I am the new Treasurer of a very small non-profit organization which has been using cash basis accounting. There has been some discussion/confusion about when income is considered “received”. Does “received” mean the date when any person in the organization collects some money for an activity, or does it mean when the Treasurer actually receives the money from the other individual? Thanks for any help.
USA Cash basis
- Thread starter dksinger
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Typically, cash is ''received" when it is placed under the control of a representative (any person in the organization) of your organization. If there is a significant lag between when a rep gets the money and when it finally gets to the Treasurer, then that is an internal control issue to be addressed.
That makes sense if money is collected at one time by someone other than the Treasurer. If money is collected over a period of time, such as dues which could be turned in at a meeting or mailed in, does each date money is collected by the membership person have to be entered separately, even though all the money is turned in to the Treasurer at one time?
When money is collected, normally a receipt for it would be given at the time it is collected, so that's the date to use. There shouldn't be money being collected and held over a period time - it should be getting to the Treasurer asap so that it can be banked.
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Hi dksinger
You have a few considerations in this
First, I can see if money dribbles in over the course of a month it would be nuts to try to nail down the exact date of receipt of all of these minor bucks. You could for example do as you suggested and base your recording in the books on the date YOU got the bucks. This would be more practical.
BUT if a donor gives your rep big bucks on 12/31/14 that donor is going to expect to get a 12/31/14 receipt from your organization for tax purposes - not when you record the bucks in 2015.
Point is you need to consider the materiality of the amounts received, especially near the end of the year.
You have a few considerations in this
First, I can see if money dribbles in over the course of a month it would be nuts to try to nail down the exact date of receipt of all of these minor bucks. You could for example do as you suggested and base your recording in the books on the date YOU got the bucks. This would be more practical.
BUT if a donor gives your rep big bucks on 12/31/14 that donor is going to expect to get a 12/31/14 receipt from your organization for tax purposes - not when you record the bucks in 2015.
Point is you need to consider the materiality of the amounts received, especially near the end of the year.
We don't usually have monetary donors at all. The dues are not considered tax deductible. We have only one meeting a month, which is why monies might be collected over a month period but turned in just once for that month.
We have a board member who is appointed the auditor for the organization each year. When she audited the books for 2013-14 (by a different treasurer), she commented on the inconsistency between the dates that were recorded on income vouchers accompanying money given to the treasurer and the dates when income was received by someone else. What I want to do is be consistent without driving myself nuts (as Kirby says).
Can I just decide, with the board’s approval, to record the dates that I as treasurer receive the monies? (The income vouchers would still have the actual collection dates written on them.) The auditor thought that this would be the least confusing way to go.
We have a board member who is appointed the auditor for the organization each year. When she audited the books for 2013-14 (by a different treasurer), she commented on the inconsistency between the dates that were recorded on income vouchers accompanying money given to the treasurer and the dates when income was received by someone else. What I want to do is be consistent without driving myself nuts (as Kirby says).
Can I just decide, with the board’s approval, to record the dates that I as treasurer receive the monies? (The income vouchers would still have the actual collection dates written on them.) The auditor thought that this would be the least confusing way to go.
What is the volume of these income vouchers? Where I work, there's offices outside of HQ where money can be collected for various things that then needs to be handed over to central finance at HQ.
The treasury services side of things record them on a spreadsheet that has a column for date of original receipt, and date of being received by central finance. The journal to post them into the finance database uses the date of original receipt as the transaction date.
Possibly a way you could do it too, and that way you have a log of when money was originally received, and when, and how long it took to get to you. Just an idea. Might not be practical for you if you get tons of them.
The treasury services side of things record them on a spreadsheet that has a column for date of original receipt, and date of being received by central finance. The journal to post them into the finance database uses the date of original receipt as the transaction date.
Possibly a way you could do it too, and that way you have a log of when money was originally received, and when, and how long it took to get to you. Just an idea. Might not be practical for you if you get tons of them.
We have lots of income (and vouchers) every June and July and in September of alternate years. Otherwise, income is relatively low.
For this fiscal year I think I will do as the auditor suggested and enter the date that I, as Treasurer, receive the income. The auditor and I will reevaluate this at the end of the fiscal year.
Thanks to both of you for helping with this issue.
For this fiscal year I think I will do as the auditor suggested and enter the date that I, as Treasurer, receive the income. The auditor and I will reevaluate this at the end of the fiscal year.
Thanks to both of you for helping with this issue.
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Hello Everyone,
I would like to ask an advice which is good to use in accounting system, because I am opening a small business. So am thinking which of this two is good the Cash or Accrual Accounting? Any ideas is greatly appreciated.
I would like to ask an advice which is good to use in accounting system, because I am opening a small business. So am thinking which of this two is good the Cash or Accrual Accounting? Any ideas is greatly appreciated.