A fund accountant categorizes income into funds and ensures that restricted funds are used appropriately. They assess the organization’s financial position, plan and budget, monitor cash flow, and communicate with stakeholders. Fund accounting allows for monitoring of spending activity and accountability. The fund accountant keeps multiple ledgers and assesses fiscal performance against objectives. They communicate financial information to decision makers.
The fund accountant position is traditionally found in a non-profit organization or branch of government whose purpose is dedicated to fiscal accountability. 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 objective 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; special funds, on the other hand, are restricted to ensure they are only used to fund activities specifically stipulated by the provider or donor of the funds as approved expenses. In essence, fund accounting allows organizations to monitor spending activity to ensure that restricted funds are allocated appropriately. While it is important for an organization to properly allocate its money from a business perspective, it is also important for the people who provide the organization with funds. People who donate money, whether to a charity, business or other organization, want to know that the organization is using the money effectively.
A fund accountant is responsible for demonstrating accountability and stewardship, assessing whether the organization has used funds properly and properly documented them. A fund accountant also determines the financial position of the company, identifying available resources, their value and any financial impact the organization could suffer if 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-driven companies focus on profitability and have a general ledger. Fund accountants, on the other hand, keep more than one ledger, depending on donor activity and spending. For example, there might be a general account used for unrestricted funds and a construction fund account used to track cash 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, the fund’s accountant is responsible for assessing the organization’s fiscal performance against proposed objectives to ensure operational efficiency. This position assesses 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.
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