Whereas many property managers don’t have accounting backgrounds, managing their group’s monetary reporting remains to be on almost each PM’s to-do listing. If in case you have been tasked with dealing with accounting duties on your property administration firm, it’s a good suggestion to maintain GAAP accounting ideas in thoughts. Right here’s an summary of GAAP accounting and the way it may help you run your enterprise with extra accountability and transparency.
What’s GAAP accounting?
The phrase “Usually Accepted Accounting Ideas (GAAP)” refers to a set of rules which can be generally utilized in monetary reporting. These accounting requirements observe ten distinct ideas which can be issued by the Financial Accounting Standards Board (FASB), an unbiased nonprofit group accountable for setting accounting requirements for publicly-traded firms in the USA.
Notably, GAAP accounting requirements are barely totally different from the Worldwide Monetary Reporting Requirements (IFRS), that are utilized by many nations across the globe. Nevertheless, lately, the FASB has made efforts to make GAAP ideas higher match the worldwide customary.
The ten ideas of GAAP accounting
There are ten GAAP accounting ideas in whole and they’re as follows:
The Advantages of Following GAAP Accounting Ideas in Property Administration
Whereas all publicly-traded firms in the USA are obligated to observe these requirements when issuing their stories, non-public firms are allowed to decide on whether or not or not they need to adhere to them. As a property supervisor, you’ll most probably be ready to choose on your group.
There are a lot of advantages to adhering to those ideas, together with:
- It helps you intend forward. Accessing dependable and constant monetary data makes it simpler to determine traits and forecast into the long run.
- It maintains consistency. Constant reporting makes document preserving easier and reduces the danger of fraud.
- It makes it simpler to determine areas of enchancment. GAAP accounting offers you a practical image of your group’s efficiency, which may help you to higher determine its strengths and weaknesses.
- It builds belief. GAAP accounting offers you the power to offer your purchasers with dependable and sensible monetary data, which might make it simpler for them to belief you to care for their hard-earned revenue.
For his half, Michael Morse, a Product Supervisor with Buildium, strongly recommends that property managers observe GAAP accounting ideas each time doable. After working within the trade for a number of years, he sees it as a finest observe that may show you how to keep away from severe legal responsibility within the occasion of an audit:
“It may be a matter of your fame and even your livelihood. In the event you’re ever audited, you want to have the ability to again up your reporting with monetary documentation. In case your books are a large number and you may’t do this, you could possibly be fined, you could possibly lose your license, and you could possibly even go to jail. [GAAP accounting] offers you a system for sustaining the documentation you’ll want should you’re ever audited sooner or later.“
Is There Software program to Make GAAP Accounting Simpler?
Whereas GAAP accounting does provide some substantial advantages, there’s no denying that it additionally creates extra work. As Morse places it, “property managers are coping with a lot guide labor each day and GAAP accounting does add plenty of paperwork. Nevertheless, automating a few of that work could make it simpler.”
There may be software program on the market that may do exactly that, chopping down on the period of time you spend pouring over spreadsheets. Worldwide Monetary Reporting Requirements, specifically, provides a bunch of options that may assist simplify the GAAP accounting course of.
Right here’s a better have a look at a few of the options that may make your accounting duties extra manageable:
As Morse places it, “Buildium provides property administration accounting instruments for individuals who aren’t accountants. Lots of the options that we construct into Buildium are arrange with GAAP accounting ideas in thoughts. We do the heavy lifting so as to simply set it and neglect it.”
The Backside Line on GAAP Accounting
On the finish of the day, following GAAP accounting ideas is prone to be one of the best plan of action on your property administration firm. It not solely helps you streamline the monetary reporting course of and offers you with a practical image of your group’s monetary well being, but it surely additionally lets you construct belief along with your purchasers, which is essential to enterprise progress.
Nevertheless, you don’t must shoulder the added administrative burden of adhering to GAAP accounting practices alone. Buildium may help you generate stories which can be GAAP-compliant and automate most of the processes that go into preserving your group’s data updated.
In the event you’re curious to see how Buildium may help you streamline your monetary reporting, give our free trial a spin as we speak.
Learn extra on Accounting Accuracy