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.

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

  1. 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.
  2. 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.
  3. Secure parking spaces, if necessary, in your building’s lot, or provide travel directions to the auditors.
  4. Gather together the necessary paperwork. Label things neatly so that the auditors know what they are reviewing.
  5. 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.
  6. Allow people time to help the auditors with tasks, if necessary.
  7. After the audit, review the report with the audits. Ask questions and be sure you understand both their findings and recommendations.
  8. Prepare to share the information with your Board of Directors.
  9. 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.
  10. 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

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.

Making Mindful Choices in the World of Nonprofit Accounting

Each day, your nonprofit organization faces many choices. One area where choices are of supreme importance is in the area of nonprofit accounting. Choosing how you classify donations, whether to give a trusted employee a raise, or how to comply with the new FASB 958 regulations are all choices that must be weighed and prioritized based on urgency.

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When faced with myriad choices, it is easy to feel overwhelmed. As Washington DC nonprofit advisers, we have worked with many nonprofit clients to help them identify and prioritize key elements of their accounting activities for maximum business impact. Here are several tips to help you make mindful choices about your financial and accounting needs.

Three Tips for Nonprofit Accounting to Help You Set Priorities

  1. Focus on strategic clarity: Clarity of purpose, mission and vision is essential for all good business management, but especially for nonprofit accounting. When you clearly identify your organization’s mission and vision, you will find it easier to prioritize the essentials. Activities in direct support of your mission are funded first, with secondary activities funded next, and so on. Developing strategic clarity can be difficult if you are not used to this type of work; a nonprofit business adviser can help.
  2. Diversify income sources: In other words, don’t put all your eggs in one basket. Relying upon one source of funding for the majority of your organization’s support can be catastrophic if something happens to the funding source. Grants may end; donations can dry up if the economy sours. Diversification of your income stream is equally as important as diversifying your investments. Diversification spreads out the potential risk if one stream dries up.
  3. Measure outcomes: Measuring outcomes isn’t just for the for-profit world. Nonprofits should also measure the outcomes of their efforts. Measuring donor campaign results, educational activities, and other projects just makes sense. It is only measuring how well you achieved your objectives that you can prioritize funding in future years. Knowing that one activity achieved its objective while another fell short can help you decide whether additional funding, staffing, or publicity can change the dynamic or not.

Asking the Tough Questions

Asking the tough questions about initiatives can also help you set your goals. It may be difficult to learn that a favorite activity doesn’t meet your revised mission statement, but it is better to learn this now than to continue spending resources unwisely.

Ask yourself:

  • Are we continuing any activities just because we’ve always done them? Some companies continue with charitable events, marketing campaigns or other activities in the same manner year after year simply because “it’s what we always do.” Always ask if the activity serves the organization’s best interests now.
  • Are we holding onto “pet” projects? Larger organizations with a strict hierarchy sometimes fall prey to the ‘pet project’ syndrome. It may be the director’s favorite activity, or a cherished idea. It’s done simply because so-and-so asked that it be done. You must have the courage to question even pet projects to prioritize the vital ones from the rest.
  • Does this serve our constituents? No matter what activity you are considering, asking if it serves your constituents’ best interests helps keep your focus on what you do best. This helps you prioritize your budget and accounting activities around what matters most.

As Washington DC nonprofit advisers, we know how hard it is to ask these questions and to change the status quo. It may be helpful to bring in business advisers to help you sort through these issues dispassionately.

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 Update: FASB Financial Reporting Standards Changes

If you are in charge of accounting for nonprofits, it is important to keep abreast of the FASB financial reporting standards changes. These changes are the most significant in twenty-three years, and will affect organizations to a large degree.

The New FASB Nonprofit Guidelines

On August 18 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities.

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Like other accounting for nonprofit tasks, these FASB changes require significant planning and preparation. Failure to begin planning now may mean that your organization is unable to meet the requirements later.

The areas most affected by the changes include:

  • Net asset classification requirements
  • Information provided financial statements
  • Notes about liquidity, financial performance, and cash flows

The Journal of Accountancy states that nonprofits must now report expenses by their nature and function. This is a change; formerly, only nonprofit health and welfare organizations were required to follow this reporting protocol. Now all nonprofits will be required to report expenses in this manner.

In addition, a net presentation of investment expense against return is now required on the face of statement activities. Internal salaries and benefits expenses must also be disclosed as they are netted against investment returns.

Operating cash flows may be presented by either the direct or indirect method, eliminating the need for those who use the direct method to reconcile with the indirect method.

Other highlights of the changes include restructuring the net asset classifications from three to two. Nonprofits are also required to provide qualitative and quantitative information that refers to their liquidity.

The goals of these sweeping changes is to make financial disclosure more transparent for donors, investors and the general public. Many changes also reflect the changing nature of the nonprofit world.

The standard will take effect for annual financial statements issued for fiscal years beginning after Dec. 15, 2017, and for interim periods within fiscal years beginning after Dec. 15, 2018.

Help for Accounting for Nonprofits

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.