Finance Standard # 2: Accounting

AIESEC as any other organization needs to do accounting to collect information about operations to be able to evaluate the financial status and performance for making decisions and to fulfill criteria set by law.

This standard helps you with the way and principles needed to be followed in accounting/bookkeeping process. 



> Double entry bookkeeping system

Each legal entity which is obliged by law to do accounting needs to have a proper bookkeeping system. 

Entities who needn't to do accounting by law, they should do their own bookkeeping management and storage the all the accounting documents.

Double entry bookkeeping system is based on the fact that every financial transaction has equal and opposite effects in at least two different accounts. It is used to satisfy the equation Assets = Liabilities + Equity, whereby each entry is recorded so as to maintain the relationship.

Basically, you not only look at the bank statement which is part of the assets, but you also look at who owns the money. So, then you classify receivables and liabilities. 

> Align your chart of accounts with GFB List of accounts

In order to provide data for GFB survey, your accounts need to be aligned to the structure, which GFB provides.

> Accounting principles

Accrual principle
Your transactions should be recorded in the period in which they actually occur, rather than the period in which the cash flows related to them occur.

Consistency principle
Once an accounting principle or method is adopted, continue to follow it consistently in future accounting periods. Only change an accounting principle or method if the new version in some way improves reported financial results.

Cost principle
It is also known as the historical cost principle. The cost principle requires that assets be recorded at the cash amount (or its equivalent) at the time that an asset is acquired.

Economic entity principle
The transactions of a business should be kept separate from those of its owners and other businesses. This prevents intermingling of assets and liabilities among multiple entities, which can cause considerable difficulties when the financial statements of a fledgling business are first audited.

Full disclosure principle
Sou should include in an entity's financial statements all information that would affect a reader's understanding of those statements.

Going concern principle
The assumption is that a company or other entity will be able to continue operating for a period of time that is sufficient to carry out its commitments, obligations, objectives, and so on.

Monetary unit principle
Record only business transactions that can be expressed in terms of a currency.

Reliability principle
You can record only transactions in the accounting system that you can verify with objective evidence (accounting document).

Revenue and costs recognition principle
The accounting guideline requiring that revenues (costs) be shown on the income statement in the period in which they are earned (spent), not in the period when the cash is collected.

Time period principle
You should report the financial results of its activities over a standard time period, which is usually monthly, quarterly, or annually.

> Alignment between accounting and budget

Costs & revenues in real budget needs to be equal costs & revenues in accounting.

> Financial Statements should be generated at least once per year.

Balance Sheet & Profit and Loss Statement

> Requiremens of accounting documents = documents which prove accounting transactions (e.g. invoices, vouchers, payrolls, reimbursement forms, receipts).

-The identification number of the vendor.
-The amount to be paid.
-The date on which payment should be made.
-The accounts to be charged to record the liability.

> Archive all accounting documents physically or virtually

Have these accounting documents according to national law, but no less than 5 years: 

A) invoices created and received
B) reimbursement forms and all receipts, 
C) bank statements, 
D) cashbook, 
E) list of transaction from the year, 
F) Balance Sheet & Profit and Loss Statement


Basics of accounting

Accounting is one of the bases of the VPF job. Therefore, take a look at our materials. If you are not familiar with the accounting principles and practicalities. 

Accounting software - Wave

There are different ways of doing accounting. Definitely! But there is always a NEED TO HAVE A PROGRAM in place! You CAN'T DO IT IN EXCEL! Accounting outcomes have that high level of importance, that we cannot take a risk of making mistakes or losing that data! 
Wave is free, user-friendly, and an online accounting program which will simplify your life. Take a look what it is about and how to work with it. 

Accounting software - Quickbooks

Do you have advanced knowledge in accounting? Does your entity need a more detailed program for managing your accounting? Check Quickbooks. It is an online accounting software with many different features and you can also use it on your phone!

Chart of accounts

Have you already opened account in Wave or Quickbooks? Now, you need to insert the chart of account in order to start proper accounting. Check how the recommended chart of accounts looks like. 

Alignment of accounting 

You haven't done it yet? This can save you many hours of filling the GFB survey and will align different reports (LCs and MC) in your entity. Discover the power of alignment in consolidation and get better overview about financial reality in your entity. 


Closing of Accounting

Don't forget about the most important step before you generate your financial statements. Check all the steps of closing your fiscal year in following materials: