Non-Profit Organizations Accounting Help and Software Support

For some managers of charities and non-profit organizations it can come as a surprise that they need to maintain financial records nearly to the same extent as those needed for corporations. Additionally, non-profit entities are required to submit files to the Canada Revenue Agency (CRA) much like a corporation does. This can be a complex process for a non-profit organization to follow and our team of professionals can assist with the work required and also ensure that the necessary regulatory filings are made.

Non-Profit Accounting Basics and Principals

Non-Profit organizations in Canada are required to prepare their financial records in accordance with the CPA Canada Handbook Part III – Accounting Standards for not-for-profit organizations. These guidelines are available free to Canadian CPA’s or can be purchased by non-members at www.CAstore.ca. A non-profit can also report under International Financial Reporting Standards (IFRS), but this adds a high degree of complexity, and cost, and is not commonly adopted by non-profit organizations.

Fundamentally, many of the accounting requirements are consistent with those required for a private corporation in Canada in terms of how the transactions and balances of the non-profit organization are recorded. For many aspects of non-profit accounting, the guidance will specifically refer to the need to account for transactions or balances as guided by that required for corporations.

Key differences do exist, however, requiring the need to engage a professional firm that can address the specific guidance that must be followed by a non-profit organisation. Our firm can provide this specific consultation and guidance to ensure that the accounts prepared by your non-profit organization are prepared appropriately and the necessary filings are made correctly with the CRA.

A key area where non-profit accounting differs from that required for corporations is related to the presentation and disclosure of the financial statements of the organization. For non-profit organizations with different objectives and operations there may be a need to issue segregated financial statements for contributions, costs, assets, and liabilities related to a specific fund. This typically occurs when an organization solicits donations for a specific purpose, i.e. construction of a community housing project, and must separate the financial information related to those specific donations from the general funds of the organization. There are also specific disclosure requirements that exist, relating to remuneration paid to management and directors, which does not exist for private corporations.

For non-profit organizations that are registered charities with the CRA there is also a need to issue donation tax receipts each year. This process can be complex and time consuming but it is required and must be managed by the accountants of a non-profit organization.

Accounting Software Help for Non-Profit Organizations

As non-profit organizations are expected to have robust financial records, the use of a software platform to support the accounting work required is recommended. One option chosen by many non-profit organizations is QuickBooks, as its Premier version has a specific set-up for non-profit organizations to ensure the financial statements are prepared correctly. Additionally it includes donor management features so that management of the non-profit can analyze donor contributions, trends and those of individual donors, to better manage approaching donors.

Accounting software can also help manage the process of issuing tax receipts each year with clear donation summaries and donor records available to provide the basis for those tax receipts.

Additionally, using a professional accounting software and leveraging the reporting options available, can display a high degree of financial management to both directors of a non-profit organization and significant donors. The appearances of how effectively an organization is run is important in the eyes of donors and having a cost-effective tool in place to effectively track and report on information can be invaluable in impacting perception.

Our team of professionals can help manage this process for you and ensure that your software is set-up effectively and you are utilizing the existing features effectively. This can save time in the organization so that managers and staff can focus on the core objectives of the non-profit organization and not on administrative processes required of them. We have extensive experience assisting non-profit organizations and can leverage our skill set to help you operate efficiently.