Here are our thoughts on what is required to prepare reliable budget reports. It’s no good presenting reports to your board, manager or your bank that contain errors. This checklist will ensure that you produce good, reliable, board-ready reports.
1. Reconcile your Bank Account(s)
This is the number one rule so make sure that all of the bank accounts you have in your MYOB, Xero or QuickBooks Online file have been reconciled to the statements. Ensure to include Credit Cards in this process and check that they too have been reconciled.
Bank Statements are the best external guide to the completeness of your bookkeeping.
2. Review Debtors and Creditors
This review is particularly important for the Calxa Cash flow Forecast. Calxa uses your average Debtor Days Outstanding and Creditor Days Outstanding to estimate your future receipts and payments. As well as checking that they reconcile to the general ledger, review any old outstanding transactions to see if they need action.
3. Review Allocation Journals
If you use monthly journals to re-allocate amounts from one account to another (for example; for Grants Received in Advance), make sure to maintain a checklist to ensure they are posted each month (or set them as recurring journals with a reminder).
4. Review Clearing Accounts
Examine any clearing accounts or suspense accounts. Ideally they should have a zero balance, however, if they do have a balance, make sure that you know why it’s there and when it will be cleared.
5. Review Salary Sacrifice Accounts
Where your staff are offered Salary Sacrifice arrangements, you probably have one or more liability accounts to manage the deductions and payments. As with the clearing accounts above, they should either have a zero balance or a balance that you know you can reconcile.
6. Check Job Exception Reports
When using Jobs in MYOB, run the Job Exception reports to ensure that every transaction has been properly allocated to a job. This will ensure the completeness of your budget reports. Similarly you can run a P&L by Class in QuickBooks Online to identify ‘Unclassified’ transactions which will display as an additional cost centre in the last column of the report. In Xero just look out for the ‘Unallocated’ column to catch transactions that still need allocating.
7. Review Budget Variances
Within Calxa, run one of the Budget Analysis reports for the month and look for variances that might indicate missing transactions or wrongly allocated transactions.
8. Review Unspent Budgets
For not-for-profit organisations working with budgets that need to be fully allocated, the Unspent Budget report in Calxa will give you a clear guide to what is still under-spent and what has gone over budget.
9. Run Cash flow Forecast
Finally, run the Cash flow Forecast chart and look for anything unexpected. If there is anything odd or unusual run the Cash flow Forecast report to get a more detailed view.
Completing these checks at the end of each month will give you greater confidence in the reports you produce. Budget reports are an important management tool for any organisation, whether it’s a small business or a not-for-profit.