Managing the Chart of Accounts for Nonprofits
The Chart of Accounts (COA) is a listing of all account titles and coding conventions used by an organization to properly classify and record transactions. In theory, it should be a relatively simple excel file that shows everything about where the revenue is coming from in one organized place. It displays the who, what, where, when, why, as well as the how of donations to the company since they are a registered 501 (c)3 non-profit organization. Now, what happens when the COA is not maintained properly with a specific set of guidelines for its use?
Part of my time here has been spent investigating the COA at UNCIEF USA and developing a set of rules for managing the document. The last time that they have updated this area in the organization was in 2002, during their last financial systems review by an outside company. My experience with the chart has been very frustrating. The file is unorganized and sloppy due to multiple people having access to the file and being able to change it to suit their current needs at will. This has led to redundant information that is labeled with different titles. For example, I found myself running around from desk to desk trying to figure out the difference between the “Active” and “Active 2” filters for the data. Turns out, there is no difference. There was a lack of communication between two co-workers leading to the same column being duplicated in the file.
The next biggest issue is that the file is unnecessarily large. With over 44,000 accounts on file, it takes forever to load the file from Box. Try to load the revenue data along with each account and you will stare at your computer for a few hours while it struggles to load everything until excel stops responding. The problem is that they have no procedure in place for closing their accounts. After some analysis, I found that of the 44,000 accounts, only 11,254 have seen activity in the past 5 years and among those, only 1,271 have been used within the past fiscal year.
Moving forward, my suggestion to the CFO and senior management team is to implement a policy for closing unused accounts. At the end of every fiscal year, any account that has not seen activity in two years should be closed. There is no need to wait hours for the COA to load when you are only looking for the less than 3% of accounts that are actually in use.