Political organization accounting and compliance are tricky, time-consuming, and extremely complicated. Only the best of the best can tackle it successfully.
Consequences of mistakes, missteps, and incomplete compliance include potentially huge financial penalties, onerous legal liabilities, and a ruined reputation. And, the pitfalls are extremely numerous, right down to the choice of political accounting software.
Following are thoughts from a political accounting software chief architect at software company ISPolitical:
Should you use QuickBooks for political accounting?
Political accounting is not the same as business or personal accounting. QuickBooks is meant for small business or personal accounting. It does that well. For political accounting, QuickBooks is a bad option.
Here are 5 reasons why off the shelf accounting tools like QuickBooks don’t work for political accounting…
Political accounting transactions are different. QuickBooks doesn’t support political accounting transactions like non-monetary in-kind contributions, conduits, enforceable pledge, auctions, or contribution splits…
Compliance reporting is the point of political accounting. You are required to disclose your campaign’s financial history with every governing agency. That disclosure must be in exactly the format the agency says. It must include all data the agency says…
With QuickBooks, you are on your own. QuickBooks cannot generate compliance reports.
Almost every agency restricts the amount of money donors can give your campaign. You need to keep track of how much a donor gives over time. These laws can be complicated…
Challenger Doug Applegate was in a tight race. Then, a disclosure report showed a $400,000 drop off in cash. His campaign used a filing application that couldn’t reconcile. A few big transactions were left out of the data imported into their filing tool. A quick reconciliation before filing would have caught this. There was a clamor in the local press. Even some national press picked it up. His defeat was one of the closest in the country. It’s possible that the bad press cost him the election…
The donor most likely to give you money is the donor that’s already given you money. Analyzing what you’ve accomplished with fundraising, keeping all your financial data in one place is critical for getting the most you can.
Political organization accounting and compliance are critically important to success. Accounting done right can win the day. Accounting done wrong can land you in huge trouble with the IRS or state, and even the Federal Election Commission—which does have requirements tied to state as well as federal organizations. Consequences of inaccurate, incomplete, or untimely accounting reporting can include huge monetary penalties, legal prosecution, and destruction of reputation once the word gets out.
John P. Morse, CPA, former Colorado Senate President, knows politics and political organization accounting and compliance inside and out. He and his team are specialists in helping tax-exempt political organizations, including such political action committees as PACs and SuperPACs.
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