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Credit Card charges & end of fiscal year. Legalities/procedure standards?

Sera Cocora
$organization

I'm looking for a legal &/or financial advice from the state of CA on procedures regarding gift entry for the crossover period between two fiscal years.

The fiscal year dates we are just closing out for FY2012 are from 07-2011 to 06-30-2012. We are currently booking new gifts for checks dated for 6-30-2012 into FY2012. Any checks dated after/on 7-1-2012 goes into 2013 (7/2012 to 6/30/2013).

Which from an accounting & legal perspective is ok. However I'm wondering if  the procedure is different for credit cards? If we charge credit cards on 07-01-2012 (which is technically the 2012/13 fiscal year) - when are we allowed to allocate this new money to the prior fiscal year? We've been booking these are pledges, then fulfilling the pledge for FY2012, but I'm wondering if this will get us in trouble with the auditors.

What if we have sufficient backup (email from a donor) or verbal agreement from the donor that they want this money for the fiscal year that has just barely passed?

 

Thank you to anyone who can help.

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  • $organization
    I agree with Jean.  Our policy is to book any gift that comes in response to a specific request for X year funding to that year for a month after the end of the fiscal year.  So if a gift comes in from a list that was targeted with a "please help us pay for FY X" message, it is credited to FY X.
     
    From: Tessitura Finance Forum [forums-finance@tessituranetwork.com] On Behalf Of Jean Rivers [bounce-jeanrivers5606@tessituranetwork.com]
    Sent: Friday, July 06, 2012 7:14 PM
    To: Leslie Fillingham
    Subject: RE: [Tessitura Finance Forum] Credit Card charges & end of fiscal year. Legalities/procedure standards?

    Sarah,

    I think you or your finance person might want to shoot the auditors an email asking about this issue if there is concern about their reaction.  I’ve found that most auditors are happy to talk through situations like this.

     

    That being said, it is the donor’s intent that matters.  If there is specific donor instruction regarding which fiscal year the contribution applies to, then the auditor should not have any problems with the payments being booked as pledges.  It is best to have that intent in writing.  Email has been sufficient for our auditors.  Again, this is something you can ask your auditors about.  Auditors are typically happy to tell you what they would like to see for backup regarding transactions.

     

    I feel that the nature of the transaction is not changed by it being paid for with a credit card. 

     

    Be well,

    Jean




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  • $organization in reply to Leslie Fillingham

    Thank you all so much! Our finance department decided to use the same method as the both of you. They said that this should be legal & the auditors will most likely not have an issue with this. We have been booking all our payments as pledges first, posting that as of the passing fiscal year, then booking payments separately, fulfilling the pledge, and posting on the date of the charge.

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  • $organization in reply to Leslie Fillingham

    Thank you all so much! Our finance department decided to use the same method as the both of you. They said that this should be legal & the auditors will most likely not have an issue with this. We have been booking all our payments as pledges first, posting that as of the passing fiscal year, then booking payments separately, fulfilling the pledge, and posting on the date of the charge.

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