Practical Accounting for Eye Programmes: an Introduction

ACCOUNTING Practical accounting for eye programmes: an introduction Heiko Philippin Software solutions Head of postgraduate training and Initially, systems and standard procedures glaucoma specialist: Kilimanjaro can be developed manually (on paper), Christian Medical Centre, Moshi, Tanzania. [email protected] Heiko Philippin also taking into consideration the country's legal requirements. Spread- Richard Hess Management consultant, Singen, sheet software is good for keeping Germany. [email protected] records of income and expenditure. Once these standard procedures are established, they can be translated into a software No institution can survive without system for easier and safer data entry, balanced books planning and reporting. A general Financial and administrative management Spreadsheet software can be a helpful accounting software package is often are fundamental to any institution. This accounting tool. good enough, as you can use a special applies also to eye care projects. Eye care useful to consider the cost centre's total chart of accounts that reflects the needs managers benefit from a solid under- expenses and total income to see whether of the project. Some examples are standing of accounting and financial it is running according to budget. Quickbooks, GnuCash or WebERP. management as it will help them to work • An account is a record of financial Quickbooks is commonly used in in, or supervise, this important area. transactions, including payments companies and NGO projects; details can (expenses) or deposits (income). Each be found at www.quickbooks.intuit.com. Basic accounting transaction is specified by date, type GnuCash is an example of an open source It is not possible to provide a comprehensive (cash, cheque, etc.) and detail, such as and free software system which runs on introduction to accounting in this article. A purpose of a payment, e.g. fees for all platforms (http://www.gnucash.org/). few definitions might, however, be helpful surgery. Typical examples of accounts WebERP is also free and is a large system as a starting point for further reading. include petty cash, bank accounts or which runs on a server in a network • Budgeting is an essential process and stock accounts. It makes financial (http://www.weberp.org). should always happen when a new management easier if you set up activity is planned. A budget is an different accounts for different Further reading estimate of future expenditure and activities. The listing of the account More information can be obtained from income. Each activity needs its own names is called the chart of accounts. the Mango website (http://www.mango. budget. The budget is what you check • Double entry: whatever is taken from org.uk/) which offers several articles, your income and expenditure against one account has to be received by courses and tutorials about financial when running the activity, to make sure another account. For example if salaries management and accountability in you have enough funds and are not are paid, expenses increase in the non-profit and related projects. Another spending too much. salaries account and at the same time starting point for a more general intro- • Cost centres are different departments funds decrease in the bank account. duction can be Wikipedia: https://en. or activities. Examples of cost centres • A ledger is a book or computer file wikipedia.org/wiki/Accounting. Finally, include the outpatient department, the where all monetary transactions for each some software solutions, such as operating theatre, and outreach. A cost account are recorded. Transactions must GnuCash, are accompanied by helpful centre will have its own account.It is be approved and accompanied by receipts. introductions and tutorials. Accounting challenges in donor-funded projects 1 Keeping funds separate – and liability account tracks debts to the reporting accurately donor (i.e. the services to be delivered). Different donors (or partners) will require A statement of expenditure on Lance Bellers different financial reports about the respective activities should be issued activities they fund – often at different once a month. These expenses can be times. posted from the relevant sub-account in It can be a challenge in eye care the liability account to the income programme management to keep track account, meaning that a debit is of spending and to generate different assigned to the liability account and the reports for different donors with just a credit is offset to the income account. general income and expenditure With this approach, the donor liability 2 Dealing with different currencies statement. account always shows the current state For different currencies, different A practical solution is to post donor of different donor funds. If necessary, a accounts must be used. If average funds, after they have been received, into report can be consolidated either in the exchange rates are used internally, a liability account, with sub-accounts general account or in a supporting reporting becomes complicated because for each donor. A liability account tracks document. [Note: receiving donor funds expenses vary over time according to how much a person or business (in this is not yet an income since these funds changing exchange rates. A solution case, the eye care programme) owes a are designated for specific purposes and could be to use only one ‘reporting’ creditor, in this case the donor. The become an income only when spent.] currency in agreement with the donors. © The author/s and Community Eye Health Journal 2013. This is an Open Access article distributed under the Creative Commons Attribution Non-Commercial License..

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