The fund’s accountants can establish contingency plans in the event of a disaster.
The fund accountant position is traditionally found in a nonprofit organization or branch of government whose purpose is devoted to fiscal responsibility. In this role, the individual separates income into categories or funds to identify the source and how the funds are used. Consequently, a fund accountant is responsible for demonstrating good management practices, determining the organization’s financial position, planning and budgeting, monitoring cash flow, and communicating with key stakeholders.
In fund accounting, the goal is to categorically allocate financial transactions between general and restricted funds, because each fund has a specific and authorized purpose. The general fund covers operating expenses such as employee salaries, office supplies, and maintenance expenses; Rather, special funds are restricted to ensure that they are used only to finance activities specifically stipulated by the provider or donor of the funds as approved expenditures. In essence, fund accounting allows organizations to monitor spending activity to ensure that restricted funds are allocated correctly. While it is important for an organization to appropriately allocate its money from a business perspective, it is also important for the people who provide the funds to the organization. People who donate money, whether to a charity, business, or other organization, want to know if the organization is using the money effectively.
A fund accountant is responsible for demonstrating responsibility and stewardship by assessing whether the organization has used the funds correctly and properly documented them. A fund accountant also determines a company’s financial position by identifying available resources, their value, and any financial impact the organization may experience if they are replaced or removed. Fund accountants group assets and liabilities according to the specific purpose for which they are to be used to ensure that restricted and unrestricted funds remain separate.
Traditional profit-oriented companies focus on profitability and have a general ledger. Fund accountants, on the other hand, maintain more than one ledger, depending on the donor and spending activity. For example, there may be a general account used for unrestricted funds and a construction funds account used to keep track of money available for construction.
Budgeting is also a key responsibility because fund accountants must determine how funds are allocated and what resources are needed for a specific project. In addition, a fund accountant is responsible for evaluating the fiscal performance of the organization against the proposed objectives to ensure operational efficiency. This position evaluates fund activity to monitor spending activity and plan for contingencies. Finally, an effective fund accountant concisely communicates essential financial information to decision makers in a clear and reliable manner.