Fund Accounting Software: Using Funds for Improved Financial Control

Fund Accounting Software: The Heart of Non-Profit and Government Accounting Software

A fund is essentially an unit of financial organization with a self-balancing set of accounts designed to record cash and other assets together with related balances and liabilities. Fund accounting software provides the ability to create financial statements and balances sheets for each fund. For non-profit and government organizations fund accounting software is a critical IT resource.

The Advantage of Software Designed for Government Entities and Non-Profits

Just as there are accounting packages designed with the manufacturer or retailer in mind, software developers have created fund accounting software to meet the specific accounting requirements of non-profit and government organizations. Using software geared for commercial operations can lead to a number of issues for non-profits and government entities.

Many organizations will attempt to use departmentalization at the general ledger level to accommodate what could be more easily set up as fund accounting. After investing time to set this up, this approach may prove useful in tracking income and expenses, but it rarely provides the necessary controls in tracking assets and liabilities necessary for accurate balance sheets. While the profit motive may not be behind it in the case of non-profits and government entities, every organization is looking to maximize their efficiency. Fund accounting software provides an accounting approach designed to eliminate time-intensive workarounds necessary to make standard commercial packages work.

Organizations who provide funding often require clear reports detailing how funds have been spent. Fund accounting software provides reports designed for this purpose. By improving your ability to document the impact of previous expenditures, you can help promote your ability to receive future funding.

Tighten Your Financial Management with Fund Accounting Software

Fund accounting software modules provide a number of inherent benefits. Donations, grants, and endowments are frequently provided to the non-profit organization with specific instructions on the usage of the funding. Tracking these financial assets in funds allows the non-profit organization to easily see how each dollar was spent. The results of failing to meet specific spending restrictions can have negative consequences, including discontinued funding.

The first step of meeting spending restrictions is knowing where every penny is allocated. For the government entity, GASB standards actually require that accounts are kept on a fund basis. Fund accounting software allows governments to track a variety of different funds including: general/operations, special revenues, capital projects, debt services, permanent, fiduciary, and proprietary funds.