Nonprofit organizations have unique obligations to regulatory agencies, grantors, donors, external customers, and other stakeholders to account for the appropriate use of funds according to their source. Fund accounting is used to accomplish this by segregating resources into categories (Fund Groups) to identify the sources and uses of funds received. This helps Open Source Ecology to appropriately account for the funds with which it is entrusted by reporting income based on the funding source and expenses based on their use.
Fund accounting helps OSE:
- Enhance accountability and stewardship by carrying out and documenting the appropriate use of funds to help ensure and demonstrate compliance with legal and regulatory requirements;
- Determine financial condition by tracking the value of assets and assessing the financial impact of maintaining/replacing them;
- Facilitate planning and budgeting by determining what should be done with existing resources, and how much is needed to accomplish goals;
- Evaluate organizational and managerial performance by determining the actual cost of programs (efficiency) and whether the objectives for which the funds were received were accomplished (effectiveness);
- Determine/forecast cash flow (the amount of cash coming in, and how much is needed for contingencies); and
- Communicate relevant, clear, reliable, timely and comparable financial information to all who need to know.