When a funder asks for a cash flow statement
The books produce no cash flow statement, so here is how a non-profit gets one for a funder through its accounting firm and ties it to the bank.
By Achekam · · 5 min read · For Non-profit businesses in South Africa, Nigeria, Kenya
The funder's reporting template has four tabs: narrative, budget against actual, income and expenditure, and a cash flow statement. The first three your finance officer can fill from the books. The fourth stops everyone. A cash flow statement shows where cash came from and where it went, split into operating, investing and financing activities, and it does not come out of a monthly report at the press of a button.
In Achekam it does not come out of the books at all: the books do not produce a cash flow statement. This article explains what the books do give you, the raw material for a cash flow, how your accounting firm can prepare the statement, how that statement is built, and the check to run before it goes to the funder.
What the books produce today, and the gap a funder will notice
Your books in Achekam produce an income statement and a balance sheet as management accounts, plus the general ledger and the trial balance. The general ledger lists every posted line, and the trial balance shows each account for all time, for a period or at a date, and says whether debits equal credits.
What they do not produce is a cash flow statement. A funder will notice, because cash is often what it cares about most: did the grant money arrive, was it spent, and how much is left in the bank at the end of the period? A surplus on the income statement does not answer those questions, because income and expenditure include amounts not yet received or paid, and items such as depreciation that involve no cash at all.
Bank statements and the trial balance as the raw material
A cash flow statement is built from two kinds of information you already hold:
- The trial balance at the start and the end of the period. The changes between them, in debtors, creditors, grants received in advance, equipment and loans, are what turn a surplus into cash.
- The bank statements for the period. They prove the opening and closing cash figures and show the large individual flows, such as grant tranches and equipment purchases.
Make sure the bank side is complete before anyone starts. Achekam imports bank statements as PDF, CSV, Excel, OFX, QIF, MT940 or CAMT.053, and checks each import so that the opening balance plus movements equals the closing balance. A reconciled bank account at the period end is the anchor for the whole statement.
Asking your appointed accounting firm to prepare the statements
The straightforward route is your accounting firm. A business appoints its firm in Achekam by the firm's Achekam address or firm code, as accountant, auditor, tax practitioner, payroll provider or adviser, with an access level, and the firm accepts or declines.
A firm working in Achekam has a financial statements Studio. From a mapped trial balance, the Studio builds a draft set of annual financial statements with every figure calculated in code, including the directors' report, the four primary statements, policies, notes and a detailed income statement. The cash flow statement is one of those four primary statements.
When you ask the firm, be specific about what the funder needs:
| Ask | Why |
|---|---|
| The period the funder reports on | It may not match your financial year |
| Whether the funder wants the whole organisation or one grant | A grant-level cash flow is a different, narrower exercise |
| The funder's template, if it has one | So the lines match what the funder expects |
| The deadline | Year-end statements take time; an interim one may need agreeing |
How the firm's statements work out cash flow from movements in balances, and when its people type a figure instead
In the Studio, the cash flow statement's current-year column is worked out from the change in balances between the opening and closing trial balances. That is the standard indirect method: start with the surplus, add back items that used no cash, such as depreciation, and adjust for the movements in working capital, before showing investing and financing flows.
Staff at the firm can type their own figure for any line, and a typed figure takes priority over the calculated one. That matters for a non-profit, because some flows are better taken from the records than worked out from balances, for example the cash actually spent on equipment for a project when the balance sheet movement also includes a donated item. The firm should tell you which lines were typed and why.
Comparative figures for the previous year can come from a person's figures, last year's issued statements, or a prior-year set a person reviews.
ACCA's article on the statement of cash flows explains, assuming no prior knowledge, how cash flows are calculated and where they are presented, which is useful reading for a treasurer reviewing the draft.
Checking the cash flow ties back to the bank before it goes to the funder
Before the statement leaves the organisation, someone who did not prepare it should check one thing above all: the closing cash on the cash flow statement equals the reconciled bank balances at the period end, and the opening cash equals those at the start.
A short review list:
- Opening and closing cash agree with the bank statements and the reconciliations.
- Grant receipts in the period agree with the funder's own payment records.
- Large equipment purchases appear under investing activities, not operating.
- Any loan received or repaid appears under financing activities.
- Typed lines are explained and the explanation makes sense.
A funder report, in words
A food security organisation must send its main funder a cash flow statement for its financial year. The finance officer confirms both bank accounts are reconciled at year end and sends the trial balance and the funder's template to the accounting firm. The firm builds the statements in its Studio; the cash flow is worked out from the balance movements, with one line typed to separate a donated vehicle from equipment bought. The treasurer checks closing cash against the bank statements before the report is sent.
Getting it in hand
Find out now which funders require a cash flow statement and for which periods, and tell your accounting firm early. If your auditor is not on Achekam, when your auditor is not on Achekam covers sharing the figures, and reading the year's surplus is explained in reading your surplus when there is no year-end close. If your firm set the books up for you, see when your accountant sets up your books.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
