Cook & Company, A Professional Accountancy Corporation

05/08/2026

7 Steps to Convert Cash Basis Accounting to Accrual Basis Accounting

1. Record Accounts Receivable:
Determine amounts that may have been owed to your organization as of the last day of the year or month (i.e. the balance sheet date) for services already rendered to your clients or customers but not paid to you until after the balance sheet date.

2. Record Pledges & Grants Receivable:
Identify grants and contributions that were formally committed to you as of the balance sheet date but not paid to you until later.

3. Identify Prepaid Expenses:
Identify any situations where the organization has paid for the following year’s expenses in the current year (e.g. insurance policies, memberships, etc.) and then defer these expenses appropriately.

4. Identify Fixed Assets:
Identify any significant assets owned by the organization (land, buildings, equipment, vehicles, etc.) and record their cost and accumulated depreciation in the accounting system. Your insurance files and property tax records can assist in this process.

5. Check Accounts Payable:
Identify any situations where expenses may have been incurred in the current accounting period but not paid until after the balance sheet date. The easiest way to do this is to look at the bills that were paid in the few weeks after year-end and identify which ones pertain to the year that just ended.

6. Assess Accrued Vacation:
For organizations that provide paid time off to their employees, liabilities for unused vacation can be significant. For some organizations, this is their most significant liability and it should definitely be reflected in the organization’s financial statements.

7. Assess Accrued Payroll:
If employee pay periods end in one accounting period but workers are paid in the next, it is necessary to accrue the current period’s portion of wages and payroll taxes.

Remember, these general guidelines on how to go about cash-to-accrual conversions are a good start but they should not replace the professional expertise of a qualified bookkeeper or accountant.

03/08/2026

Feeling grateful for all of our amazing clients!
Friendly and mission-minded, the Cook & Company team is passionate about helping nonprofits achieve more through better financial management.

30/07/2026

What nonprofit travel and expense policy will work best for your organization? Follow these guidelines ...

If you’re a bookkeeper, accountant or manager in a nonprofit, you have probably felt the frustration of getting employees to submit their expense reports and receipts for travel and meal expenses.

23/07/2026

Cash vs accrual accounting: which is best for your nonprofit?

17/07/2026

We understand that many small and medium-sized nonprofit organizations don’t have professional accountants on staff. That’s why we’ve gone beyond what the typical CPA firm offers to provide a more integrated service. So what does that mean for your nonprofit?

It means our focus is different. We’re not just about the numbers, we want to show you how to improve your internal systems and structures to be more effective and efficient. It means we take the time to answer your questions. It means we create clear reports, then work with managers, board members, and staff to make sure everyone understands what’s happening and what needs to happen next

14/07/2026

How do you enhance your nonprofit financial statements to make them more meaningful? Here are 4 ways…...

09/07/2026

Protecting your nonprofit from fraudsters is important. Check out some of the cash controls commonly used by small nonprofits to minimize the risk of theft....

As a nonprofit, you work hard for your money, so it’s important to safeguard it. While it is difficult, if not impossible, to eliminate the risk of fraud, you have a fiduciary responsibility to minimize the risk.

30/06/2026

Preparing nonprofit financial statements is complex & errors are common. Avoid inaccurate reporting by avoiding these 6 common mistakes made by our clients…...

If you run a nonprofit, the last thing you want is to issue financials to your board or funding sources that are materially misstated.

25/06/2026

Enhance nonprofit financial statements with these four changes…

1️⃣Create enhanced liquidity disclosures
All nonprofits are required to include a discussion of the liquidity and availability of financial assets, as well as how liquidity is managed.
The liquidity disclosure footnote gives management an opportunity to apply insight into, and analysis of, the organization’s financial position.
This insight and analysis actually becomes part of the audited financial statements. This allows organizations with a robust financial position to inform the public how solid you are.
If, on the other hand, your balance sheet doesn’t look so great, it allows you to explain what you’re doing to remedy the situation.

2️⃣Prepare a statement of cash flows using the direct method
Nonprofits are required to present a statement of cash flows as part of their audited financial statements.
There are two main methods of doing this.
* The direct method: a very straightforward way that shows line items such as “cash paid to employees” and “cash received from donors”.
* The indirect method: a much less intuitive way for people who are not used to looking at financial statements.
Even if you currently use the indirect method, you’re free to switch to the more intuitive direct method, and your donors and board members may thank you for the added clarity.

3️⃣Prepare a statement of functional activities
ALL nonprofit organizations must present information about their expenses by function AND natural category.
However, some organizations choose to go a step further and present a statement of functional activities, which also breaks down your revenue by department.
This can be very useful because it shows which revenue streams are supporting the various activities of the organization, as well as which activities are “profitable” versus those that are subsidized.

4️⃣Break the statement of activities into sections
GAAP requires that you present certain minimum components on your statement of activities (SOA).
Beyond that, you’re free to add elements.
One enhancement you can make is to divide the statement into operating and non-operating activities.
The goal with this approach is to isolate the items that can fluctuate dramatically from year to year irrespective of actions by the organization.

Before making any significant changes to nonprofit financial statements, it’s important to firstly reference the FASB Accounting Standards Codification for more detailed guidance.

19/06/2026

So you’re a veteran nonprofit staffer and have just landed your first executive director (ED) gig? Now what?

Nonprofit financial management can be highly challenging and it helps to be prepared for the months and years ahead.

The tips that follow should help with overcoming some of the financial management hurdles you’ll face…

Perhaps you have years of experience as a fundraising professional or a program director. Now you’ve taken the step up as an executive director, you find yourself in charge of the whole organization.