Prepare the memo to the board of directors. Revenue recognition policies should use the deferral method.
Notes on Accounting System and Practices
1. The annual financial statements consist of a statement of financial position, a statement of cash receipts and disbursements, and a statement of changes in net assets. The statement of cash receipts and disbursements compares the actual results for the year against the original budget of the year.
2. The budget is prepared annually by the treasurer of the board in co-operation with the executive director. A monthly comparison of the year-to-date expenditure with the total budgeted amounts, on a line- by- line basis, is prepared by the bookkeeper and forwarded to the executive director and treasurer.
3. Grants from governments, foundations, and corporations are recorded as revenue when pledges are made or grants are announced. Donations from individuals are recorded as revenue when the cash, cheque, or credit card voucher is received, regardless of whether the cheque or voucher is current- dated or post- dated.
4. Expenditures are charged to accounts as paid, on the basis of the type of expenditure; for example, all salaries are charged to a single account, all furniture replacements and repairs are charged to a single account, and so forth.
5. The historical cost of the buildings and land is carried on the SFP. The buildings are not amortized. The cost of furniture and equipment is charged to operations when the expenditure is made.