If you're new to the nonprofit sector, no doubt you've already realized that the financial standards are stricter here than they were in the for-profit world. That can make end-of-year bookkeeping a stressful process — especially at the end of this year, due to new procedures that the Financial Accounting Standards Board (FASB) has implemented for 2019.
So before any more sand slips through the hourglass, let's review the vital end-of-year bookkeeping tasks your nonprofit needs to accomplish to avoid fines or penalties — up to and including the loss of your nonprofit status.
Reconcile Your Restricted and Unrestricted Fund Accounts
As the names imply, the designations "restricted" and "unrestricted" determine how nonprofits can use different funds. Simply put, restricted funds can only be used according to the donor's specifications. This can be simple (e.g. funds for an event) or complicated (e.g. funds for the purchase of a particular item or to be held for a specified amount of time). These funds cannot be used or transferred without the consent of the donor and approval by the nonprofit's board of directors.