Thursday, February 19, 2009

Banks find accounting tougher than non-profits?

An important take-away, from  last hearing of the congress committee where the nine top bank CEOs presented their case regarding the update on new loans and how the bailout funds were spent, was the banks stand that the money that has been injected into their balance sheets can not be tracked separately.
   
Have been catching up a little bit on the non-profit space these days. Interestingly this article here article explains that, what banks claim as impossible, non-profits do on an everyday basis. 
Apparently it a basic requirement in non-profit accounting to track the money received for any particular project is spent on that project only. The link here.

The article calls it, soup-kitchen accounting. Interesting right? But hold on before you blame the banks, maybe the never received the money at all. This may sound quirky but another article points that the government has been actually injecting capital into bank holding companies and not banks. With banks barely managing to stand upright, shareholders have non incentive to inject the money into those subsidiaries. Link

Maybe we all have been whipping the wrong poster boy.

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