Accounting, Payroll & Pension Issues/Accounting for non-profit
I have been appointed as the initial fiscal agent for a non-profit healthcare coalition and I'm struggling a bit with setting up our chart of accounts. I'm a paramedic by trade, but I have a small understanding of accounting principles from my college days - but that was 25 years ago, so I'm a bit rusty.
We are funded primarily through a grant administered by the Iowa Department of Public Health. At the beginning of each fiscal year, we are awarded a fixed amount of money for preparedness expenditures. When a partner agency requests funds to be used for preparedness purposes, they submit the request to us, and if we approve it, we send a request to the IDPH who then verifies that it meets the criteria and sends us a check for the funds.
For example, Anytown Fire Dept requests (by submitting a quote or invoice) that our coalition purchase 5 new radios for them at a total cost of $2000. Our board meets and approves the request. We send a request to the IDPH who confirms that this purchase meets the grant requirements and then sends the coalition a check for $2000. We then write a check for $2000 to NextTown Radio Specialists to purchase the radios for Anytown Fire Dept.
My question is, what is the most appropriate way to set up our accounts, knowing that we must be able to demonstrate that the IDPH grant funds are used for purchases that meet the criteria of the grant? We may have other purchases that are not eligible for grant funds, and for those we may use funds through our own fundraising efforts, or a different grant. Somehow, I need to keep the dollars separate in our accounting, but I want to be able to write all checks from the same account.
How do we set up our accounts so that we can easily tie expenditures to the appropriate fund to demonstrate that certain expenditures are coming from the IDPH grant, and other non-qualifying expenditures are being purchased with other funds.
Do you have any recommendations on accounting software that will help us manage our organization's finances?
My expertise is in for profit accounting. In addition I have no experience with an organization whose function is as you have described.
With that said, my thoughts are the following. It is apparent that you will need to track the initial quote or invoice with the subsequent documentation as well as payments received from IDPH and disbursement to the organization who originally sent the request. I think a way to accomplish that is by assigning a reference number to the initial invoice / quote request, then using that reference number on all documents abd checks, both received and paid out.
I presume there are similar organizations in other states.
Is there a way for you to discuss your questions with people in similar organizations in other states. I would also ask the person who will be preparing the tax returns for this organization. In addition, someone, if other than the person preparaing the tax return, will likely be auditing the accounting work; that person should be involved in the setup of the chart of accounts.
As for software, I do not have the experience with entities like this to recommend any software.
Let me know if I can assist further.