The Michael Paul Wein Charitable Foundation
"Underpromise and Overdeliver"
Most of what follows is an attempt to show you how to accomplish the most elementary "accountability" for each organization's finances. Here are a few presentation "rules" that should be faithfully followed. Additional ideas can be found at BBB & public accountability (Note that the BBB "rules" we present exclude a great number of other BBB rules that do not have critical relevance for the primitive organizations here in San Miguel.)
While we suggest the following examples of Financial Reports that will meet our minimum needs, after your first two grant years in our program have passed, we will require better financial statements, an example of which can be found on our financials-example web-page:
#1 - Report of Receipts and Expenditures of XXX organization for the 12 months ended mm/dd/yy
#2 - Balance Sheet (or, as it is more properly called, a Statement of Financial Condition) for XXX organization as of (its year-end, with the specific date of) mm/dd/yy
#3 - a very simple set of double-entry bookkeeping books (note that this double-entry system may not be necessary for the smallest organizations, where a single-entry listing might be sufficient, as long as the final results are proven to be arithmetically accurate).
#1- Report of Receipts and Expenditures of XXX organization for the 12 months ended mm/dd/yy --- all figures are in pesos (and converted from US dollars, where necessary)
#2 - Balance Sheet (or, as it is more properly called, a "Statement of Financial Condition") for XXX organization as of mm/dd/yy --- all figures are in pesos (and converted from US dollars, where necessary)
Note THE following things:
1 - that the "assets" always equal the "liabilities plus equity"
2 - that the difference between the beginning cash (or equity, or whatever you are "reconciling") and the ending cash, or equity, RECONCILES to the EXACT "excess" shown in statement #1 above.
3 - the above example shows only cash as the only asset. This example could have had other assets, some liabilities, etc. and the same conditions of reconciling between the beginning of the period and the end of the period would STILL apply.
4 - the name of currency (USA dollars OR Mexican pesos OR whatever) should be shown. It is advisable to have all of the financial information given in ONLY ONE currency, even if that means conversion of whatever the second currency may be. The name of the currency, of course, should be shown here.
5 - if the submitting organization has its own financial statements and they conform substantially to the above criteria, please submit your own financial statements.
6 - while the above example #1 shows minimal information that we require, the financial statements are really intended to be most useful to the submitting organization, more than they are for us. That organization, if it uses financial statements to PLAN its future, rather than record its past, will be doing itself a huge favor. As a result of that, the statements might also include (or be a substitute for the above) information such as variation amounts between columns, and might also show percentages for items in any column. The purpose of financial statements is to disclose information, not hide information, and to enlighten ANY reader (preferably inside the organization) to events that should be further explained, or events that can be changed for the future, or events that are unusual. They are to be management tools to aid in the creation of future events that further the organization in its mission; not as much merely historical recordings. If each member of the organization's board DOES NOT fully understand all that is on the financial statements, then the preparer is NOT doing his or her job properly.
#3 - an example of a very simple set of double-entry books follows (the column "headings" are):
a few "notes" regarding each of the above columns:
date - the date of EACH individual cash transaction (whether a receipt, or an expenditure by cash or check)
name - obviously, this column (and other columns) should be much wider than shown above, but it should include the name of the person or organization, etc. that either paid your organization money or to whom your organization paid out monies.
amount - the amount of EACH individual cash transaction (both received and paid out). If your organization does transactions in both pesos AND other currencies, we can show you various options on ways to deal with the conversions between the various currencies. But, unless you wish to have two separate books to handle each individual currency, the books (and very definitely, the reports that come from the books) should be in only ONE currency (with conversions shown for transactions in and out of the other currency).
code - this is a pre-assigned code number for each of your organization's most common categories of income or expenditures. We will help you, if desired, to develop and use such categories, including, if desired, a simple computerized set of "books" to make your bookkeeping easier and less cumbersome. (see below)
cash balance - this is a running computation of the balance of your cash. For each transaction that effects your cash, this balance increases or decreases. When a bank account is involved, for cash receipts (prior to deposit) and cash disbursements (not using a check), depending upon your own bookkeeping method, this balance may not increase or decrease, BUT it will increase for the deposit (the exact total of the cash received and listed just prior to the deposit) and decrease for the check drawn (in the exact total amount reimbursing the persons - or fund - that expended the cash expenses to be shown just prior to the drawing of such checks. Additionally, this mathematical balance should be compared (and reconciled) to the cash and/or bank balance every time a bank statement (probably monthly) is received. Any differences between the cash balance as shown in these books and the cash on hand plus bank balance shown on your bank statement should be investigated and explained in the reconciliation (e.g., outstanding checks and deposits in transit are of course to be found on the succeeding month's bank statement, while errors, if any, should be both explained and corrected in the following month's books or, if significant in amount, in this month's books).
Note that a "single-entry" system would include the above columns, but not include the below columns. However, the items that are added and subtracted to result in the running cash "balance" must be proved to the actual cash at that date. And, the summary of the individual items that would otherwise be in the distribution columns (see below) still must be done manually, so that financial statements are possible. Actually, in retrospect, I can't imagine what time or effort is saved by not using the double-entry method.
-------various distribution columns-------- - these are separate columns for each "amount" (see above) for each (there is no limit on the number of such) category which YOU decide is a normally recurring item of income or expenditure. Otherwise, you would have to enter such an item in the "all other" columns described just below AND write in the name of the category AND later analyze these columns, something that would not have to be done if a column was devoted to ONLY that category.
"all other" column - these two (2) columns are for "all other" categories for which you have not designated a column as described immediately above. One of the two columns would hold the "description or category name" and the other, the amount.
Totaling AND proving your work - each transaction should have an amount in the "amount" column AND the same amount in one of the distribution (or "all other") columns. Occasionally, the amount column may be equal to the total of 2 or more distribution columns when an expenditure is for more than one type of expense. At the end of your work (generally monthly, but other periods may be appropriate) someone should add up the amounts in all columns (except the cash balance column) and the total of the amount column MUST equal the sum of the amounts in the distribution and "all other" columns. And, as stated above, the "cash balance" column should be compared (and reconciled) to the actual bank statements and/or cash on hand.
Computerization - it should be evident that ALL of the above is simplified and made quicker, better, and more legible when done on a computer, most specifically a spreadsheet with automatic calculating and formatting and printing and reporting potentials. We would be pleased to help you implement such a system. Click on and see Services
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