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

  1. Call the accounting firm to request dates for audit. Confirm audit dates.
  2. Reserve conference room.
  3. Contact building security for temporary building pass card and parking sticker for auditors.
  4. Contact IT for WiFi access for the auditors.
  5. Request all accounting documents for audit by [date]
  6. Call auditors one week before audit date to make sure everything is set up.
  7. 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.
  8. Clear calendar and do not schedule meetings while auditors are here so you can help them with what they need.

Resources Needed

  1. Auditing firm [list name and phone number]
  2. Conference room
  3. IT department – reserve WiFi password
  4. 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:

  1. Establish guidelines for who can access data and how it may be accessed.
  2. Create a shareable privacy policy and post it to your website.
  3. Assess the risks after reviewing your data inventory. If there are any gaps in your online security, take steps now to fix them.
  4. Add anti-virus software to your systems and servers.
  5. 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.
  6. 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.
  7. 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

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: 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.

  1. 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.
  2. 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.
  3. 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

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.

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

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.

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.

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.

Accounting for Nonprofits: Why You MUST Tell a Compelling Story

As a consulting firm that provides accounting for nonprofits, Beck & Company wants to be sure that our clients have accurate and timely information to assist them with their needs. This includes updates on the latest FASB regulations that impact accounting for nonprofits.

By now, you have probably heard of Accounting Standards Update No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. This new update seeks to help nonprofits provide better clarity and transparency in their financial reports. It requires several changes on how information is classified and reported.

Register for this online webinar: Outcome Measures – Metrics That Matter for Nonprofits.

Numbers Tell a Story

People naturally gravitate towards stories. Since earliest childhood, we listen for stories, and we respond to them from an emotional, as well as logical, perspective. So, it’s not surprising that FASB’s new guidelines for nonprofit accounting attempts to help nonprofits tell a story through their numbers. Nonprofits struggling with the new accounting rules should keep in mind the impetus behind the changes. If you keep the reason in mind, it’s easier to understand why FASB has requested the changes it has and how your nonprofit organization can comply with them.

Helping Donors Understand Your Organization

Nonprofit organizations have a responsibility to their donors, patrons, sponsors, and members to tell a complete, comprehensive, and transparent story with their financial reports. People who give money to a nonprofit want to be sure that their money is used responsibly in support of the organization’s mission and activities.

Much has been made in recent years of nonprofits who have spent excessively on activities that donors view as superfluous. Although nonprofits are still free to spend as they wish within the limits of their charter, the new, enhanced transparency in financial reporting will help donors and the public understand how finances were spent.

Telling a compelling, honest and articulate story through your numbers can help donors understand more about your organization. The new FASB requirements, for example, include qualitative information added on how organizations manage liquid available resources and liquidity risks. The updated regulations also require reporting of expenses by both function and nature, two additional areas you can use as an opportunity to share information with your constituents.

Consider the information that goes into these sections. If you are reporting expenses by both function and nature, you can provide additional details that will help donors understand the importance of expense categories. The functional areas can help them understand the areas of your organization. Additional details can be provided to help donors understand the various activities supported by these funds.

Additional Changes in the New Guidelines

There are other changes in the guidelines that will be in effect for fiscal years beginning after December 15, 2017. These include:

  • Reducing the number of net asset classes from three to two
  • Continue allowing preparers to choose between the direct and indirect method for presenting operating cash flows
  • Eliminating the requirement for those who prefer the direct method to perform reconciliation with the indirect method
  • The reporting by nature and function, as well as reporting on liquidity risks and liquid available resources, as discussed in the ideas shared here.

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, change to follow FASB 958, or handle all types of accounting for nonprofits. Please contact Beck & Company today for further details.