Nonprofit finance, plainly

You inherited books you don’t trust.

New executive director, new treasurer, or the bookkeeper left and took the institutional knowledge with them. The books are technically there: a QuickBooks file, some spreadsheets, a drawer of statements. You just cannot tell what is real. Here is how to take ownership without rebuilding everything blind.

Start with cash, because cash cannot lie for long

Ignore the whole ledger for a moment and answer one question: does the bank agree with the books? Pull the latest statement for every account and compare it to the book balance. If the accounts reconcile, whatever else is wrong is fixable bookkeeping. If they do not, note the gap per account and how far back the last clean reconciliation was. That number, months since the books last matched the bank, is the honest size of your problem.

Then test what the books claim other people owe and are owed

Print the receivables list: who supposedly owes the organization money. Print payables: who the organization supposedly owes. Old items that nobody recognizes usually mean things were entered and never cleaned up, and they quietly distort every report the board has seen. You do not have to fix them today. You have to know they are there.

Decide your cleanup window, and keep it honest

You rarely need to rebuild five years. You need clean books from a defensible starting point: usually the beginning of the current fiscal year, sometimes the year before if an audit or 990 depends on it. Earlier history gets locked as "as inherited," and the organization moves forward from a line you can stand behind. Trying to perfect ancient history is how cleanups stall and budgets die.

Keep the chart of accounts only if it answers your questions

A chart of accounts is a list of the questions the organization wants answered. If yours cannot show program versus management versus fundraising spending, or grant-level activity, the cleanup is the natural moment to restructure it. Recoding a year of transactions into a good structure costs little more than recoding them into a bad one.

Know when to stop doing this yourself

If cash reconciles and the mess is thin, a careful volunteer or staffer can work through it. If the accounts have not matched the bank for months, restricted funds are involved, or a filing deadline is approaching, the reconstruction is professional work, and the cost of doing it twice is higher than the cost of doing it once properly. A fixed-scope cleanup with a fixed price is the right shape for it; open-ended hourly cleanups are how small messes become expensive ones.

Or find out exactly how deep it goes, first

This is precisely what our Nonprofit Financial Health Check exists for: a $500 fixed-fee assessment across ten areas, delivered as a written report that tells you, in plain language, what is solid, what is broken, and in what order to fix it. Before you pay anyone, including us, to clean anything, it is worth knowing the actual size of the job. The fee is credited in full toward your first month if you engage us afterward.

Millennial M&C Co. provides nonprofit accounting and operational support for organizations that want books they can trust. We prepare and present; your CPA files.