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6. Setting Up Your Accounting System

A well-structured accounting system serves as the backbone of your organization's financial management. Before our session, you'll need to understand your current system's strengths and limitations. This knowledge will help you participate actively in discussions about system improvements and best practices.


Understanding Your Current System

Take time to evaluate your accounting setup. Consider how your system handles these key functions:

Your chart of accounts is like a filing cabinet for your financial information.

Review how your current structure:

  • Organizes different types of income and expenses

  • Tracks various projects and programs

  • Separates restricted and unrestricted funds

  • Manages different donor requirements

Banking and Reconciliation Regular bank reconciliation ensures accuracy in your financial records.

Examine your current process for:

  • Recording bank transactions

  • Matching bank statements with your books

  • Handling outstanding items

  • Documenting reconciliation differences

Financial Reporting Your accounting system should generate reports that meet both internal and statutory requirements. Consider:

How effectively does your system:

  • Create project-wise financial statements?

  • Track budget versus actual spending?

  • Generate donor reports?

  • Maintain audit trails?

Technology Assessment

Before our session, evaluate your current accounting tools. This will help us discuss specific improvements during our time together.

Software Review If you're using accounting software:

  • Note the version and features you currently use

  • List any challenges you face with the system

  • Identify features you haven't explored

  • Consider what training your team might need

If you're using spreadsheets:

  • Review your current templates

  • Check your calculation formulas

  • Assess your backup procedures

  • Consider your data security measures

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