When we open a file that has not been maintained, the same handful of problems appear almost every time. None of them is a crisis on its own. Together they make every report untrustworthy. Here is what they are and what a clean file looks like afterward.
1. Unreconciled accounts
The root of everything else. If an account has not been reconciled, nothing downstream can be trusted. Fixed means every month ties to the statement, with no stale uncleared items.
2. Transfers recorded as income or expense
Moving money from checking to savings is not income. Paying a credit card is not an expense; the purchases already were. Fixed means transfers hit both accounts and nothing else.
3. Payroll liabilities that never clear
Each payroll creates liabilities for taxes and withholdings. When the payments are coded to expense instead of the liability, the balance grows forever. Fixed means liabilities return to zero after each remittance.
4. Loan payments coded entirely to expense
Only the interest is expense. The principal reduces the loan. Fixed means the loan balance on the books matches the lender’s statement.
5. Duplicate deposits and double-counted sales
A giving platform payout entered as a deposit, plus the individual gifts entered from the platform, counts everything twice. Fixed means one source of truth per revenue stream.
6. A chart of accounts that grew wild
Forty expense accounts that mean roughly the same thing make reports unreadable. Fixed means a chart that matches how leadership thinks about the organization, with old accounts merged or made inactive.
7. Restricted money with no tracking
For churches, designated gifts that were deposited into general funds with no class, fund or tag. Fixed means every restricted balance can be stated on demand.
8. Nothing is locked
Prior years that can still be edited will be, usually by accident. Fixed means a closing date and a password, so the past stays put.
