Building a financial and accounting system for Gitcoin

In fact, most crypto projects, even the large ones, do not have any financial or accounting systems and do not make any financial plans.

But I believe that building a financial and accounting system and a financial plan are essential and important.

The system should be able to produce financial statements and financial plans regularly and present them to the community for discussion and auditing.

It gives confidence in the crypto project and makes the position of the crypto project stronger in front of investors.

It makes a big difference when you try to communicate with an investor and try to convince him to invest in your project and you do not have any financial statements or any financial plans.
It will be easier if you provide him with reliable financial statements and if he sees a realistic financial plan.

This achieves the rules of transparency and control and makes the investor more interested in investing in a project that has an integrated financial system.

In many forums of decentralized organizations, this topic is always discussed and often demanded by many members of the community.

Also, building a financial and accounting system that helps in developing a comprehensive strategic plan

This system should be able to perform the following tasks:

Part 1: Financial Accounting

1.Preparing basic financial statements: balance sheet, income statement (profit and loss), and cash flow statement

2.Organizing and building a chart of accounts for Gitcoin

3.General ledger accounts

4.Organizing all accounts of external and internal parties dealing with Gitcoin

5.Organizing revenue, expense, and treasury accounts

6.Organizing accounts of fixed and current assets, short-term and long-term liabilities

7.Trial balance, accounts receivable, and accounts payable

8.Able to provide detailed, clear, and simple reports about ox activity for community discussion, especially expense and revenue reports.

9.Ability to build financial statements and the accounting system in accordance with international accounting standards

10.Gitcoinshould build an accounting system capable of dealing with different taxes, laws, and financial regulations.

11.Building a cloud system to store all financial documents related to the transactions of Gitcoin. There is no accounting system without organized and preserved documents.
that prove all financial transactions

12.Follow Gitcoindues and obligations and set a schedule for collection and payment.

13.Developing and preparing financial regulations and laws that regulate and control any expenses or money paid from the Gitcoin treasury (with the help and supervision of the Gitcoin community)

Part 2: Forecasts and Budgets

Always begin by preparing a revenue budget.
Prepare it based on expectations for revenue or on planned goals.

For example, in the current period, we want to achieve greater revenues.
Based on a realistic plan, you prepare a budget, including the numbers we want to achieve.

Based on this budget, we prepare the operating budget and the rest of the budgets. It may be fixed or flexible.

Now we have the expected numbers.

At the end of each period, we calculate the difference between what was expected and what actually happened, find the variance, analyze it, and find out why it happened.

for example

We expected to spend $10,000 on a particular item, but we spent virtually $11,000.

What is the reason for spending $1,000 more than the budget?

It may be a normal cause, like a price change, or maybe for another reason you should check, and it’s all written in a report.

The accounting system periodically prepares a report showing the variance between actual numbers and budget, explaining the reasons for it, and discussing it with the Gitcoin community.

These discussions improve the way we prepare for the budget in the following period.
and in this way it achieves community control and effectiveness in the optimal use of financial resources.

It also helps in converting Gitcoin plans into realistic financial plans, proper planning, and increasing confidence in the management of Gitcoin.

Capital budget

Developing a new product or adding parts to an existing product may be a complex matter that requires a lot of money, time, and effort. It is considered an asset owned by Gitcoin, so it may need to build a capital budget for it.

Part 3: Financial analysis and financial models

Financial and accounting systems should be able to perform vertical and horizontal financial analysis and extract

1.Liquidity Ratios 2.Activity Ratios 3.Profitability Ratios 4.Leverage Ratios 5.Market Ratios

able to build financial models that serve Gitcoingoals

Analysis of financial ratios and horizontal and vertical comparisons of the statements and financial reports give a better idea of the strengths or weaknesses in Gitcoinand
give ideas about possibilities of development and give the management better ideas.
about the situation in Gitcoinand how to move forward.

Also, doing a financial analysis of competitors for Gitcoin(if possible) and comparing Gitcoin’s ratios with others in the same activity gives an idea of whether Gitcoin’s performance is optimal or if there are things that need correction.

Financial analysis is very important and should be done regularly.

Part 4: Cost Accounting System and Opportunity Cost

Gitcoin is an ambitious company that is always striving to develop existing products and
In the future, maybe build new products.

It also has a desire to expand and include new members of the team.
All of this needs a strong costing system that regulates the process of calculating
the costs of implementing Gitcoinideas

also be able to calculate the opportunity cost.

For example, if we have a great idea, it will cost $10,000.
and will generate revenue of $15,000, should we implement it or not?

It depends on alternative opportunities. Perhaps there are other ideas that also cost $10,000, but revenues will reach $20,000, so this will be better than the first.

Gitcoin should have a system for calculating opportunity cost, which helps in making decisions.

Part 5: Accounting Audit System

Always check all numbers, whether expenses and revenues, with original documents, verifying the correctness of all financial operations and integrity, and make sure that there is no manipulation, fraud, error, or misuse of funds, either intentionally or unintentionally.

and that any financial decision is the best and achieves the interests of Gitcoin; constantly stocking financial documents of Gitcoin in a way that can be easily viewed at any time; and verifying the validity of the declared financial statements.

and immediately reveal any financial transaction that is suspected to be against the interests of the Gitcoin community.

The financial and accounting systems should monitor the use of funds.

Part 6: Managing Treasury, Financial Resources, and Token Control

The financial and accounting systems should develop a plan for the optimal use of the Gitcoin Treasury and divide it in a way that achieves the maximum benefit for Gitcoin and reduces financial risks to a minimum.

Gitcoin’s financial resources should be managed only according to the will of the Gitcoin community.

The price of tokens is attempted to be controlled by raising or lowering it according to the financial plan and the goals to be achieved.

Part 7: Financial Risks and Financial Opportunities

The financial and accounting systems should constantly

Write reports about potential financial risks and opportunities and develop plans to deal with both of them.

and present them to the community to think about the best solutions.

Also, if there is a financial shortage, make plans to cover it.

Part 8: Attracting more funding and investment

The financial system should make plans on how to attract more funding and investments to develop Gitcoin.

Provided that these plans do not affect the independence of Gitcoin or create dangers or problems for Gitcoin,
The priority is for the independence of Gitcoin and to always be safe.

These are only broad lines, and the subject is open to discussion.

I hope that the community will interact to lay the foundation for building an accounting and financial system that achieves transparency and integrity.

and be able to prevent any financial risks from Gitcoin, which helps the management.
in setting a development plan and increasing confidence in the management of Gitcoin

So building an integrated accounting and financial system is not difficult.
All of the above can be achieved without much effort.

I hope the community will share its opinion in the comments.

I hope in the end we can build the broad lines for the establishment of a financial and accounting system for Gitcoin.


I would love to be part of this kind of work stream.

No need to re-invent the wheel, let’s use prove solutions like :arrow_heading_down:

ERPNext is the world’s best free and open source ERP

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Thanks for your interest.

ERPNext is a good ERP program. Good suggestion.

It is possible to use ERPNext or any other open-source software, such as Odoo. There is also specialized crypto-accounting software that can be useful and more convenient.

Also, in the past, I had a business in the field of accounting and ERP programs, so I am able to build a financial and accounting program that exactly matches what we need, and we can constantly add to it any reports and additions for details related to the field of crypto.

But in most cases, we will not need to use any accounting program for the following reasons:

If we make the decision to start building an integrated financial system and provide unique financial insights to the GitCoin community

The data that will be available to us will only be the data available on this forum and some data that can be obtained from Dune Analytics and some other crypto analysis tools.

The data will be limited and perhaps incomplete, so we do not need an accounting program to process it. The data can be processed using Google Sheets and Excel, and an open-source version such as Open Office or Libre Office can be used to deal with Excel files.

However, we can do a lot with this little data, and through it, we can build an integrated financial system.

Also, if we make a final decision to start this matter, I should mention some points.

Through LinkedIn, I know very well that the Gitcoin team already has many data scientists, data analysts, researchers,and employees in many areas, and it deals with many external consulting parties, so it is logical that no one will be interested in helping and wasting their time with that or with anything else because they already have what they want. So, any attempt will be without any assistance or participation from anyone.

Therefore, work on this or any other matter will be voluntary and free of charge, without financial compensation, and open to any member of the community who wants to participate in it.

Only community members will be interested in the reports we will present.

For sure, whoever engages in providing such services will become known among community members.

This experience will benefit him later, perhaps in other areas.

Another point is that most decentralized autonomous organizations (DAOs) do not have any financial or accounting systems. Only a few of them have financial systems, and even that number of decentralized organizations actually have accounting and financial systems. None of them have a complete and perfect one.

Therefore, the experience of attempting to build an integrated and accurate financial and accounting system for DAO, even if it doesn’t work perfectly, will be very good for those who participate in it.