directly.
  2. Write the corresponding [Purchase Request Form] number on each receipt.
  3. Place the receipts in the [Accounting Inbox] in the Factor e Farm Office.

Digital Receipts

This procedure describes how to submit a digital receipt to the bookkeeper after a purchase has been made.

  1. Email receipts to [email protected]
  2. Place a link to the [Purchase Request Form] in the body of the email with the following Subject heading: Receipts - Purchase Request Form - #
    Example: Receipts - Purchase Request Form - #542

Comments

Who - These procedures should be followed by anyone who has made a purchase.

When - These procedures should be followed as soon as possible after a purchase is made.

Time Requirements - Submitting a single receipt should take less than a minute.

  • Receipts are stapled to a standard sheet of paper in order to keep the filing cabinet organized and orderly, and in order to preserve the legibility of receipts over time.
  • Receipts are filed by vendor, so receipts from different vendors should never be stapled to the same sheet of paper.
  • All purchases must be accompanied by a [Purchase Request Form], even if made by the someone with the authority to approve purchases (Operations Manager and Executive Director), so that the bookkeeper knows how to log all transactions and to follow internal control guidelines.
  • Receipts are associated with their corresponding [Purchase Request Form] in order to keep them organized for the bookkeeper.


Top of Page

Receipts - Filing

Procedures

Physical Receipts

This procedure describes how to file a physical receipt in the [Accounting Filing Cabinet] and is done by the bookkeeper.

  1. Log all transactions in the accounting software.
    Transaction Examples: instructions on how to log transactions by type.
  2. File physical receipts in the [Accounting Filing Cabinet] in the corresponding vendor folder and order them chronologically within each vendor folder.
  3. File digital files according to the Digital Receipts Procedure in the next section.

Digital Receipts

This procedure describes how to file a digital receipt in the [Online Accounting Archive] and is done by the bookkeeper.

  1. Name digital files according to the following naming convention:
    Date: (year/month/day) - vendor - purchase request form number
    Example: 2013 - 01 - 10 - Surplus Center - 101
    Note: if two purchases were made from the same vendor on the same date with the same purchase request form number, add a hyphen and a two-digit number.
    Example: 2013 - 01 - 10 - Surplus Center - 101 - 01
  2. File digital copies of receipts in the [Online Accounting Archive] in the corresponding vendor folder (the software will file them chronologically).
  3. File digital copies of [Purchase Request Forms] in the Purchase Request Form Folder in the [Online Accounting Archive].

Comments

Who - These procedures should be followed by the bookkeeper.

When - These procedures should be followed on a weekly basis at minimum, but they can be done on an ongoing basis.

Time Requirements - Each item should take five minutes to log and file.

  • Physical receipts deteriorate and become unreadable over time. This is why we create digital backups of each receipt. It is not sufficient to only have a digital archive, because digital files are easy to forge, while physical records are more difficult to forge.


Top of Page

Reconciling Accounts

Procedures

This procedure describes how to reconcile bank statements with account ledgers.

  1. Open bank statements and open the corresponding account ledger within the accounting software.
  2. Click on the 'Reconcile' button in the toolbar. This will bring up the 'Reconcile Window'.
  3. Compare each transaction with the bank-issued statement and click on each transaction that matches.
  4. If any irregularities appear, make a note of them and click 'Postpone' while you investigate them.
    Note: call vendors, make an inquiry with the bookkeeper, call the bank, etc.
  5. Once all transactions are investigated and verified, click the 'Finish' button.
  6. Sign the bank statement and photograph (scan) it.
  7. Name the file according to the following convention: Year-Month-Day - Bank Account - Bank Statement
    Example: 2013-01-05 - SESLOC - Bank Statement
  8. Upload it to the [Online Accounting Archive] in the [Bank Statements] folder.
  9. File the physical bank statement in the [Accounting Filing Cabinet] in the corresponding bank folder for reconciled statements.

Comments

Who - These procedures should be followed by the [Account Reconciler], which must not be the same person as the bookkeeper (internal controls).

When - These procedures should happen once a month. Bank accounts should be set up so that all statements are mailed at the same time of the month.

Time Requirements - Each statement should take 15m or less to reconcile, unless irregularities need to be investigated.

  • Account reconciliation is simply a comparison of bank-issued statements to the in-house account ledgers to make sure no mistakes were made (and to prevent fraud).
  • ll bank accounts should be set up so that bank statements are mailed directly to the [Account Reconciler].
  • All mail must be delivered unopened to the [Account Reconciler].
  • It is important to reconcile all accounts on a monthly basis. This includes savings accounts that may have no regular activity.
  • The [Account Reconciler] should either be the Operations Manager or the Executive Director for OSE at this time.
  • For more information about the GnuCash reconciliation function, go to the online GnuCash Manual here.

Top of Page

Financial Statements

Procedures

Statement of Activities

Income Statement

This procedure describes how to generate an income statement with the accounting software.

  1. Within the accounting software, select the following:
    Toolbar: Reports - Income & Expense - Income Statement
  2. The statement will appear. Then select the following:
    Options Button - General Tab
  3. The start date should be the first day of the year.
  4. The end date should be the last day of the most recent month.
  5. Then select the following:
    Display Tab
  6. Make sure that the display accounts as hyperlinks option is not checked.
  7. Click ok
  8. Then select the following:
    Print Button
  9. Select print to file
  10. Name the file with the following naming convention - the date should be the last day of the most recent month:
    Year-Month-Day - Income Statement - Pending
  11. Submit the PDF to the Operations Manager for approval. The Operations Manager will change the word pending to approved.
  12. Once the statement is approved, upload it to the [Online Accounting Archive] in the [Financial Statements] folder.

Statement of Financial Position

Balance Sheet

This procedure describes how to generate a statement of financial position with the accounting software.

  1. Within the accounting software, select the following:
    Toolbar: Reports - Assets & Liabilities - Balance Sheet
  2. The statement will appear. Then select the following:
    Options Button - General Tab
  3. The end date should be the last day of the previous month.
  4. Then select the following:
    Display Tab
  5. Make sure that the display accounts as hyperlinks option is not checked.
  6. Click ok
  7. Then select the following:
    Print Button
  8. Select print to file
  9. Name the file with the following naming convention - the date should be the last day of the most recent month:
    Year-Month-Day - Balance Sheet - Pending
  10. Submit the PDF to the Operations Manager for approval. The Operations Manager will change the word pending to approved.
  11. Once the statement is approved, upload it to the [Online Accounting Archive] in the [Financial Statements] folder.

Cash Flow Statement

This procedure describes how to generate a cashflow statement with the accounting software.

  1. Within the accounting software, select the following:
    Toolbar: Reports - Income & Expense - Cash Flow
  2. The statement will appear. Then select the following:
    Options Button - General Tab
  3. The start date should be the start of this year
  4. The end date should be the end of previous month.
  5. Click ok
  6. Then select the following:
    Print Button
  7. Select print to file
  8. Name the file with the following naming convention - the date should be the last day of the most recent month:
    Year-Month-Day - Cash Flow - Pending
  9. Submit the PDF to the Operations Manager for approval. The Operations Manager will change the word pending to approved.
  10. Once the statement is approved, upload it to the [Online Accounting Archive] in the [Financial Statements] folder.

Comments

Who - Financial statements should be prepared by the bookkeeper, submitted for approval to the Operations Manager, and published to the wiki by the bookkeeper after approval.

When - These procedures should happen once a month after all accounts have been reconciled.

Time Requirements - Each statement should take 10m or less to generate. Approval should take 30m or less. Posting to the wiki should take 30m or less.

Top of Page

Financial Statements - Publishing

Procedures

This procedure describes how to publish financial statements to the wiki.

  1. Create each statement in the accounting software using the procedures in the [Financial Statements] section of this document.
  2. For each statement, select the following:
    Export
  3. Name the file, select a location, and press Export
  4. An html file will be created. Either open the file with an html editor or open it with a web browser.
  5. If you are using an html editor, you will now see the code. If you are using a web browser, right-click and select view source
  6. Copy the code and go to the following web page:
    http://opensourceecology.org/wiki/Financial_Statements
  7. Select Edit and overwrite any previous code for the corresponding statement section, so that only the most recent information is now displayed on this page.
  8. In the archive section, post links to the PDFs of these files from the [Online Accounting Archive]. Be sure they are publicly viewable.

Comments

Who - Financial statements should be published to the wiki by the bookkeeper.

When - These procedures should happen once a month after all accounts have been reconciled and after the statements have been approved.

Time Requirements - Posting to the wiki should take 30m or less.

Top of Page

Cash - Handling

Procedures

This procedure describes how to handle cash.

  1. When cash is received, through direct contributions, public events, program fees, etc., two people must be present at all times.
  2. Both individuals count the cash, log the amount in a Cash Count Worksheet, and sign the worksheet.
  3. When possible, deposit the cash in the bank immediately.
  4. If a same-day deposit is not possible, store the cash in the lockbox in the Accounting Filing Cabinet.
  5. After depositing the cash in the bank, place the deposit slip in the Accounting Inbox.

Comments

Who - Separate individuals perform each function: counting, depositing, reconciling.

When - This procedure should be followed as soon as possible after cash is received.

Time Requirements - Counting and logging cash receipts should take less than five minutes, deposits should take 30 minutes to one hour, and reconciling should take less than 15 minutes.

Top of Page

Checks - Writing

Procedures

This procedure describes how to write checks.

  1. Any signer may sign checks up to $500, other than if the payee is the signer, where a check of any amount in such case shall be co-signed.
  2. Checks above $500 require two signatures.
  3. It is against company policy to issue pre-signed checks.
  4. It is against company policy to write a check to 'cash'.
  5. Checks for any amount over $10,000 require pre-approval of the board, unless it is for a budgeted item.

Comments

Who - The following people shall be authorized to sign checks: the board chair, treasurer, chief executive, and one senior staff member. This last individual shall be named by the executive director.

Top of Page

Checks - Handling

Procedures

This procedure describes how to handle checks written to the company.

  1. Upon receipt, checks must be immediately endorsed For Deposit Only
  2. Log the check in the [Check Receipt Log] and place the check in the [Accounting Inbox].

Comments

Who - These procedures should be followed by anyone who receives a check.

When - These procedures are followed whenever a check is received.

Time Requirements - These procedures should take 5 minutes.

Top of Page

Checks - Voiding

Procedures

This procedure describes how to void a check.

  1. Voided checks must be defaced by cutting off the signature line and placed in the [Accounting Inbox].
  2. The bookkeeper must file the voided check in the [Accounting Filing Cabinet] in the [Voided Checks Folder].
  3. Note: how does the bookkeeper update the account ledger? Should they investigate to identify if the payment is cancelled altogether or handled by some other means?
  4. The corresponding checkbook's carbon copy should be updated by writing VOID on the copy with a signature and date.

Comments

Who - Only the board chair, treasurer, executive director, and operations manager have the authority to void checks.

When - These procedures are followed whenever a check needs to be voided.

Time Requirements - These procedures should take 5 minutes.

Top of Page

Chart of Accounts - Changing

Procedures

This procedure describes how to change the company's chart of accounts.

  1. Anyone can propose a change to the chart of accounts to the Executive Director.
  2. The Executive Director is authorized to make changes in consultation with the Operations Manager to determine account numbers.
  3. Changes to the chart of accounts are logged in the [Chart of Accounts - Master Template], and the accounting software accounts are updated.
  4. The Executive Director issues a memo to the relevant staff of the update.

Comments

Who - Anyone can request a change. The Executive Director approves changes, consults the Operations Manager, and issues a memo to relevant staff.

When - These procedures are followed whenever a change is needed.

Time Requirements - This procedure should take 1 hour.

Top of Page

Questions

  • Should financial statements be generated from the beginning to the end of each month or from the beginning of the fiscal year (same as calendar year) to the end of the previous month?
  • Do we need to log changes to the chart of accounts with dual signatures and oversight?
  • How are voided checks handled?

References