Lessons Learned Specific Steps in Setting up a Financial Monitoring/Management System

• Purchase a computerized accounting package no matter the size of the organization. Inexpensive packages can be purchased for a few hundred dollars and will provide the bookkeeping and reporting function needed for smaller organizations. They are more accurate, exportable to other software such as excel that are commonly used in financial management. They save staff time thus paying for the purchase very quickly…

• Purchase a computerized accounting package no matter the size of the organization. Inexpensive packages can be purchased for a few hundred dollars and will provide the bookkeeping and reporting function needed for smaller organizations. They are more accurate, exportable to other software such as excel that are commonly used in financial management. They save staff time thus paying for the purchase very quickly.

• Set up a chart of accounts that is designed according to contracts.  This shouldn’t be done by accountants on their own – the system has to be intuitive and user friendly, and it is only with your input that it’ll be that way.  Lay contracts out and create matrix of all line items that need to be accounted for defined with clear language of what is eligible and what is not, which can then be published. 

• Attempt to develop a chart that can be used for all or most of your projects.

• Learn from audits about how to improve the structure of your chart of accounts. 

• Develop a rolling cash flow for 12 months in order to be able to see gaps in funding/cash flow well in advance.

• Maintain a separate Statement of Revenue and Expense for each Project, no matter what the funding source, then combine them into one Consolidated Statement of Revenue and Expense (or Statement of Operations) to arrive at overall organizational figures.

• Treat infrastructure/organizational administrative costs as a Project, with a separate Statement of Revenue and Expense even if “Revenue” consists of payments from other projects.

• If a funded Project continues via a new contract from year to year, set up new revenue and expense accounts for the new contract at the project start date and end the revenue and expense account for the previous contract at it’s end date. This avoids the improper overlapping of the accounting information of two separate contracts within a fiscal year. This will provide accurate Statements of Revenue and Expense for both projects.




• Always share information with appropriate staff:

o Finance Department staff should all be aware of Projects starting and ending, of latest changes in funder’s reporting and budgeting requirements, of background and/or reason for certain practices, of changes in staff, and other information relevant to accounting.

o Project Leads and those responsible for purchasing supplies or hiring staff should be aware of relevant budgetary approvals and limits.

o Management and Project Leads should be provided with monthly updates of year-to-date budget variances so that they can react appropriately in a timely manner.

o Maintain a large white board in the Finance Department listing all current projects, including project name, number, start and end dates so that this information is readily available to those who need it. A blank column on the board can be used to indicate when last report was sent. This is an information system that can also be created in your accounting software. This can then provide access to information remotely to your managers.

o Set up a shared, secure finance server so that all Finance Department staff can save documents to the same folders and have access to all documents relevant to their work, without having to ask the person who original prepared the document to send them a copy.

o Have regular departmental staff meetings to keep all staff informed and to give staff the opportunity to share ideas and/or concerns.

• Cross-train all departmental staff so that all can do certain tasks, e.g. posting, cheques, reports to funder, and at least two can perform other tasks, e.g. payroll, in the event of another’s scheduled absence or sudden departure.

• Develop a Procedures Manual for the Finance Department so that new staff can learn from it and current staff can refer to it when performing a task usually undertaken by someone else, or infrequently done.