Daniel W. Elliot, CPA

  Year-end brings accounting factors not often considered during the year when interim reports are generated. If you are performing the following tasks on a monthly basis, you are probably not doing it with a 10% administration fee.   Let’s start with depreciation of capital assets and the    corresponding amortization of donation revenue where applicable. While this is often performed once at year-end, you could calculate these at the beginning of the year and allocate during the period using reoccurring entries. Remember, though, you will need to consider additions and disposals which occur during the year. Next, many of you have bi-weekly payroll which means the first pay after year-end will include days which belong to the prior year requiring an accrual in old year and a reversal in new. Some systems are able to do this monthly if the feature is available and used correctly. From there, we reevaluate leave balances by program such as sick and annual, and adjust ...

The joy of multiple programs is multiple funders each with their own reporting requirements including level of detail, frequency, templates, portals, and restrictions. As the Director of Finance for a mid sized not-for-profit, I had over thirty programs funded by over a dozen major sponsors to contend with, and sometimes even the same funder has different requirements for each of their programs. Unfortunately, there are situations where certain funders assume they are the only program we are running; probably because they themselves despite having multiple deliverers, are only running one program. The result of this can sometimes lead to angst and increases administration costs of program delivery.   Before we get into the details of funder reporting, let’s have a discussion on why we are reporting in the first place.   When you tender a requirement for a contracted good or service, regardless if you are a for profit business or not, you review the bids for value for money...

 For those who have worked for government organizations at various levels, you may have heard the term ‘use it or lose it’ in the context of spending unused funds at year-end. The concept is you are given a budget for the fiscal year, and if you lapse funds, they will be returned to the Centre never to be seen again. In fact, some managers fear the following year budget will also be reduced because if you did not need that much last year, you probably don’t need that much next year either. Unfortunately, the above mentality leads to questionable decisions such as purchasing frivolous goods or services, as well as ‘business retreats’ on cruise ships. However, when  ́March Madness ́ is used to stock up on necessary items such as office supplies, rations for kitchens, or fuel for vehicles and equipment, it is generally acceptable. However, if the value of these types of ‘inventoriable’ items becomes excessive, accounting policies may require you to move the value of the product o...

  As I attempt to finalize the new year budget, I recall the number of scenarios which can make the task daunting.   Working in the Social Services field of the not-for-profit sector, over 70% our costs are salaries and benefits, and ensuring these are well forecasted is critical otherwise affecting decision making therefore representing a significant risk to the financial health of the organization. You would think working in a unionized environment where salaries and benefits are clearly defined would make the task of forecasting and managing salaries fairly straightforward; however, a number of factors complicate this. First, not all benefits are available to all employees, or available right away; for example, the Health and Dental portion have a three month wait period, where the pension match wait period can be as much as six months. Each of these two packages cost over 9% of eligible salaries for the employer portion. The variance of forecasting full offering versus an ...

  While almost every financial professional will tell you to diversify your portfolio, both investment and service or goods offerings, there are times where this can lead to higher Administration and Management costs in both for-profit and not-for-profit organizations. Most of us have heard the term ‘Span of Control’ being how many staff one person can effectively manage, a common quote being 5-7. This topic has such a high ‘It Depends’ factor, in my opinion this ratio is only valid for introducing the concept. Let’s consider a few examples. One program with 100 delivery officers may require one Manager and 7 assistant managers as Span of Control can be stretched from the commonly quoted 1:5-7 ratio to 1:15 if all persons are performing similar tasks requiring similar qualifications. Contrast this to an organization with 100 employees, 6 major areas, and multiple programs with distinctively different occupations and skill requirements. For example, an Assistant Warden Management Se...

  Federal, state/provincial, and municipal governments exist to enact and enforce laws which strive to ensure we remain a civilized society; they are also there to provide centralized common services and assist those who are legitimately in need.   In developed nations it is common to have a centralized pot of funds which members of society contribute to provide services such as civil protection including military, police, border, prisons, fire-rescue and healthcare. In addition to these public safety services, is infrastructure such as roads, water, and sanitation. Although there are many debates regarding providing the above more efficiently through forprofit sector, we will assume it would still require a central authority to collect and distribute funding to provide such services regardless of who in the end is delivering. In addition to civil protection and infrastructure, is social programs which is providing support and services to those members of society who are leg...