5 items which should not be there in Balance Sheet
Currently, NGOs are busy preparing their final account for the previous financial year. It is highly recommended that the NGO accountant and NGO Head should always go through the Financials (Income & Expenses) and Balance Sheet, instead of blindly relying on Auditor (Chartered Accountant) before its finalization. It is always desirable to clean up Financials before 31st March.
Following are some of 5 things which should not be part of your Balance Sheet.
1. Negative Cash Balance
Many times this happens when one project is short of funds and expenses are spent from another project. However, care must be taken that, cash is not falling negative. Whatever the reason may be cash should not go negative.
2. Negative Bank Balance
At the end of the financial year, in the pressure of completing projects or to spent funds, cheques for payment are issued but not cleared by 31 March and thus sometimes when the balance is low on the bank, it shows negative. Though from BRS, it is easy to understand such situations, on the face of the Balance Sheet, it doesn’t look good. Plan beforehand at the end of the financial year and avoid negative bank balance.
3. Fixed Assets
20 Computers funded by some funding agency 5 years back and still it is showing in your fixed assets at some value. Out of that, many are not in use, some are scrapped. Care must be taken that those assets are shown in the Balance Sheet which is in actual use and at the correct value. Remove ‘ghost assets’ on a regular basis.
4. Staff Advance
It is a good practice to see that all staff advances are settled before 31 March. This will help in a clean presentation of the Balance Sheet.
5. Suspense Account / Temp Account
These are accounting terms used to park figures for the time being. Once the query solved pr transaction is traced, it must be transferred to the appropriate account. Thus utmost care should be taken to see that these type of accounts do not come up in the Balance Sheet.
Conclusion
Basically, the Balance Sheet is the first document people will see when assessing your organisation’s financial strengths. Thus it is very important to present it in an accurate manner.
If you aware of any such other items which should not go in Balance Sheet, write in the comment box.
Helpful… Thnx :)
Please write on or make video on how to remove ghost assets (assets which are non-functional)
Planning for it
It is useful
Sir,
In our Balance sheet on Land & Building a/c only Rs 15 lakh has been shown in 17-18. But the current value of the building only may be not less than 25-30lakh. The price of the land may be 40 lakh or above. Furniture value is Rs.50000 approx. But the current value may be Rs.5 lakh. How it can be shown in current year(18-19) Balance sheet.
More over our fcra reg. no. (147040081) has been cancelled due to non submission of annual returns. In order to restore this we want your help.
Regards
LALITMOHAN SAMANTA
General Secretary.
Contact me on 9825434411