quickbooks pro 2010 - mango: management accounting for non

QuickBooks Pro 2010

for Development Organisations

Prepared May 2011 for users of QuickBooks Pro 2010.

further information from Mango www.mango.org.uk

and [email protected]

QuickBooks Pro 2010

Notes for Development Organisations

CONTENTS PAGE

1 USING THIS MANUAL ..................................................................................... 1

2 CHOOSING THE RIGHT SOFTWARE ............................................................ 1

3 EQUIPMENT REQUIREMENTS AND INSTALLATION .................................... 2

4 IT PROCEDURES............................................................................................ 2

5 INTERNAL CHECKS AND CONTROLS .......................................................... 3

6 SETTING UP QUICKBOOKS: EASY STEP INTERVIEW ................................ 4

7 SETTING UP QUICKBOOKS: PREFERENCES ............................................. 6

8 SETTING UP QUICKBOOKS: CHART OF ACCOUNTS ................................. 7

9 SETTING UP QUICKBOOKS: OPENING BALANCES ................................... 9

10 USERS AND PASSWORDS ............................................................................ 9

11 USING “CLASSES” TO TRACK FUNDS AND PROJECTS ............................ 10

12 CASH AND BANK TRANSACTIONS ............................................................. 12

13 BANK RECONCILIATION .............................................................................. 15

14 JOURNAL ENTRIES ...................................................................................... 16

15 CORRECTING MISTAKES AND CLOSING PERIODS .................................. 16

16 REPORTS ..................................................................................................... 17

17 EXPORT OF DATA AND REPORTS TO EXCEL ........................................... 19

18 YEAR END TASKS ........................................................................................ 20

19 BUDGETS: SETTING UP AND ENTERING DETAILS .................................. 21

20 BUDGETS: PREPARING REPORTS ............................................................. 23

21 FOREIGN CURRENCY.................................................................................. 25

22 CHECKLIST 1. NGO ACCOUNTING SPECIFICATIONS ............................... 29

23 CHECKLIST 2. MONTHLY TASKS ............................................................... 30

QuickBooks is a registered trademark of Intuit Inc. in the United States and

other countries.

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QuickBooks Pro 2010 Manual 2011 v1.03 20110706 © Richard Collins 2011

1 Using this Manual

This manual is for NGO staff using QuickBooks Pro 2010, which is a multicurrency

version of this popular accounting software. The features in previous versions of

QuickBooks vary – QuickBooks Pro 2008 was not a multicurrency package.

QuickBooks Pro 2006 was multicurrency but certain features worked in different

ways. Readers should consider upgrading to the 2010 version.

The main purpose of this manual is to help you set up your company file in

QuickBooks, and discover the features of QuickBooks 2010 software which are of

particular interest to NGOs. It is assumed that the reader has experience of using a

computer and a good knowledge of accounting principles.

The Menus in QuickBooks are shown in uppercase in this manual. This is to help

you find your way round the software. For example, the option for using multi-

windows instead of single window is shown as follows: EDIT- PREFERENCES-

DESKTOP VIEW- MY PREFERENCES. The option for selecting multi windows is

displayed in the last window.

Select the menu HELP for detailed information about how QuickBooks software

works.

The appendices at the end of the manual contain checklists to help you to decide if

QuickBooks 2010 is the appropriate software for your NGO and to give you an

illustration of checks and operating procedures for NGOs using QuickBooks 2010.

2 Choosing the right software

Carry out some research before you buy your new software! Find out what other

NGOs in your area are using and whether they have contacts that can help in case

of need. Ask your auditors for their suggestions.

Make a list of the NGO’s budgeting, accounting and reporting requirements; review

and agree the Chart of Accounts that you will use in future. This will enable you to

prepare the “specifications” that your NGO requires from your new software.

There is an example of accounting software specifications for NGOs on page 29.

QuickBooks Pro meets these requirements except where indicated. It is for this

reason that QuickBooks Pro is used by many NGOs across the world. Alternatives

for medium size NGOs include software produced by Pastel, MYOB or SAGE. Larger,

international NGOs may require more sophisticated software such as – SAGA, and

SUN Systems.

QuickBooks is produced in English in the UK and in the USA. There is a French

multicurrency version available from Intuit Canada.

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3 Equipment requirements and installation

Check that your computer system meets the system requirements for QuickBooks

Pro 2010. Visit the Intuit website on http://www.intuit.co.uk/, and refer to the

QuickBooks manual for full details, before you purchase! Currently at least 2 GHz

Pentium lll (or equivalent) with 1GB of RAM is recommended. Windows

XP/Vista/Windows 7. 1 GB of disk space is required (additional space for data files).

Microsoft 6.0 browser or better required (6.0 provided on CD from Intuit requires

an additional 70 MB hard disk space).

It is advisable to run QuickBooks on a computer that has access to the internet, for

registration and updating of the software. You may find using a mouse rather than

a keypad an easier way to move round the various menus and for entering

transactions.

The QuickBooks manual that comes with the software explains how to install and

activate the software. Close all open programmes, including anti-virus, before

installing the software. The activation process includes online connection to Intuit

or a phone call. Print the details of the Serial number, Installation key and Licence

key after activating the software. The programme will stop working after a few uses

if it is not activated.

4 IT procedures

AIM: To ensure that the software runs smoothly and data is not lost.

Your NGO should have a written IT Policy including regulations about computer

access and security, and anti-virus precautions. Regular Backups must be kept in a

secure location away from the computer. Backups should be stored on an external

hard drive or on CDs.

If QuickBooks is installed on more than one computer each user must have their

own licence. If you transfer company files across from one computer to the other

this can be done by backing up via the menu FILE – SAVE COPY OR BACKUP. The

backup file can then be transferred to another computer where the programme is

already installed, and then “restored” via the menu FILE- OPEN OR RESTORE

COMPANY. Take care that the correct filenames are used during this process, so

that you do not delete a needed file on the second computer by mistake.

If your computers are connected to the internet the QuickBooks files are

automatically updated from time to time so that your computer has the most

recent version. When transferring a file from one computer to another make sure

that the same version of the software is running on each computer. A computer

with an older version may not accept a newer version file. The “Automatic Update”

feature can be switched off on both computers if this is likely to cause problems

(HELP –UPDATE QUICKBOOKS – OPTIONS).

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5 Internal checks and controls

AIM: To ensure that the control features of QuickBooks are used as part of the internal

checks and controls of the organisation.

NGOs should never rely on their software systems alone to provide sufficient

checks and controls on the accuracy or security of their accounting systems.

Reports that are produced from the accounting software must be checked; backups

kept; access to the software restricted to the accounting staff and arrangements

made for internal and external audit of the records by someone who is not involved

in the daily accounting work. An example of good organisation is as follows:

a) The “Administrator” (the person who sets up QuickBooks) will be a senior staff

or board member, for example the Finance Director. The Administrator will have a

password (keep a copy of this with someone who does not make entries in

QuickBooks) and will set up other Users, with their own passwords..

b) It is strongly recommended that the Administrator is not involved in the entering

or changing of any data in QuickBooks. The Administrator’s responsibility should be

to “oversee” the work of those who are responsible for making entries of

transactions into QuickBooks. The Administrator has total access to the QuickBooks

system, including the ability to change or delete transactions recorded in

QuickBooks. For this reason it is important that a different person, say The

Accountant/ Accounts Assistant, is responsible for entering all transactions into

QuickBooks.

c) The documents supporting the bookkeeping entries, including cash and bank

transactions and journals will be approved and countersigned by the Finance

Director and/or others who have authorised transactions and checked the

documents. This should be done before the accountant enters transactions into

QuickBooks.

d) The Finance Director will ensure that financial reports are prepared in a timely

and regular way, say each month, and that these are thoroughly checked. There

should be strict controls over the procedures to correct mistakes or to change

previous entries in QuickBooks. See section 15 for further details.

e) Those responsible for internal and external audit of the QuickBooks records will

compare the entries in QuickBooks with the supporting documentation and with

the approved management reports and accounts. Particular attention will be given

to examination of cash and bank reconciliations. Other key reports include the

General Ledger, and the Audit Trail where all transactions, including changes and

deletions, are recorded. These reports are located in REPORTS - ACCOUNTANT &

TAXES.

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6 Setting up QuickBooks: Easy Step Interview

AIM: To create a well structured “company file” for your NGO. Some features that you

choose at this stage cannot be easily changed later!

This indicates steps or notes of particular interest

Once QuickBooks is installed a separate “Company” file has to be set up for your

NGO. Go to the menu called FILE at the top left of your screen and follow these

steps:

Select and click on NEW COMPANY. “EasyStep Interview” Window opens

Option to Start or Skip interview START INTERVIEW

Enter details as listed (it is not necessary to complete all fields)

Company name

Address etc. NEXT “Select your industry”

Scroll down the list and highlight “Non Profit” NEXT How is your company organised?

Select Non-Profit NEXT Select the first month of your financial year NEXT Set up your Administrator password

It is recommended that you enter a password, even if this is a temporary one, such as

“admin”, and time to be spent later setting up passwords and users. See sections 10 and 15

for further details. It is very important to use, and to control the use, of passwords! NEXT Create your company file. No action required NEXT

Filename for New Company

QuickBooks will assume that you want your file to have the same name as your company

name entered previously. It will create the file in a folder called “Company files”. This is a

sub-folder of “QuickBooks” which is a sub folder of “Intuit”. SAVE

(Wait while your new company file is created)

Customising QuickBooks for your business NEXT What do you sell?

Suggest that you select “Both services and products” – even if your NGO does not sell

anything! NEXT Do you charge VAT?

“No” will already be selected. This will normally be the case, so leave this as it is unless you

are a UK company or charity that does charge or claim Value Added Tax. NEXT Do you want to create estimates in QuickBooks?

“No” will already be selected. NEXT Tracking customer orders in QuickBooks

“No” will already be selected NEXT Using Sales receipts in QuickBooks

“Yes” should be selected (if not already marked) as your NGO may wish to use this facility to

issue receipts. NEXT Using statements in QuickBooks

Select “Yes”

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NEXT Using invoices in QuickBooks

If you issue invoices (now or in the future) to anyone using NGO services, renting NGO

property etc. select “Yes”. NEXT Using progress reporting

Normally not required so select “No” NEXT Managing bills you owe

“Yes” is selected NEXT Tracking stock in QuickBooks

Most NGOs will not require stock records; this QuickBooks feature can be adapted for use

by hospitals and relief agencies where there is tracking of goods issued from warehouses. NEXT Tracking time in QuickBooks

Normally not required so select “No” NEXT Do you have employees?

Select “No” unless your NGO is based in the UK and has employees. The payroll software

can only be used in the UK as it is linked to UK tax rates. NEXT Tracking multiple currencies in QuickBooks

If your main (“home”) currency is not UK pounds sterling, or if your NGO handles more than

one currency you should select “Yes” for this question. Although Intuit states that you can

change this preference later it is advisable to say “Yes” before going further.

When you have clicked on “Yes” a further line will come up asking you to “Select your home

currency”. This will normally be the currency in which the majority of your transactions are

made. Note that the ledger, and management reports will be automatically prepared by the

software using the currency you have selected. (If reports for partners are required in other

currencies your reports can be easily transferred and converted in Excel). See section 21 for

further details about multi-currency. NEXT Using Accounts in QuickBooks (some general information is given here) NEXT Select a date to start tracking your finances

It is usually best to set the start date as the first day of your financial year – even if you will

start to use QuickBooks at a later date. See section 9 – Opening Balances - below. NEXT Add your bank account

It is recommended that you enter details of one bank account now, and then other accounts

later .

Choose “Bank” as the type of account when you create a new account in

which you will record cash transactions

NEXT Enter your bank account information: Bank account name: Your bank account name or nickname

Bank account number: Optional - You may decide for security reasons not to enter this.

Bank routing number: Optional

Account currency: Assumes that this is in your main currency

When did you open this bank account? Before / On or after: Suggest that you select “Before” NEXT Enter your bank statement information

Follow the steps indicated on the screen in order to enter the closing bank balance before

your start date for using QuickBooks. If in doubt, leave at zero and complete this later. NEXT Review bank accounts

Recommend that you select “No” and complete details later.

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NEXT Review income and expense accounts

You will see a model Chart of Accounts for you in this window – we recommend that you

delete all the proposed account by deselecting each one (drag your mouse down the ticks

or click on individual ticks until they disappear). You can then set up your own chart of

accounts when your QuickBooks company file is up and running – see Section 8 below. NEXT

Congratulations! This window confirms that you have completed the Easystep Interview. Click FINISH The NEXT window gives you the opportunity to run a Tutorial about using QuickBooks – it is

up to you to decide if you would like to look at these, or leave this until later! Then select

GO TO QUICKBOOKS

This takes you to the opening window of your newly created file for your NGO. You will see

another little window “QuickBooks Coach”. You may decide to leave this until later, in which

case CLOSE this – but keep the window “Home” open. If your screen is blank, click on the

icon labeled “Home” (this is the first icon on the extreme top left of the screen).

7 Setting up QuickBooks: Preferences

AIM: To set up key features for your NGO including use of account numbers. To manage

the ICON Bar - where key reports can be accessed at the touch of a button!

Go to the menus on the top row of your screen and select:

EDIT – PREFERENCES

There is a list on the left hand side of the Preferences window, starting with

“Accounting” at the top. When you have time explore these preferences. The

following preferences may be required immediately:

ACCOUNTING

When you select accounting you will see two tabs “My preferences” and “Company

Preferences” – select “Company Preferences”

If your Chart of Accounts has account numbers (and this is recommended), tick the

box “Use account numbers”. We shall revisit this preference again to select “Use

lowest sub-accounts only”, but this cannot be selected at this stage.

If, as is likely, your NGO manages different funds or programmes and you want to

track income and expenditure on each one you should now tick “Use class

tracking”.

You can now move on to the NEXT Preference on the list on the left – BANKING.

When you select this QuickBooks prompts you to save the preferences that you

have just selected and changed – select “Yes”.

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BANKING: My Preferences

There is nothing urgent to be done here until after you have set up your chart of

accounts. You may return to this preference later and set up one of your bank (or

cash) accounts as the “default” account. (“Default means that when you open a

menu to enter transactions, QuickBooks will open the “default” account first).

DESKTOP VIEW: My Preferences

Check that “View” is set for “Multiple Windows”. You can open as many windows as

you like while using QuickBooks – but close down unused windows from time to

time via the menu WINDOW – CLOSE ALL. If you have too many windows open the

computer may crash!

8 Setting up QuickBooks: Chart of Accounts

AIM: To set up and manage your Chart of Accounts.

a) Introduction

The Chart of Accounts is set up through the menu:

LISTS – CHART OF ACCOUNTS. Click on this. You will then enter the chart of

accounts window. There will be some system generated accounts already there

(Payroll liabilities, Giro, Opening Bal Equity, etc.)

It is assumed that you have already prepared a list (chart) of numbered accounts.

In section 7 above you will have selected: EDIT-PREFERENCES-ACCOUNTING-

COMPANY PREFERENCES -“Use Account Numbers”. In this case most of the system

generated accounts will already have account numbers but some may not (for

example the account Exchange Gain or Loss).

Enter appropriate numbers for these existing accounts, and your new accounts, as

follows: Move the cursor to the account where you wish to enter (or change) the

account number, so that this is highlighted. RIGHT CLICK on your mouse or keypad

and select EDIT ACCOUNT. Enter the account number in the top right hand corner

of the new window and then click on SAVE AND CLOSE.

b) Creating new accounts

Go to LISTS – CHART OF ACCOUNTS. New accounts can be created by “Right

clicking” the mouse on a blank space and selecting “NEW”. Alternatively select:

EDIT – NEW ACCOUNT from the main menu. Note that you have to decide upon the

Category of the account first (Income, Expense, Bank etc.).

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If you have main accounts with sub-accounts where transactions are

entered consider writing the main account names in capitals/ uppercase, or

place a suffix such as a full stop in from of the name. In this way the

person making entries into QuickBooks is less likely to enter transactions

into the main accounts by mistake.

c) An important preference to be set up!

It is important that ALL accounts have numbers. This is essential if you have

accounts arranged in a hierarchical structure (i.e. accounts with sub accounts, sub-

sub accounts etc.).

It is recommended that you select this preference: EDIT – PREFERENCES –

ACCOUNTING – Company Preferences – “Show lowest subaccount only” . This

preference can only be selected once all accounts have be allocated numbers. If

this preference is NOT selected you will find that, when you enter a transaction, the

name of the “sub” account is not visible on the screen, but only the name of the

account at the “top” of the hierarchy!

d) Importing your Chart of Accounts from an Excel Spreadsheet

If you have a list of your Accounts on an Excel Spreadsheet this can be directly

imported into QuickBooks. Go to FILE- UTILITIES- IMPORT-EXCEL FILES and then

follow the instructions for “Import using an existing Excel file”. The accounts on the

Excel spreadsheet have to be arranged so that the account numbers are in one

column; the account names (which must not exceed 32 characters) in a second

column, and the account “Type” (i.e. Income, Expense etc. as used in QuickBooks)

in a third column. NOTE: DATA AND ACCOUNTING TRANSACTIONS CANNOT BE

IMPORTED.

NB Mapping is complicated! Note that QuickBooks column includes “Type”

and other headings more than once – you must “Map” each of these or the

Mapping will not work. Intuit recommends that you set up your Chart

manually!

e) Deleting accounts

This can be done through the EDIT-DELETE ACCOUNT menu or by holding down the

key CONTROL and pressing C. QuickBooks will not let you delete accounts in which

transactions have been recorded.

Accounts that are no longer required can be removed from the Chart of

Accounts by making them “inactive”. In the LISTS-CHART OF ACCOUNTS

window select the account concerned; right click the mouse and select

“Make Account Inactive”. If you do this we recommend that you click on

the “Account” button at the bottom left of the window and select “Show all

accounts”. The inactive accounts appear on this screen, marked with a

cross – in this way you will not forget that they are there and can be

reactivated by clicking on the cross.

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9 Setting up QuickBooks: Opening Balances

AIM: To enter balances from your previous accounting records.

It is not possible to “import” balances from your previous accounts if these are on

an Excel spreadsheet or in other accounting software. It is recommended that you

enter the opening balances by a Journal entry (see section 14).

If possible, start your entries in QuickBooks from the beginning of your financial

year. It is recommended that you enter your opening balances by journal. The date

of the journal should be the last date of your past financial year. In this way you will

be able to prepare a “Balance Sheet Prev Year Comparison” report which displays

the past years balance sheet figures.

It is also good idea to enter the closing balances of your past year’s income and

expenditure so that a “Profit and Loss Prev Year Comparison” Report can be

prepared. You can also see that these reports are displayed correctly.

10 Users and Passwords

AIM: To enter passwords and to ensure that access is restricted to authorised persons. To

set the limits as to what each user can, and cannot, do.

When you set up QuickBooks you were prompted to enter a Password for the

Administrator (named as “Admin”). This is a first step in establishing control over

access to the software. The menu to use to enter a new password is:

COMPANY – SET UP USERS AND PASSWORDS – CHANGE YOUR PASSWORD

The Administrator should not normally be the person who is responsible for the

daily entering of transactions into QuickBooks. The Administrator is a senior person

with a supervisory role, and the responsibility to check that entries into QuickBooks

are authorised and accurate. The Administrator will set up other USERS, each with a

password, and will decide upon the ACCESS RIGHTS of each person.

The menu to set up Users and their Access rights is found under COMPANY – SET

UP USERS AND PASSWORDS – SET UP USERS. The Administrator can Add, Edit or

Delete Users here. The Administrator will set up the password and access rights of

the new user. The Access rights range from full access to selective access, and

where the user can modify past transactions or not.

Your organisation should have clear procedures concerning the security of

PASSWORDS. If the Administrator’s password is lost, or if the Administrator is no

longer contactable, or if someone else starts to enter passwords, the whole system

could be blocked if there is no backup plan! Someone, preferably at Board level,

should have access to the files and backup copies in this situation.

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11 Using “Classes” to track Funds and Projects

AIM: To set up a method for allocating transactions to individual projects and funds and to

monitor their financial activity. The QuickBooks word “Class” may indicate a “Fund”,

“Programme” or “Project” in your organisation.

a) Introduction

Transaction amounts may be “classified” i.e. recorded in a “Class”, as well as posted

to their respective general ledger account. This is important for NGOs if you need

to “track” the use of restricted funds, projects, departments etc. Separate budgets

and reports can be prepared for each “Class”.

b) Creating “Classes”

New Classes may be set up either as you enter a transaction for a new Class, or by

selecting the menu EDIT-NEW CLASS, or by selecting LISTS- CLASS LIST and then

right click on the mouse to create a new class. It is also possible to create sub-

classes. This is useful if you have a project that is co-funded or where you need to

have a sub total of income and expenditure for a group of funds or projects in the

same programme.

The PROFIT AND LOSS BY CLASS report gives a breakdown of income and expense

for each class for the dates that you specify. There is also a column that lists all

transactions that have not been classified. This is useful as you can review each

item by double clicking on the amounts listed in the unclassified column, and then

check if the transaction should have been entered into a particular class. Section 16,

Management Reports explains how you find this report.

It is recommended that you check that all income and expenditure transactions

have been allocated into their respective classes.

c) Recording transactions in their respective Classes

A column is provided in the Bank Registers and Journal where the name of

the Class is selected. If a transaction affects more than one Class, the

transaction can be split up so that the appropriate amounts can be entered.

If you decide to use Classes it is a sensible control to allocate all income and

expenditure to a class. There is then less possibility of forgetting to allocate

items to its class.

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d) Balances at the beginning of the year on individual classes

The QuickBooks year end function closes down Income and Expense accounts.

Brought and carried forward balances for individual Classes are therefore not held

in the system. Here is an example of a suggested “Work around “ solution if you

want your class reports for the next year to include balances brought forward:

Example

ABC Literacy Action financial year ends on 31 December. It has two programmes

with the following balances in hand at the year end:

Alpha School - 5,675; Beta College – 4,000

(i) Create a new account named “Opening fund balance”. The account type is

“Other Income”

(ii) Then prepare a journal entry dated the first day of your financial year

recording opening Class (Project/Fund) balances. Debit and credit the

amount of the opening balances on each funds to this “Opening Balance

account” i.e. The debit entry is the same as the credit!

(iii) Then record the debit or credit opening balances against the correct

“Classes” but do not classify the corresponding balancing debit or credit. Your

management reports for Classes should now show the opening and closing

balance to date in respect of each project.

(iv) The PROFIT & LOSS BY CLASS Report will display the Opening Balance after

the Income and Expenditure for the Year to date. Thus the final balance at

the end of the page will be the balance in hand and carried forward at the

report date.

(v) No journal is required at the end of the year as the QuickBooks year end

routine will automatically zero out this “Opening Balance” income account.

e) Preparing reports for a specific class

Budgets and Income and Expenditure reports may be prepared for each “Class” (see

section 19 and 20 below for further details).

Date 01/01/2011 Entry No:

Account Debit Credit Memo Name Billable Class

Opening Balance 5675 Alpha School Opening Balance

Opening Balance 5675 Alpha School Opening Balance ALPHA

Opening Balance 4000 Beta College Opening Balance

Opening Balance 4000 Beta College Opening Balance BETA

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12 Cash and Bank transactions

AIM: To enter cash and bank transactions into QuickBooks together with date, reference

numbers, class allocation and other relevant details.

When QuickBooks talks about “Bank” as an account type it includes “Cash”

accounts as well. So choose “Bank” as the type of account when you create a new

account in which you will record cash transactions.

Here are some general notes about the way QuickBooks works, and procedures to

be followed:

VOUCHER NUMBERS! It is essential that each entry in QuickBooks is given a

reference number that is also recorded on the document supporting the

transaction (invoices, receipts, extract of minutes etc.) This will make it

easy for NGO staff, and the auditors, to find the document if it is needed in

the future. The voucher number can be entered after the date, in the

column labeled “No.” However, this column is also used for cheque

numbers. Another idea is to enter the voucher number at the beginning of

the “Memo details” column.

QuickBooks memorises names of the people making or receiving payments

as you enter them, so that the full name does not need to be entered next

time. The first time you enter a new name you will be prompted to say

whether this person is a Supplier, Customer, Employee or Other. DO NOT

use the “Employee” option unless you are using the Payroll software in the

UK. File these names in “Other”.

When receipts or payments are being entered you can find the account

name by typing in either the name or the account number (but be careful if

two accounts have similar names).

Use Control C to Copy and Control V to paste the same details (or use the

mouse to copy and paste)

If you enter a receipt as a payment or a payment as a receipt QuickBooks

may not allow you to immediately correct it. If this happens cancel what

you have done by clicking on “Clear” or “Restore” and start again.

It takes time to enter each transaction when you start; however, it becomes faster

as you get used to how QuickBooks works; and as QuickBooks memorises names.

There are two methods of recording payments in a particular bank (or cash)

account:

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METHOD 1

This is a good method to use to start with as the screen looks like a cash book and

you can enter receipts and payments! However, this Method does not work for

foreign currency bank accounts – go to Method 2A and 2B!

a) Close all open windows except the “HOME” window. On the far right of the

screen you will see “Account Balances” and under this there is a list of your cash

and bank accounts. Double click on the bank account in which you wish to enter a

transaction. Alternatively go to the main menus and select BANKING – USE

REGISTER – Select Account.

b) A screen opens that looks like a cash book! Enter the transaction as follows:

Date: Date of the transaction

No: Cheque (or supporting voucher) no.

Payee: the name of the person you are paying; the first time you enter a

new name here you will be prompted to say whether this person

is a Supplier, Customer, Employee or Other.

Amount: the amount – payment in the first column or receipt in the

second column

Account: Enter the account number /name here

Memo details: write brief details here about the transaction i.e. brief

description of goods or services.

c) If this is all you need to enter click on RECORD (bottom right corner). The

transaction is then permanently recorded in QuickBooks.

d) If the receipt or payment is to be “split” between two or more accounts, or if

you want to track the transaction against a particular fund or programme, click on

the SPLIT box on the bottom left of the screen. Complete the items as follows:

Account: enter names of the ledger accounts here

Amount: enter the amounts. QuickBooks will not let you record the

transaction unless the total of the amounts entered here agree

with the total amount received or paid.

Memo: it is not necessary to repeat the details you have already entered

(see b. above)

Customer Job: no entry is necessary

Billable? no entry is necessary

Class: Enter the name of the programme or fund if you are tracking

transactions against different programmes or funds (see section

11 for more details).

e) When you have finished entering the transaction click on RECORD (bottom right

hand side of the window). QuickBooks then permanently records the transaction.

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METHOD 2A

(This is an alternative method for entering payments - all the details you need to

enter are displayed in the window).

a) Close all open windows except your “HOME” window. On the right of the screen

you will see “Banking” and under this you will see “Write cheques”. Click on this to

open the WRITE CHEQUES window. Alternatively go to the main menus and select

BANKING – WRITE CHEQUES.

b) You will see a frame that looks like a cheque! Above this there is a place for the

name of the cash or bank account in which you are going to enter transactions.

Make sure that the right account is selected. You can make the cash or bank

account that is used most often appear each time you return to this window. Go to

EDIT-PREFERENCES-BANKING- My Preferences and “Select Default Accounts to

Use”. Then enter the account number/name of the bank or cash account that in the

“Write Cheques” box (and also the “Make Deposits Box)

When you open the Write Cheques window the ending cash or bank

balance is displayed above the cheque, on the right hand side.

c) Under the cheque you will see a box labeled “To be printed”. Untick this.

d) Use your mouse or the TAB key to move from one entry to the NEXT as follows:

No: Cheque (or reference) no.


Pay order of: the name of the person you are paying;

Amount: the amount

Memo: write brief details here about the transaction i.e. brief

description of goods or services.

e) Under the cheque you will see a box with a tab called “Expenses” (ignore the tab

called Items – no details are required under this tab)

Account: Enter the account number /name here

Amount: The amount will already appear but you can change this if the

amount paid is to be entered into different accounts.

Memo: not necessary to use this if you enter details in the first Memo

space

Customer Job: no entry is necessary

Billable?: No entry is necessary

Class: Enter the name of the programme or fund if you are tracking

transactions against different programmes or funds (see section

11 for more details).

15


METHOD 2B

(This is the alternative method for entering receipts).

a) Close all open windows except your “HOME” window. On the right of the screen

you will see “Banking” and under this you will see “Record Deposits”. Click on this

to open the MAKE DEPOSITS window. Alternatively go to the main menus and

select BANKING – MAKE DEPOSITS.

b) At the top of this window you will see a place for the name of the cash or bank

account in which you are going to enter transactions. Make sure that the right

account is selected. Then using your mouse or TAB key enter the details of the

transaction:


Memo: Voucher number and Brief memo

Received from: Name of person from whom cash is received

From account: Ledger account (for example- donations, grants)

Memo: Further details if required

Chq No: No entry necessary – but this column could be used for

recording the voucher reference

Pmt Meth. No entry necessary

Class: Enter the name of programme or fund (see section 11)

Amount: Enter the amount

b) At the bottom of this window you will see three further boxes: Cash goes back

to, Cash back memo and cash back amount. The use of these boxes is optional.

c) When you have completed entering the transaction click on Save and Close.

13 Bank reconciliation

AIM: To ensure that the transactions recorded in QuickBooks agree with those on bank

statements – and that entries on both records are correct.

The process is found in the menu: BANKING – RECONCILE.

Have the most recent bank statement NEXT to you and follow the instructions on

screen. You may temporarily “Leave” the bank reconciliation to make an entry or to

correct a figure in the bank account, while you are preparing the bank

reconciliation.

Print out the detail report when you have finished the reconciliation. This is a useful

control report, especially the end of the financial year. This can be a workpaper to

support the accounts, and to give to the auditor.

16


14 Journal entries

AIM: To enter non cash/ bank transactions, corrections, year end adjustments, etc. in

QuickBooks.

The Journal is found in the menu ACCOUNTANT – MAKE GENERAL JOURNAL

ENTRIES.

The following message comes up the first time that the Journal is opened

“QuickBooks automatically assigns numbers to journal entries”. You can enter your

own journal reference if you prefer, and this preference may be changed.

QuickBooks will not Save and Close the Journal until the Journal entry balances.

15 Correcting mistakes and closing periods

AIM: To set up procedures for correcting mistakes – before or after management reports

and accounts have been prepared. To ensure that corrections and changes are authorised.

It is always possible that a mistake is made when entering transactions. Incorrect

entries may also be found when carrying out the bank reconciliation or reviewing

monthly financial reports before they are circulated. The mistakes should be

immediately corrected and new financial reports prepared.

The Finance Director should ensure that there are procedures for checking

transactions both before and after they have been entered so that mistakes are

seen and corrected immediately.

The accountant may be authorised to amend the data entry in QuickBooks by

editing or deleting it If a mistake is found immediately after it has been entered, or

before a financial report is prepared. These amendments are automatically

recorded in the Audit Trail. The mistake is corrected by highlighting the incorrect

transaction and then editing it. An entry can be deleted by holding down the CTRL

key and then pressing key D, or via the menu EDIT-DELETE (or VOID) CHEQUE.

No further changes should be permitted once the monthly accounts have been

discussed and approved. Any corrections should be made by preparing a Journal

entry in the NEXT financial reporting period.

An essential procedure to prevent any changes to entries in previous accounting

periods is to “Close” previous periods. The menu for this is COMPANY – SET

CLOSING DATE. This takes you to the PREFERENCES- ACCOUNTING – Company

Preferences screen. Click on the box “Set Date/Password”. Once a date is set a

warning screen is displayed if someone tries to make, or change, an entry before

the closing date. It is necessary to enter the password (if this has been set) before

any change or entry can be made.

17


A Password can only be entered here by the Administrator, and not by any other

User. The Administrator can change the password if it is lost.

All correction or modifications are recorded permanently in the AUDIT TRAIL. The

Audit Trail is found via the menu: REPORTS - ACCOUNTANT & TAXES - AUDIT

TRAIL. The screen that first comes up discloses transactions entered or modified on

today’s date. Change the date range as needed. The listing includes Deleted

transactions – it is advisable to click on the tab: “Modify Report” and check that the

“Show Deleted Transactions” box is ticked.

There is an alternative report CLOSING DATE EXCEPTION REPORT which discloses all

changes made to entries prior to a Closing Date.

16 Reports

AIM: To produce timely management reports at the press of a button!

a) Introduction

You will find a large number of reports, and illustrations, via the menu REPORTS –

REPORT CENTRE. On the left hand side there is a list of report groups. The groups

that are of particular relevance to NGOs are:

Company & Financial Banking Accountant and Taxes Budgets & Forecasts List

Once you have selected a report in a particular group you will usually find the

following menus at the top of the report:

Modify Report Memorise Print

E-mail Export Hide Header

Collapse Refresh Dates From/ To

Columns Sort By

The Modify Report menu is of particular interest. This menu has options to change

dates, format the report, add or remove columns, etc. There is a facility to “filter”

the accounts information, allowing you to select certain accounts, classes etc. as

required for your report.

18


b) Key Reports

The key reports you can create, where they are found in REPORTS, and how they

are presented include:

COMPANY & FINANCIAL – STANDARD PROFIT & LOSS ACCOUNT

COMPANY & FINACIAL – PROFIT & LOSS BY CLASS

COMPANY & FINANCIAL – STANDARD BALANCE SHEET

The MODIFY REPORT menu allows you to change the name of the report for

example change “Profit and Loss” to “Receipts and Payments”. You can make other

changes for example, change fonts, show amounts without decimal places, show

negative figures in brackets or not display zero amounts.

The COLLAPSE menu hides any sub- accounts that you have created, so that you can

have a summarized report displaying the main accounts.

There are some headings that are generated by QuickBooks that cannot be

changed, for example, the heading “Assets”. You can change the header, including

the date on the report – BUT be careful! You may prepare a report later for a

different period and it is easy to forget to change the header to the new report

date!

There is a report in this group where previous year comparative figures can be

displayed and also an “income and expense graph” which includes a “pie chart”.

ACCOUNTANT & TAXES – TRIAL BALANCE

If you double click on an amount listed on the Trial Balance a screen opens

displaying the detailed transactions that make up the balance on the account; if you

need to look at all the transactions on this particular account, including those of

previous periods, change the DATES setting to ALL.

ACCOUNTANT & TAXES – GENERAL LEDGER

If you do not wish to include ledger accounts for which there are no transactions or

balances click on the MODIFY menu and then click on the box marked “ADVANCED”

(bottom right); then select “In use”.

ACCOUNTANT & TAXES – JOURNAL

This report includes ALL transactions, including bank. Select ACCOUNTANT & TAXES

– ADJUSTING JOURNAL ENTRIES if a listing of Journal entries only is required.

ACCOUNTANT & TAXES – ACCOUNT LISTING

It may be helpful to export this report to Excel so that you can design it to display

sub accounts etc. and have a copy in the office for reference purposes.

19


c) Memorising reports and the use of the Icon Bar

There will be some reports that will be needed on a regular basis, for example, the

Profit and Loss Account, and the General Ledger. When these key reports are

created for the first time, and it has been formatted in the way you would like it to

appear when it has been printed, the report can be “memorised”. Click on

MEMORISE. You will be prompted to give a name to the report, for example “Profit

and Loss”. Then click on OK. When you want to retrieve this report go to REPORTS

– MEMORISED REPORTS and then click on the report that you need from the list on

the screen.

An even quicker way to retrieve a report is to add it as an icon to the Icon Bar.

When the report is on the screen, select the menu VIEW- “ADD (name of report)

TO ICON BAR”. You will then be prompted to give a “Label” (a short name) and a

description for your report. Click on OK, and a new icon for your report is added at

the right hand end of the ICON BAR.

Click on VIEW- CUSTOMISE ICON BAR (or right click on the Icon Bar) and then

follow the instructions to delete icons or to change the order in which they appear.

17 Export of data and reports to Excel

Check that dates and figures in the Excel sheet are correctly formatted before

exporting data, or a financial report, to Excel. Click on the “EXPORT” Tab which is

located just above the report currently on the screen. If there is a problem check

that the Regional Settings on your computer are the same as those that are

assumed to be in place by your QuickBooks software. The Regional Settings may be

adjusted as follows:

Close down QuickBooks and Excel.

Go to START-CONTROL PANEL- and find REGIONAL AND LANGUAGE SETTINGS

Edit the format of dates and numbers as required

Note that changing the Regional and Language settings may have an impact on

other Excel files so you should make a note of changes you have made, in case you

have to change them back to the original settings.

20


18 Year end tasks

The Journal is used to record year- end adjustments for prepayments, accruals and

stocks, and any other adjustments after reviewing cash and bank reconciliations.

QuickBooks automatically “closes down” all income and expense accounts on the

Year end date. The balances on these accounts are transferred to an account called

“RETAINED EARNINGS” on the first day of the new financial year. The balance on

this account represents the overall surplus or deficit for the year on all funds and

projects.

Accounts must be set up in the ledger for each fund or project that is managed by

the NGO. These accounts should be created as “EQUITY” accounts. There will be no

movement on these accounts except an annual journal that should be prepared on

the first day of the new financial year. This journal is transfer the income and

expenditure on each fund from the RETAINED EARNINGS account to the respective

fund account. There should be a ZERO balance on the Retained Earnings account

after entering this journal.

After the Annual Accounts have been finalised it is recommended that a file is

prepared containing print outs of key reports that back up the accounts. This would

include:

TRIAL BALANCE

LEDGER (includes Cash and Bank accounts)

JOURNALS

PROFIT & LOSS ACCOUNT

BALANCE SHEET

These reports should be kept in your archives for at least seven year (some

countries may require documents to be kept for a longer period).

It is recommended that a back of the company file is prepared via the menu FILE –

SAVE COPY OR BACKUP. This should be on an external hard drive or CD.

21


19 Budgets: setting up and entering details

AIM: To set up an annual budget so that management accounts comparing budget with

actual results may be prepared – this information may also be used to prepare cash flow

forecasts.

There are TWO types of budget that can be prepared

- a global budget for ALL the income and expenditure of the NGO, and

- budgets for individual programmes/funds (by CLASS – see section 11 above).

A) GLOBAL BUDGET

Select the menu COMPANY- PLANNING & BUDGETING- SET UP BUDGETS. Select Create a New Budget – specify the year end and type (leave type as Profit and Loss). NEXT Additional Profit and Loss Budget Criteria

Leave as “No additional criteria” NEXT Choose how you want to create a budget

You will probably want to create budget from scratch (with new figures) FINISH. The NEXT screen lists the income and expenditure accounts, with columns

for monthly budget figures. These are totalled into an annual total column. It is not

possible to enter annual budget figures into the annual total column – entries can

only be made in the monthly budget columns. If you only know the annual figure,

say 4,000, and the monthly figure is the same throughout the year, you can enter:

4000/12 in January and then ENTER. QuickBooks will enter 1/12 of 4000 into the

month (333.33). Then click on COPY ACROSS (box at bottom left of screen).

QuickBooks then enters 333.33 in each month and the total in the Annual column. SAVE as you proceed and when you have finished entering the budget figures

(including zero amounts – see below) click on OK. This takes you out of the Budget

menu.

B) PROGRAMME BUDGETS

Select the menu COMPANY- PLANNING & BUDGETING- SET UP BUDGETS. Select Create a New Budget – specify the year end and type (leave type as Profit and Loss). NEXT Additional Profit and Loss Budget Criteria

Select “Class” Do NOT leave as “No additional criteria” NEXT Choose how you want to create a budget

You will probably want to create budget from scratch (with new figures) FINISH.

There is a box on this screen labeled “Current Class”. Select the “Class” for which

you wish to prepare a budget. The screen lists all the income and expenditure account with a column for monthly

budget figures. These are totalled to make up the annual budget. See the section

above (A) Global Budgets for information and notes as to how to enter budget

figures.

22


SAVE as you proceed, and when you have finished entering the budget figures

(including zero amounts – see below) click on OK. This takes you out of the Budget

menu.

The amounts you enter in your Class budgets are NOT be included in your global

NGO budget report.

Points to remember when preparing Budgets on QuickBooks

ZERO BUDGETS

Enter Budget figures for ALL income and expenditure accounts. If there is no

budget for a certain account enter a “Zero”. If no entry is made the QuickBooks

budget report does not calculate/ display the variance between any actual income

(or expenditure) and the “zero” budget.

CAPITAL BUDGETS

A “Work around” solution has to be found if you wish to include and monitor

budgets for capital expenditure during the year (Balance Sheet accounts are not

included in the QuickBooks Revenue Budget).

One procedure is to create “temporary” capital expenditure accounts (categorised

as “OTHER EXPENSES”), in addition to the accounts in the “Fixed Assets” Category

of Accounts. Record Expenditure during the year in these accounts. Then at the

end of the year the capital expenditure is transferred to the Capital accounts

(fixed asset accounts).

NOTE: QuickBooks will not allow you to use the same name for two accounts so

the account in “Other Expense” should be given a slightly different name to

differentiate between the two. Be careful when entering expenditure – that you

do not record it in the “Fixed Asset” account by mistake!

23


20 Budgets: preparing reports

A) GLOBAL BUDGET REPORT

Select the menu REPORTS – BUDGETS & FORECASTS - BUDGET Vs ACTUAL

On the NEXT screen, “select the budget to use when generating the budget report”.

Select the budget with the name “FY…. – Profit and Loss by Account”

NEXT Account by Month – this cannot be changed here, select

NEXT then FINISH.

This takes you to a very large spreadsheet where the budget is broken down by

months, initially for “This Financial Year to Date” with columns for Actual, Budget,

Over Budget and % of Budget for each month.

Select MODIFY REPORT. On the first Tab “Display” you can change the date to the

period required. If you want to see the budget by Year rather than by Month you

can change the “Display columns by month” to “Display columns by Year”.

B) PROGRAMME BUDGET REPORT

Select the menu REPORTS – BUDGETS & FORECASTS- BUDGET Vs ACTUAL

On the NEXT screen, “select the budget to use when generating the budget report”.

Select the budget with the name “FY…. – Profit and Loss by Account and Class”

NEXT Account by Month – this cannot be changed here, select

NEXT then FINISH.

This takes you to a very large spreadsheet where the budget is broken down by

months, initially for “This Financial Year to Date” with columns for Actual, Budget,

Over Budget and % of Budget for each month.

THIS SPREADSHEET INITIALLY DISPLAYS ALL Actual Income and Expenditure and

the CLASS budget(s)- so the report now has to be modified so that only the budget

and actual expenditure for a particular class is displayed. This is achieved as follows:

MODIFY REPORT. Select the tab “Filters”

Scroll down the box headed “Filter” and select “Class”

Then in the box labelled “Class” select the Class (or multiple Classes) for which you

want to display the actual and the budget figures. Click on OK.

24


Point to remember when preparing Budgets Reports

If you wish to compare the actual results “to date” with the budget for the

whole year select “This Financial Year” and not “This financial year to

date” for the period covered by your report. The slight problem with this is

that the header at the top of the actual column will give the dates of the

whole year, rather than the period for which you are preparing the report.

There are two suggested “work around” solutions for this. Either change

the Report heading to indicate the period covered by the report in respect

of the actual results, or export the whole report to Excel, where the header

of the “Actual” results can be changed to the dates of the period covered.

When you have arranged the report in the way that you want it, you can

“memorise” the report, and add it to the Icon Bar so that it is easily

retrievable. This will save you much time in the future! PS: If you have

modified the Header name or dates, do remember to change this on the

next report that is prepared using this template!

25


21 Foreign Currency

AIM: To operate cash and bank accounts in more than one currency. To prepare reports

disclosing transactions in the different currencies.

If you have the UK or US version of QuickBooks Pro, and your “Home Currency” is

not pounds sterling (GBP), you can set up the MULTICURRENCY option in

QuickBooks and then select or set up a different currency as the your main

currency. It is best to choose this option when you set up the new NGO “Company

file” (see section 6).

Once you have selected the option to run the multicurrency feature it cannot be

changed. Budgets and key reports can only be prepared in “Home Currency”. This

should be taken into account when deciding what currency to set up as your “Home

Currency”.

You can add and edit additional foreign currency bank accounts as needed.

a) Setting up “Multicurrency” feature after you have set up the

company file

Go to the menu EDIT – PREFERENCES - MULTIPLE CURRENCIES - COMPANY

PREFERENCES. Select “Yes I use more than one currency” and then select the

required currency. QuickBooks assumes that all the transactions you have entered

up to that point were in the “Home Currency” that you have now selected.

After Multicurrency has been activated you can add or edit currencies through

LISTS-CURRENCY LIST. Highlight the currency that you wish to edit (or create or

activate a new currency). Click on the menu Edit Currency. A screen is displayed

where you can view and edit the currency format, and change exchange rates,

including the date from which the any new exchange rate will apply. Note that this

will NOT change the exchange rate already applied to previously entered

transactions.

b) Creating and using a Bank account in a foreign currency

Go to the menu: LISTS – CHART OF ACCOUNTS then either right click or click on the

menu ACCOUNT (bottom left of screen). Select “New”

Select “Bank” from the choice of Account Types. Click on CONTINUE.

Set up the new bank account with account number, name and then choose the

currency of the new bank account from the list of currencies.

26


c) Entering receipts and payments made in foreign currency

You cannot enter foreign currency receipts of payments directly into the bank

register – you have to use the WRITE CHEQUES or MAKE DEPOSITS menus for these

transactions. See section 12, Methods 2A and 2B.

You will be prompted to set up a new name as a supplier or customer the first time

you enter a receipt or a payment in the new foreign currency bank account. You

cannot use the a name that has previously been used for “Home currency”

transactions. If you try to do this Quickbooks will “jump” out of the foreign

currency bank account into a bank account in Home currency! A way round this is

to add a prefix, such as “.” in front of the name.

There is a box in the window which displays the exchange rate between your

“Home currency” and the foreign currency. This is originally set as “1” so this should

be corrected to the correct rate. Take care that the rate is correctly entered!

Example:

Your home currency is GBP. You have opened a bank in local currency (Kenya

Shillings KES) and the exchange rate is 1 KES = 0.007144683 GBP. Enter this rate

into QuickBooks and NOT the rate of KES to the pound (139.99).

The exchange rate that you set for your first transaction will be used for

subsequent transactions – unless and until you change the rate.

d) Multicurrency Reports: checking that you have entered the

transactions correctly!

It is strongly recommend that there is a report that you can quickly access on the

Icon Bar which discloses movements on your foreign currency bank accounts in

both your “Home” and the local (foreign) currency. This is set up as follows:

Go to REPORTS – ACCOUNTANT & TAXES – GENERAL LEDGER

Click on MODIFY REPORT

Change “Dates” range to “This Financial Year to date”.

Click on “Advanced”; select “In use”, then click OK

In the “Columns” box put a check mark NEXT to the following additional column

heads: “Foreign Amount”, “Currency”, “Exchange rate”, and “Foreign Balance”.

Click on the Tab called “Filters” and select the Filter “Account”. Then, in the

Account Box select “Multiple accounts”. Select the foreign currency bank accounts

that you want displayed on your report.

27


When you have finished, click on OK, and then OK again on the Modify Report

screen.

Adjust the size of some of the columns on the report now displayed (by clicking on

the diamonds at the top of each column and then dragging your mouse to change

the size of the column).

When you are satisfied that everything is displayed on the screen, including the

foreign currency columns, memorise this report and add it to the Icon Bar (see

section 16 for instructions). Give the report a short name such as “Forex Report”.

It is very important to check that you have the right figures in your ledger –

look at the entries in the bank registers, and on the bank reports that you

have set up (Para c. above) and check the home currency and the foreign

currency amounts – IT IS VERY EASY TO MAKE MISTAKES – DOUBLE CHECK

YOUR WORK!

e) Transferring money between bank or cash accounts of

different currencies

Transfers between “Home” currency and a foreign currency bank account.

Transfers should be recorded using the menu BANKING – TRANSFER MONEY. Enter

the precise exchange rate used for the transfer and after you have saved the

transaction go to the two bank account registers to check that the amounts

recorded are correct. You may find small rounding differences that will need

adjustment.

A suggested method of calculating and entering the precise exchange rate is to use

Excel for the calculation (up to 9 decimal places) and then copy and paste the result

from the cell in Excel directly into the exchange rate cell in QuickBooks.

Transfers between two bank (or cash) accounts – both designated in the same

foreign currency

These transfers should also be recorded using the menu BANKING – TRANSFER

MONEY. It is important to check that the exchange rate of the foreign currency with

the “Home currency” that will be applied to this transaction is correct, even though

the transfer is between two foreign currency bank accounts in the same currency.

QuickBooks will enter the foreign currency using the exchange rate currently set

unless this is changed.

Transfers between two bank (or cash) accounts – designated in different foreign

currencies

QuickBooks does not allow you to record transfers from one foreign currency bank

account to another foreign currency bank account. A workaround solution to this is

to assume that the transfer from one foreign currency bank account is first made to

28


your Home currency bank (or cash) account (or to a specially created “Currency

transfer bank account just used for this purpose). A second transaction is then

entered transferring the money from this account to the other foreign currency

bank account. It is important to check that the amount recorded as being received

into your Home currency bank account is the same as that going out!

f) Gains and losses due to exchange rate fluctuations

Your organisation must have a policy as to what exchange rates should be applied

to transactions, and how often exchange rates should be reviewed. If currency is

stable and there are few fluctuations the rate may for example be reviewed and

updated on a monthly basis. In certain situations the rate applied to payments from

a foreign exchange bank account will be the rate that was obtained on the money

that went into the bank account. This is a complicated area, and expert advice may

be necessary.

The balance on the home currency account in respect of each foreign currency bank

account may need to be adjusted from time to time due to exchange fluctuations.

QuickBooks 2010 has a special procedure for making the necessary adjustment to

the balance in the Home currency, without changing the (correct) balance in foreign

currency. The procedure is as follows:

Example

Your Foreign currency bank account has a balance of, say 80,000 and if this money

was to be changed into your home currency you would receive 7,000 at current

rates of exchange. However, because of the exchange rates that have been used

your ledger account for this bank is showing a balance of 8,000 in your home

currency.

Go to the menu COMPANY- MANAGE CURRENCY- HOME CURRENCY ADJUSMENT

Enter the Date on which you are making the adjustment and the Currency

Calculate the exchange rate that will convert the foreign currency amount into the

correct home currency equivalent amount (divide the correct home currency

balance by the foreign currency balance). In the example above the new exchange

rate would be 0.0875 ( 7000 divided by 80000). Enter this in the Exchange rate box.

Click on Calculate Adjustment. The new balances are then displayed in the window.

Check that these are correct. Tick the row displaying the new balance. There is a

place for a memo note at the foot of the window. Then click on Save and Close.

If you go to your ledger report you will see that the home currency balance has

been adjusted – but the foreign currency balance will not be affected.

29


22 Checklist 1. NGO accounting specifications

For more details of QuickBooks 2010 specifications visit the Intuit website:

http://quickbooks.intuit.co.uk/small-business-accounting/compare-quickbooks-products.jsp

GENERAL SPECIFICATIONS

NGO computer specifications (Processor, RAM etc. compatible with software)

See section 3 ........................................................................................................... CHECK!

Multilingual (available only in English and French)........................................................ NO

Multicompany (accounts can be kept for several NGOs) .............................................. YES

Automatic online Updates ........................................................................................... YES

Multi-user access (with additional copies, up to 3 users) ............................................. YES

Stock records (useful for hospital pharmacies issuing drugs) ....................................... YES

STRUCTURE

Password system for user access and to restrict access to closed periods ..................... YES

Sufficient number of Digits (13) .................................................................................. YES

Flexible account code structure allowing for sub-accounts .......................................... YES

Flexible secondary coding structure (could be used for Programs, Funds,

Departments) ............................................................................................................ YES

Sub codes for secondary coding structure (could be used for jointly fund

programmes, projects within programs) ...................................................................... YES

ENTERING INFORMATION AND TRANSACTIONS

Web based input in remote locations ....................... WITH QUICKBOOKS PREMIER

Import of transactions entered on Excel (for example from Field offices?) ................... NO

Import of account names ............................................................................................. YES

Field for Cheque or voucher numbers .......................................................................... YES

REPORTS – INCLUDING EXPORT

Key Report templates ready for use and easy to modify ............................................... YES

Memorise and access updated reports previously prepared ......................................... YES

Export of Reports and ledger extracts to Excel ............................................................. YES

Audit Trail .................................................................................................................... YES

Report writing facility ................................................................................................... NO

BUDGETS

Budgets, including budgets for individual Programs/Funds .......................................... YES

Budgets in foreign currency ......................................................................................... NO

Budget overview report(can be exported to excel to prepare cashflow forecast) ......... YES

Cashflow reports .......................................................................................................... YES

30


23 Checklist 2. Monthly tasks

Monthly – QuickBooks Operator and Accountant (by 12th of month)

Prepare bank reconciliations (and print the QB reconciliation reports) ......................... �

Check reports and make corrections where necessary ................................................. �

Print and file the following QuickBooks reports as permanent

accounting records:

TRIAL BALANCE ............................................................................................................ �

GENERAL LEDGER (includes cash and bank accounts) ................................................... �

JOURNALS (if required) ................................................................................................ �

Prepare Exchange profit/loss month end journal (inc. bank rounding adjustments)...... �

Reconcile Monthly Control account with Head Office ................................................... �

Reconcile Salaries control accounts .............................................................................. �

Open Excel previous month file and save for current month ........................................ �

Print the following reports for managers

PROFIT AND LOSS ACCOUNT (Monthly, cumulative, by Class etc.) ................................ �

BUDGET V ACTUAL (Monthly, cumulative, by Class etc.) .............................................. �

BALANCE SHEET ........................................................................................................... �

.................................................................................................................................... � .................................................................................................................................... �

Export QB Reports to Excel monthly financial report file (to link in with

Donor or other preformatted management Reports; to convert to other

currencies etc.):

TRIAL BALANCE (for monthly or cumulative account totals).......................................... �

GENERAL LEDGER (for detailed list of transactions on each account) ............................ �

.................................................................................................................................... �

File reports & supporting documents ........................................................................... �

Sign and send reports to the Administrator .................................................................. �

Carry out back up procedures ...................................................................................... �

Monthly – QuickBooks Administrator (for example Finance Director)

Check and countersign cash and bank reconciliations ................................................... �

Close down past month (password protected) so that changes cannot be made .......... �

Check that Operator and Accountant’s monthly checklist has been completed ............ �

Check monthly exchange rate and distribute memo with new rates ............................. �

Compare exported QB report with Excel worksheet ..................................................... �

Review Excel Management Reports and Donor Reports ............................................... �

Sign and authorise reports to be forwarded to Donors/ Regional Office/ H.O. .............. �

Ensure that back up copy of QuickBooks is prepared and kept in a safe location .......... �

Set “Close Down” date and password in QB ................................................................. �

Give copy of password to xxx ....................................................................................... �

Periodic – Accountant/ Administrator

Prepare and distribute updated Chart (List) of Accounts .............................................. �

Ensure that Password and IT procedures are being followed ........................................ �

1st Day of new month

Record exchange rate changes after closing down previous month .............................. �

quickbooks pro 2010 - mango: management accounting for non

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