Accounting Best
Practices
Part 3 of 3: Accounting and Budgeting
Executive Summary
December 2014
Accounting Best Practices:
Accounting and Budgeting
AccounƟng Best PracƟces Series
Executive Summary
The Accounting Best Practices: Accounting and Budgeting Survey was conducted online in June
and July 2014 and 90 responses were received. Key findings and takeaways are summarized below.
Contact us to request the full report or interactive dashboards.
More than half (53%) of nonprofits
take more than 10 days to close the
month end, and approximately six
out of 10 (63%) nonprofits usually
experience delays in month end
closings for the first quarter of a new
fiscal year.
Nonprofits can avoid the cycle of delays by defining and enforcing clear
procedures for month end tasks and reconciliations of balance sheet
accounts. In fact, nonprofits who have a checklist/closing calendar for the
month end are less likely to experience delays in month end closings for the
first quarter of a new fiscal year and are less likely to fall behind on completion
of balance sheet account reconciliations.
Having a defined policy for the timing of reconciling balance
sheet accounts decreases the number of business days required
to close the month end, as well as the likelihood that nonprofits will
experience delays in month end closings or fall behind on
completion of balance sheet account reconciliations.
Four out of 10 nonprofits say that
department heads/operations mangers
are not responsible for analyzing actual to
budget variances on a monthly basis.
Organizations should strive to develop a culture of accountability in
which managers who own a part of the budget are responsible for
performance against the budget, including explaining any variances of
actual performance versus projected performance.
Six out of 10 nonprofits say non-financial data is minimally or
somewhat integrated into monthly management reports,
and approximately one-fourth (26%) say non-financial data
is not at all included in monthly management reports.
While most respondents perform longrange strategic planning, less than half
(46%) say that the long-term strategy is
closely linked to the annual budgeting
process.
Despite these numerous benefits, less than half
(47%) of nonprofits have a defined policy for the
timing of balance sheet account reconciliations.
By failing to integrate financial information with key
drivers of the business, such as membership growth,
member retention, and expense reduction, nonprofits
fail to acquire meaningful insights and develop
predictive capabilities about their organization’s
operations and performance.
The organization’s strategic plan provides critical context for development of
the budget. Also, nonprofits – and currently 31% do not – should perform
continuous planning or rolling forecasting outside of the annual budget
process. This helps an organization adapt quickly to changes in its internal or
external environment.
Nearly six out of 10 nonprofits (59%) do not benchmark their
operations against peer operations, and of those that do,
only about one-fourth (24%) include benchmarking as part
of their annual budget process.
Benchmarking against peers is a critical step in
identifying opportunities to improve performance or
efficiency. While each nonprofit is unique,
benchmarking against similar organizations can help
nonprofit leaders recognize operational weaknesses
that are potentially detrimental to organizational health.
© Tate & Tryon 2014