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What Does a Fund Accountant Do?

A fund accountant working.
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  • Written By: Margi Williams
  • Edited By: Angela B.
  • Last Modified Date: 10 September 2014
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The fund accountant position is traditionally found in a nonprofit organization or branch of government whose purpose is dedicated to fiscal accountability. In that role, the individual separates income into categories, or funds, to identify both the source and how the funds are used. Consequently, a fund accountant is responsible for demonstrating good stewardship practices, determining the organization’s financial position, planning and budgeting, monitoring cash flow, and communicating with key stakeholders.

In fund accounting, the goal is to categorically allocate financial transactions between general and restricted funds, because each fund has a specific and authorized purpose. The general fund covers operational expenses such as employee wages, office supplies, and maintenance expenses; by contrast, special funds are restricted to ensure they are only used to fund activities specifically stipulated by the provider or donor of the funds as approved expenditures. In essence, fund accounting allows organizations to monitor spending activity to ensure restricted funds are properly allocated. While it's important for an organization to properly allocate its money from a business standpoint, it's also important to those people providing the organization with the funds. People who give money, whether to a charity, a business or another organization, want to know the organization is using the money effectively.

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A fund accountant is responsible for demonstrating accountability and stewardship by assessing whether the organization used the funds appropriately and documented it properly. A fund accountant also determines a company's financial position by identifying available resources, their value, and any financial impact the organization may experience if they were replaced or removed. Fund accountants group assets and liabilities according to the specific purpose for which they are to be used to ensure restricted and unrestricted funds remain separate.

Traditional profit-oriented businesses focus on profitability and have one general ledger. Conversely, fund accountants maintain more than one ledger, depending on donor and spending activity. For instance, there may be a general account used for unrestricted funds and a building fund account used to track money available for construction.

Budgeting is also a key responsibility, because fund accountants must determine how funds are allocated and what resources are required for a particular project. Additionally, a fund accountant is responsible for evaluating the organization's fiscal performance in comparison to proposed objectives to guarantee operational efficiency. This position evaluates fund activity to monitor spending activity and plan for contingencies. Finally, an effective fund accountant concisely communicates financial information essential to decision makers in a clear, reliable manner.

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