Monthly accrual (yes or no)

[ILLMAS]

Let’s say non-profit has a bimonthly payroll:

1–15 is paid 2-3 days later

16-end of month is also paid 2-3 days later

For example pay period July 16-31 was paid on August 2, 2019, would you post an entry to reflect it in July?  And do this for every month?

[Evan S. Golar]

Answer isn't that simple.

Does the entity report financial activities on the cash basis or accrual basis?

[ILLMAS]

Accrual basis with fixed salaries, pretty much the payroll is the same every pay period, I would understand at December 31, 20XX making an accrual for being paid in a new.

[Evan S. Golar]

If on the accrual basis, then accrue salary at month end if paid shortly after month end date.

It doesn't matter if the salary is fixed or variable, so long as it's determined by month end.

[Abby Normal]

I wouldn't worry about this for a nonprofit. I also would not report monthly for a nonprofit. Every nonprofit in my town that I became treasurer for (including my Quaker meeting), I switched from monthly to quarterly, because nonprofits have so much variability from month to month, it was meaningless and confusing to review monthly. It was a waste of the everyone's time to do monthly financials, and left people more confused than informed.

[jklcpa]

I agree with Abby, and if the payroll is fairly consistent from pay to pay, the accrual probably doesn't materially change that expense or the overall reporting anyway. If that is the case, I would book accruals and reversals only for final year-end reporting.