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Cloud-Based Nonprofit Financial Management: It’s Time to Make the Switch

Throughout all the years when you’ve been handling nonprofit financial management, you know that there comes a time when new technology becomes ubiquitous. The fax machine seemed novel at first but now is as common as a telephone. Telephones themselves gave way from rotary dials to touch-tone, then to cell phones and smartphones. Computers are now so commonplace that they’re as necessary as a chair and a desk to most offices.

Cloud computing has also entered this phase of adoption throughout the world of nonprofit financial management. Once seen as an intriguing concept, the cloud is now a part of most nonprofits’ daily business. It’s time you switched to the cloud.

Concerns About Switching to the Cloud

Some nonprofit managers have concerns about switching over to the cloud. They’re used to software running on computers within their office. Accessing everything through the Internet seems both odd as well as risky. Here’s are some of the potential concerns you may have about switching to the cloud and the facts.

Security: Cloud-based software is very secure. Your account is accessed through secure user names and passwords, and data is kept behind multiple firewalls for added security. Cloud providers must spend a great deal of time, money, and effort on security since they are keeping not just your data secure but that of hundreds of other customers. Cloud security is often better that security individual companies could enact on their own.
Costs: Cloud software is less expensive than site-based software because it is shared among multiple companies. Best of all, you do not need to invest heavily in expensive hardware and infrastructure to support a cloud-based system. All you need is a reliable and secure Internet connection and your typical PC, smartphone, or tablet to access cloud-based software.
Mobility: Older software had to be loaded onto an individual computer for users to access it. Cloud software can be accessed from any device connected to the Internet, so you’re not locked into using the same desktop or laptop. Data is also stored on the cloud so that users throughout your company can access the same information. It’s great for nonprofit financial management on the go.

How to Choose Your Cloud Provider

Ready to switch to the cloud? Choosing a service provider may take some time, but with the proper due diligence, you can find a great vendor who offers the support that your organization needs. When choosing a vendor, consider the following:

References: What do other companies using the vendor’s services have to say about their reliability and response time?
Support: Does the company provide 24/7 support? If so, how is the support provided – telephone, chat, help desk, user forums?
Data ownership: Who owns the data?
Backup: What is their backup plan? How often is their system backed up?
Security: Ask for details on the security provided on your account.
Downtimes: What is their average downtime, and why do their systems sometimes go down? Do they guarantee any level of service?
Costs: What are the costs and are they steady or do they fluctuate with data or storage use? What does the cost include?

Using these questions as a guideline, you can evaluate the services from several cloud vendors and make a smart choice for your nonprofit financial management.

Beck & Company: Cloud-Based Nonprofit Accounting Software

Beck & Company can help you choose cloud-based accounting software and other systems and services for your nonprofit organization. We are a CPA and business advisory firm dedicated to the nonprofit sector. Our many years of experience can help you update your financial compliance or handle all types of accounting for nonprofits. Please contact Beck & Company today for further details.

Make Accounting for Nonprofits Simple with Process Roadmaps

It’s a document your nonprofit can’t live without.

Have you ever looked up during a meeting and had that distinct deja vu feeling? “We’ve had this discussion before. I know we’ve talked about how to set up the tables for the annual charity ball at least a thousand times before!”

Well, maybe it wasn’t a thousand times before, but if your charity ball is an annual event, you’ve had the discussion about where to set up tables and chairs before. Most organizations do have a routine, a structure, a rhythm to their annual activities. Like the changing seasons, the annual audit, the annual charity dinner dance, raffle, or carnival is something you know will come up each year in the same season.

Yet many nonprofits find themselves scrambling to re-create such events. It’s as if the memory of last year’s event has been wiped from the minds of those who ran it. Given the volume of tasks the average nonprofit employee undertakes each year, it’s no wonder that they can’t remember the details of every decision. Hence the endless planning meetings and the deja vu feeling is so common to longtime nonprofit employees.

There’s a way to capture the information from activities that are annual events, organize, and share it so that if people leave the organization or change jobs within the organization, the new person leading the tasks has an easy way to learn what needs to be done. A process roadmap is a document that outlines the necessary tasks, people, equipment, processes, and other pertinent information so that you can smoothly hand off the task to someone else or duplicate it in the future. All it takes is a few minutes to document the necessary information to create your very own process roadmap.

An Outline of the Process Roadmap

A process roadmap simply lists the tasks needed to accomplish a project, with a detailed resource list added to flesh out the project. A simple process roadmap outline may look like this:

Name and title of the event or task
Last date the process was outline
Task owner (who manages the task)
List of steps in sequence of how to do the task.
Section that includes resources to complete the task
Due dates and timelines.

For an accounting audit, the process roadmap may look something like this:

Annual Nonprofit Audit

January 15

Owner: Jim Smith, Accounting Department

Steps

Call the accounting firm to request dates for audit. Confirm audit dates.
Reserve conference room.
Contact building security for temporary building pass card and parking sticker for auditors.
Contact IT for WiFi access for the auditors.
Request all accounting documents for audit by [date]
Call auditors one week before audit date to make sure everything is set up.
Send company-wide email the week before the audit to remind staff that the conference room is in use and that the auditors should not be bothered while they are working.
Clear calendar and do not schedule meetings while auditors are here so you can help them with what they need.

Resources Needed

Auditing firm [list name and phone number]
Conference room
IT department – reserve WiFi password
Building security [name, phone number, email address]

Due Date/Timelines

November – call auditing firm
January – audit date
- Two weeks before audit, reserve room and get parking spots.
- Week before audit, request WiFi access and send companywide email.

An effective process roadmap should be succinct; one page is usually sufficient. Make sure you keep the process roadmaps in a place where all employees can easily access them. The HR or accounting department are both great places to keep process roadmaps.

Make Accounting for Nonprofit Tasks Easier

Process roadmaps make accounting for nonprofits much easier. You can focus your time and energy on accounting when you don’t need to use it to figure out how to complete routine tasks.

Beck & Company: Accounting for Nonprofit Success

If you struggle with your accounting for nonprofits, Beck & Company can help. We are a CPA and business advisory firm dedicated to the nonprofit sector. Our many years of experience can help you update your financial compliance or handle all types of accounting for nonprofits. Please contact Beck & Company today for further details.

Accounting for Nonprofits: How Secure Is Your Data?

It seems like every time you turn on the television or browse the Internet, there’s word of another data breach. Even big companies who specialize in offering secure services like email aren’t immune. Hundreds of thousands of records are compromised each year, causing embarrassment to the companies affected by the data breach and heartache for those who are the victims of identity theft.

If you think your nonprofit is exempt from cyberattacks and data breaches, think again. Many nonprofits collect sensitive information that criminals would love to get their hands on: donor names and addresses, email addresses, credit card information. Passwords are also a hot commodity for criminals since they can be resold, and many people reuse their passwords across multiple sites. Any data that can be stolen from your organization puts you at risk, as well as your constituents at risk, for big headaches later.

There are many things that you can do as part of your accounting for nonprofits work that helps secure data and prevents theft. The following tips can help you manage the situation to stop problems before they start and handle them effectively in the unfortunate event that you do face a major data breach.

Tip 1: Find all your data sources.

You collect more data than you think. The first step to secure your data is to find and inventory all potential sources of data within your nonprofit.

Some of the more common areas where nonprofits collect data include:

Account set up: Do you encourage members to participate in online forums or set up an account profile on your site? That’s an area that collects a great deal of data.
Forums and chat rooms: Forums and chat rooms often require an account and these accounts collect more personal information from users during the set-up process.
Membership purchases and renewals: If people can join your organization through the website and fill out a membership application form, that’s another data source. Credit card information may also be collected via such forms.
Online stores: Member-only stores or online stores where your nonprofit sells items collect personal data, including mailing addresses, as well as credit card information and email addresses.
Employee records: Employees records include social security numbers and other information that could lead to identity theft.

Once you’ve listed all the places where your organization collects data, it’s time to find the best ways to protect it.

Tip 2: Create a data ethics policy.

A data ethics policy is an organization wide policy that spells out which data is collected, how it is stored and shared, and who may access it. Establish data-use goals and create a privacy policy for your organization. There are free privacy policy generators online that can help you easily and quickly set up an Internet policy for your website.

To create your data ethics policy, you can:

Establish guidelines for who can access data and how it may be accessed.
Create a shareable privacy policy and post it to your website.
Assess the risks after reviewing your data inventory. If there are any gaps in your online security, take steps now to fix them.
Add anti-virus software to your systems and servers.
Update your computer programs frequently. Companies issue patches and updates to fix problems and to close any gaps in the software’s programming that hackers have learned to exploit. Forgetting to update your programs leaves these gaps open to attack.
Perform due diligence on your data, especially if third parties have access to it. If you use an external fulfillment vendor or a drop shipping vendor for items ordered over your website, check on how they’re using and storing customer data. Make sure it aligns with your policies and directives.
Review mailing list protocols, especially if you use a list vendor or broker to mail our donation requests and other materials. Third-party mailing houses or email list vendors who send materials on your organization’s behalf should also be checked to ensure that data is being handled securely and carefully.

Tip #3: Create an action plan.

The last step is to create an action plan to manage your data security year-round as well as prepare for any potential data breaches. Although the IT department may be a good place to start with such a policy, accounting for nonprofits often means that the accounting department takes charge of such procedures. If so, your team should become well-versed in all the issues pertaining to data security and risk.

When it comes to preventing bad things from happening to good nonprofits, an ounce of prevention is always worth a pound of cure. Take steps now to prevent a data breach and ensure that the data your nonprofit collects remains safe.

Beck & Company: Accounting for Nonprofit Success

Accounting for Nonprofits: Goal Setting for Success

Accounting for nonprofits grows increasingly more complex with each passing day. New rules, regulations, and laws must be accommodated and followed to ensure compliance. Daily duties require your full attention, but then there’s the list of ideas you want to implement at your nonprofit organization. Your to-do list grows while your wish list languishes. Is there any way to tame the task-list tiger and gain control over what’s important to your organization’s success?

When it comes to accounting for nonprofits, the secret to managing your time wisely is in your approach to goal-setting. Goal-setting for accounting means establishing priorities and rubrics to weed out the unimportant so that you can grow what is important. The better your time-management abilities, the better you’ll be able to support your organization’s mission through critical accounting tasks and processes.

Questions to Ask to Establish Goals

Begin your goal-setting task by answering these questions. Then, use the answers to guide your priorities.

Can I delegate any of my tasks to my team? If you’re the only accountant at your nonprofit organization, you may be unable to delegate tasks to subordinates. But if you have a team backing you up, are there any tasks on your list that can be delegate to them to free up your time to focus on big-picture tasks?
Are you doing things just because they’ve always been done that way? Many organizations fall into the trap of continuing to do the same tasks every year simply because it’s always been done that way. Hosting the same event, running the same fundraiser, and enacting the same donation drives may be safe, but it may be unprofitable. Assess and evaluate the effectiveness of every activity before adding it to your task list.
Do we cling to favorite projects? Sometimes you keep tasks on your list simply because you enjoy doing them. These may be tasks that could easily be delegated to others, but because you love doing them, you keep them. Be objective during your evaluation of your work and see if you’re clinging to any projects because you have emotional investment in them.
Does this activity serve constituents? Align your activities to the needs of your constituents and you’ll find your priorities falling into place more easily. When the focus is on meeting your nonprofit’s goals, you’ll set your sights clearly on the tasks aligned with your mission.

Three Stress-Busting Nonprofit Accounting Tips

In addition to sorting your tasks based on the question above, the following three tips can help you prioritize your time.

Establish your group’s vision and purpose: When you create, establish, and share your group’s purpose and vision, it is easier to align the tasks of the accounting department with that purpose. Extraneous tasks fall by the wayside. It’s easier to say “no” to tasks that do not fit the group’s ideals, and that helps you prioritize and organize easily.
Diversify income: Just as in the for-profit world of investing, you want to diversify your income streams. Avoid relying on one grant or a single angel donor for all of your funds. Make sure you’re always cultivating new sources of income for your nonprofit organization. Partner with the fundraising team to ensure that they understand this concept too.
Measure results: Prioritize around those activities which generate the best results for your organization. Put your energy into those tasks with greatest chance of a good return on your time investment.

Better Time Management Enables You to Grow Your Margin

A strong nonprofit organization uses its margin to support its mission but you can’t focus on tasks that increase your organization’s margin when too many other tasks compete for your time. With this method, you’ll once again become master of your schedule, and your organization will flourish.

Beck & Company: Accounting for Nonprofit Success

Weather the Fraud Storm with Nonprofit Accounting Audit Services

Nonprofit accounting audit services can help you weather all kinds of storm. The “storm” most often feared is also a five-letter word: fraud.

Why do we fear fraud so much? It’s a taboo subject at many nonprofits. The word is never spoken. It’s as if by speaking the word, we fear we’ll bring it on ourselves.

Little children do crazy things to wish for bad weather like snow days. They’ll sleep with their pajamas inside-out, for example, following the old schoolyard fable that such sacrifices please the skies and encourage a nice blizzard and its attendance day off from school, sledding and snowman building, and hot cocoa.

We know wearing pajamas inside-out has nothing to do with the weather conditions that foster snowstorms, yet we exhibit the same type of superstitious behavior when it comes to fraud. We’re almost afraid to say the word for fear of calling it down upon ourselves.

Register for this Webinar Now: Survival Guide for Nonprofit Finance Teams

Instead of fearing the word, look it squarely in the eye. Face your fears and take proactive action to build a strong culture of honesty, integrity, and ethics within your organization. Make your organization so transparent that no one will think twice about uttering the word “fraud” because they know it’s impossible within your office.

Nonprofit Accounting Audit Services: Three Steps to Prevent Fraud

While we all wish life came with the same warning-sirens that herald a tornado or other severe weather alert, fraud does give off its own signals. They’re subtle, more like static than a siren, but you can still learn how to detect them in the nonprofit workplace and take steps to clear the static from the air so that fraud is difficult (or, we hope, impossible, for people to even consider). These three steps will be your warning and shelter from fraud.

Talk about it! Fraud isn’t a forbidden word. Some nonprofit workplaces are so afraid of even mentioning the possibility that they avoid talking about it altogether. If you don’t talk about the potential for fraud in the workplace, your staff won’t be on the alert for it. Make sure that fraud prevention, reporting, and resolution are all part of your employee handbook, training, and accounting practices. Don’t be afraid to talk to anyone who may have information about potential fraud. Keep an open-door policy so that everyone is comfortable speaking up if something happens.
Be aware: To prevent problems of any type, awareness is critical. Develop a culture of fraud prevention and awareness. Everyone should practice simple fraud prevention procedures such as always have two people count out cash or place checks into the safe. Create a series of best practices for fraud detection and prevention. As the accounting leaders in your organization, you have the opportunity to implement procedures to benefit your nonprofit.
Practice drills: Once everyone understands that fraud prevention is important to the organization and that the organization is serious about prevention, the last piece in the puzzle is to make sure that everyone understands the steps to take if they suspect fraud. “Practice drills” sound silly until you consider how many other emergency situations we practice for in life. Nearly every school, office building, and hospital practices fire drills and other emergency situations; shouldn’t your organization do the same to protect against losses? Practice “fraud drills.” Identify someone on the team who is a ‘safe’ person to report suspicions too. Have the numbers handy for your nonprofit accounting audit services so that if fraud is detected you have the go-to guys and gals on speed dial for immediate help. Write everything down into a simple procedure list so you have step-by-step instructions and action items at the ready.

With awareness, prevention, and reporting procedures in place, your nonprofit will be on dry ground when it comes to fraud alerts. While we all wish that fraud and other serious workplace events came with some kind of early warning signal, in the case of fraud detection, just being aware can be enough of a deterrent.

Financial Advice and Assistance for Nonprofit Organizations

Beck & Company Certified Public Accounts and Business Advisors specializes in nonprofit financial management, nonprofit accounting audit services, and issues pertaining to the world of nonprofits. We have extensive experience helping nonprofits of all sizes achieve their mission without sacrificing margin. Contact us for more information.

Preparing for Nonprofit Accounting Audit Services

The annual audit is an important part of nonprofit financial management. Nonprofit accounting audit services include a visit from the auditors, review of key financial information, preparing reports, and reviewing them with directors, board members, and other members of your organization. If it’s time for you to make the call to Beck & Company to schedule your audit, keep these considerations in mind.

Helping the Auditors Help You: Manage the Process

A good audit can really help your nonprofit thrive. Having organized finances along with the confidence that everything is in good order can strengthen relationships with your board and major donors. The information gained from the audit can also be used to shape goals, strategies, and methods by which you’ll continue to fulfill your organization’s mission.

In order to obtain a satisfactory audit, it’s important that you take control of the process within your company and do the prep work required. It’s simple to do, but a methodical approach ensures that nothing is left for the last minute.

Register for this Webinar Now: Survival Guide for Nonprofit Finance Teams

To manage the audit process, tackle the following logistical and operational tasks early in the timeframe intended for the audit:

Call Beck & Company to schedule your audit. Scheduling it early in the season means we can accommodate your timeline easier. Providing a few dates gives us all some room to work around previously scheduled meetings.
Make arrangements within the organization to have a room set aside for the auditors. Confirm that you have a working telephone line, computers or outlets available, and a quiet space for them. Have the WiFi passwords and instructions for calling outside the company printed and waiting for the auditors.
Secure parking spaces, if necessary, in your building’s lot, or provide travel directions to the auditors.
Gather together the necessary paperwork. Label things neatly so that the auditors know what they are reviewing.
Tell the staff to make helping the audit a priority. Brief the staff on your expectations for the audit. Make it clear that they should be helpful to the auditors while also avoiding interruptions.
Allow people time to help the auditors with tasks, if necessary.
After the audit, review the report with the audits. Ask questions and be sure you understand both their findings and recommendations.
Prepare to share the information with your Board of Directors.
After sharing with the Board, share it with your staff. Staff also needs to know what’s going on within the organization. Sharing the audit findings gives everyone a sense of clarity about the organization’s financial state and operations.
Ask the auditors if there is anything you should improve for next year’s audit. Make notes and get ready for next year!

Nonprofit accounting auditing services are an important part of running an active organization. If it’s time for your group to have its annual audit, these steps can help make it go smoothly and efficiently for all.

Financial Advice and Assistance for Nonprofit Organizations

A 10-K for Taxpayers: The Government’s Annual Report and What Your Nonprofit Can Learn

Accounting for Nonprofits Includes Analyzing Trends

Did you know that the United States government produces an annual 10-K? It’s called The Financial Report of the United States Government (a creative title if ever there was one) and it contains the annual reports from 150 federal entities. Accounting for nonprofits includes analyzing such documents and exploring trends that may directly impact your work and constituents.

The report is prepared annually by the Treasury Department. It contains nearly every brand of the federal government with the exception of the Federal Reserve, among others. The focus is on the government’s fiscal performance for the previous year, but it contains some useful gems of information about trends and future direction. It’s this information that may be valuable to your nonprofit organization.

Register for this Webinar Now: The New Roadmap for Nonprofit Finance

Which Way the Wind Is Blowing…

Reading through the information in the document, or the summaries provided by each agency, you can begin to glean some of the trends found within the jargon. Some of the government bodies use reporting methods similar to what you have seen from corporations, but others use specific government-formula reporting to account for their finances.

Among the notes that accompany the finances are useful bits of information that may be quite helpful to your nonprofit organization. For example, if you work for a nonprofit that provides health or health-related services, reviewing the Department of Health and Human Services’ information in the complete report may help you understand the government’s priorities. This in turn may lead to pursuing federal grants and other funds based on such priorities, or aligning your nonprofit with general trends to better serve people.

Super CPA to the Rescue

CPAs have an important role to play in the analysis of the federal budget information. With your experience and knowledge, you can translate the important points for your organization and help them understand the information that may affect their work in the new year.

The AICPA has published a special report to go along with the main document. What’s At Stake provides information for CPAs curious or concerned about the contents of the federal document.

Accounting for nonprofits is so much more than keeping the books and managing the money. It’s also being part of the leadership team that helps set policy direction, goals, and more. For those concerns about how various federal agencies may change their policies or adapt to the new year, reviewing The Financial Report of the United States Government may be helpful.

Financial Advice and Assistance for Nonprofit Organizations

Big Data, Big Worries: Ethics and Nonprofit Financial Management

Does the amount of data your nonprofit collects from donors, members, and other supporters worry you? It should. If you have big data, you have big worries, as well as responsibilities. An important part of nonprofit financial management is securing and managing the data that your nonprofit collects so that you safeguard the interests of all.

You Collect More Data Than You Think

At first glance, you may think you don’t collect all that much data. Sure, you’ve got a mailing list on file of people interested in your nonprofit’s work, and email addresses for that monthly newsletter to send out, but doesn’t everyone?

Consider how people donate to your nonprofit. If you accept credit card donations over the internet, website security becomes critical to prevent criminals from stealing data from your donors. Passwords may also be important if you have a member-only area on your site where you host forums. When you really sit down to analyze your organization’s data collection methods, you’ll quickly realize that you’ve got more data than you initially thought.

Keeping Data Safe: Creating a Data Ethics Policy

Register for this Webinar Now: The New Roadmap for Nonprofit Finance

Many organizations are creating their own data use and security ethics policies to help safeguard customer privacy and maintain the high level of trust they’ve worked so hard to build with their constituents.

To create your own organizational data ethics policy, follow these five tips.

Establish data-use goals: Knowing exactly why your organization collects data, and the use to which you will put it in the future, is the starting point for a data ethics policy. You’ve got to know the reason why you’re collecting the data in the first place to establish guidelines about its use. Some common reasons for collecting customer data include future marketing, such as requesting that interested people sign up for your email list so that you can send them donation solicitations later.
Create a privacy policy: Privacy policies are ubiquitous on websites but an important part of your data security and ethics work. You can create a privacy policy in several ways. There are privacy policy generators online that help you build a simple boilerplate privacy policy for your website. You can also ask your legal counsel for a recommendation. Once you create your privacy policy, post it online.
Assess the risks: Take a data inventory to understand exactly what data you have stored and what the risks are of maintaining it. Know what you have to work with, how and where it is stored, and who has access to it. Lastly, determine who controls access to the data and the steps your organization has taken to safeguard it.
Add safeguards: Every day it seems that hackers have found new ways to break into websites and steal personal information from customers. It may be worthwhile to consult with an internet security expert to make sure that your website and network have the latest security safeguards in place. Updating software and plugins for websites, adding Akismet to WordPress-based sites to screen for virus-filled spam, and using other simple measures may go a long way in preventing theft and security breaches.
Conduct due diligence: If third parties have access to your data, such as mailing house or email service providers, do you conduct due diligence to ensure that their safety procedures match or exceed your own? Few organizations give much thought to who in other companies may use or access their data. Make sure that you have steps in place to screen companies and understand their data security policies. Common third-party vendors who may access your data include marketing agencies, mailing list companies, list brokers, email service providers, and fundraising organizations.

Nonprofit Financial Management: Data Security Policy

Once you have the basic information about your current data collection and use, formulate a general ethics policy and procedure document that can be shared throughout your organization. A little work now will come in handy later if the unthinkable happens and you have a data breach on your hands. Your constituents will thank you for taking extra steps to safeguard your data.

Financial Advice and Assistance for Nonprofit Organizations

Nonprofit Financial Management and the Responsibilities of CPAs: What You MUST Know

CPAs play an important role in shaping federal financial policy. But to shape any type of policy, you need to understand the basics underlying the current structure. One way to do this is to review the 10-K of an organization. Surprisingly, the federal government files a 10-K. Citizens can review it, and CPAs should also review it for a peek behind the curtain of the often-misunderstood government agencies and bureaus.

The Government’s 10-K Report: What You Need to Know

The government’s 10-K report includes financial reporting for 150 government entities. Some of these entities may impact your nonprofit organization, which is yet another reason why nonprofit financial managers and accountants should note the reports and make it a point to look at them.

The reports include:

Financial position and condition
Revenue and costs
Assets and liabilities
Financial obligations and commitments
Analysis of important financial issues
Significant conditions that impact future events

This should be enough information to provide a comprehensive and detailed picture of the government entity’s financial picture. The Federal Reserve and a few other entities are excluded from reporting.

These reports are either traditional, accrual-based accounting, such as you will see in the corporate sector, or nontraditional sustainability reports. Each report includes eight basic financial statements, with details on many aspects of the current and future budget.

What’s at Stake – and What You Need to Know

The complete analysis of these reports is available in the Journal of Accountancy. What CPAs and nonprofit financial management experts need to know is this: many of the budgets show disturbing fiscal gaps that, if left unchecked, can be dangerous for the economy.

The AICPA discusses the use of the U.S. government’s financial statements as they pertain to the nation’s fiscal health in a paper entitled “What’s at Stake? The CPA Profession on Federal Fiscal Responsibility”. Greg Anton, CPA, CGMA, a past chairman of the AICPA board of directors explains the far-reaching consequences if current policy is kept in place.

Although CPAs can probably understand the technical aspects of the document, reviewing eight statements from 150 federal agencies would take a considerable amount of time. There’s a layperson’s guide which might come in handy: the Guide to Understanding the Financial Report of the United States. This may prove easy reading, from which to grasp key insights useful for CPAs.

One of the most troubling aspects of this report is that, despite 19 years of releasing the report, the GAO has been unable to release an audit opinion. Many of the agencies included within the report have been audited, but certain groups like the Department of Defense remain an exception.

The AICPA urges CPAs to become better informed and to raise questions and concerns with local elected officials. CPAs are in a unique position to understand and explain these policies to local business leaders and others. As a nonprofit financial management leader, you are also in a special position of responsibility to your constituents, and some of this information may have deeper meaning for your nonprofit.

Understanding the information and taking the appropriate actions through your local elected officials is one way that CPAs can demonstrate important leadership skills in the nonprofit sector. Citizens and policymakers look to CPAs for guidance on important matters. Elected officials too need guidance on the technical aspects of federal budgeting, and concerns from local taxpayers. CPAs play an important role in this process.

At Beck & Company, we offer CPA services, nonprofit accounting, and business advisory functions for nonprofit organizations. Contact us today if you would like more information about our services or help with your nonprofit business needs.

The Top Three Reasons Why Internal Controls Are Vital for Accounting for Nonprofits

No one likes to talk about internal controls. It makes people feel uncomfortable to think about a colleague or coworker stealing from the company or otherwise doing something wrong. Yet internal controls are necessary for accounting for nonprofits, the same as they are necessary at for-profit companies. Some might even say they are even more important at nonprofits, which may run with fewer staff or more personal responsibility.

Anyone can be tempted by lax security, financial need, or simply a bad moment. Without internal controls in place, you aren’t doing your best to prevent people from succumbing to temptation. Internal controls may feel like we don’t trust our colleagues or volunteers, but they help keep people honest.

It’s good to remember the old adage, “If anything can go wrong, it will,” especially when it comes to handling money.

Internal Controls for Typical Scenarios

Accounting for nonprofits includes handling payroll, donations, accounts payables, membership fees and dues, and other financial tasks. There should be routine controls in place for all common tasks including:

Storing checks for bank deposits: If you store checks in the office until someone can take them to the bank, have safeguards in place to secure the uncashed checks. Keep them locked in a safe or in a desk drawer. Make sure that only one or two people have access to the safe or drawer. Have two people present whenever each is opened so that one can verify the items removed or placed inside.
Handling petty cash: Cash may be the most tempting item since it is difficult to trace if stolen. To prevent thefts or even mistakes, have at least two people present when petty cash is counted in or out. Verify the amounts by having the second person count out the cash, too. Make sure that employees sign receipts for petty cash and provide receipts for items purchased for petty cash, including receipts for services such as taxi or car service.
Fundraising events: Raffles, sales and other events may generate a lot of cash in small bills. Volunteers working raffle and sales tables may handle cash and store it at the event in a cash box or other unsecured box until it’s time to finish the event. Train volunteers and workers to never leave cash unattended at the booth or table. Instruct them to place all cash into the secure box or official cash register, never in their pockets or purses. Reconcile ticket sales with cash that night before everyone goes home to make sure no one has made mistakes.
Payroll: Padding timesheets with unworked hours is another form of theft that needs internal controls to prevent. Ask all managers to authorize employee overtime, and have a supervisor sign off on manager’s overtime reports if they are not salaried workers.

These steps are simple to put into place and can prevent small actions that can add up to significant losses over time. Although internal controls may feel like ‘spying’ on your employees or that you don’t trust them, they are a must for all nonprofit organizations.

The idea behind internal control policies is to trust yet verify. You must have a witness when handling money, and spit up cash responsibilities and duties among several employees to prevent anyone from being tempted. The more controls you can put into place and make a regular part of your company’s policies, the easier it will be to prevent problems.