What is Fund Accounting?

I. What is Fund Accounting?

Fund Accounting is a method of segregating resources into categories, (i.e. funds) to identify both the source of funds and the use of funds.
 

II. What are the Basic Objectives of Fund Accounting?

A. Demonstrating accountability and stewardship
• Did we use the funds in the way instructed?
• Have we documented that the funds were used properly?
B. Determining financial condition
• How much can we do with the resources we have?
• What is the value of buildings and other assets?
• What is the financial impact of maintaining/replacing other assets?
C. Planning and budgeting
• What should we do with the funds we have?
• How much do we need to do the job right?
D. Evaluating organizational and managerial performance
• Are we accomplishing the objectives for which we received the funds?
• What did the program/activity actually cost?
• Are we operating efficiently and effectively?
E. Determining/forecasting cash flow
• How much cash is coming in, how much is going out, and how much do we need for contingencies?
F. Communication
• Are we communicating financial information to all with a need to know?
• Is the financial information relevant, clear, reliable, timely, and comparable?