Category: Nonprofit Audit

Nonprofit Fundraising in our Connected and Modern World

In order to prepare for a nonprofit financial audit or to expand fund development, you will need to be sure that past, current, and future funds raised from fundraising efforts are properly tracked and recorded. Even if you are simply doing an internal audit to prepare for a campaign, it is necessary to take a closer look at funds raised in the past and to be sure that the proper infrastructure is in place to handle a campaign. Beck and Company’s Certified Public Accountants and Business Advisors can give you insight into auditing processes and other nonprofit services. To learn more about audits and for assistance in this nonprofit financial audit process, take a look at our auditing services.

We all know that nonprofit fundraising is extremely valuable and important. Without it, it is likely there will be insufficient funds to meet the needs and service the mission of the organization because nonprofits can no longer rely on ever-decreasing government funds nor on select special events or grants. How, then, can we successfully do it? Fundraising is becoming more focused on individual giving. Being successful with fundraising efforts online is no easy task, but using the technology tools of today to reach individuals can be an important source of funds in a world where nearly everything is transitioning to the web. Here are five important tips for helping you achieve success in raising funds online:

1.       Use multiple social online tools that others are using, too

Yes, there are indeed dozens of social tools available these days. While you would not want to use everything that is available, you should pick and choose as many as you think will work best for your audiences that you are also capable of managing. For example, different people prefer using Facebook pages over Twitter while others would rather follow Twitter feeds. You’ll want your efforts to be widespread so no one is left in the dark and so no possible opportunity is missed. Therefore, invest in the channels and tools that can really help you reach all of your supporters and donors. Remember, use what those people are using. There is no need to jump on the bandwagon of a new social technology tool until your donors are using it, too.

2.       Networking with bloggers that share your organization’s passion is essential

Take time to build a relationship with the MANY bloggers that are out there. You are likely to find numerous blogs and bloggers that will share your nonprofit’s same passion. These connections can translate into easily multiplying efforts by having others with the same passion spread the word through their blogs. They can become your champions and help you raise awareness and donations through their readers and subscribers.

3.       Don’t forget the power of face-to-face

Asking for support in person is still the number one way to achieve a donation for your organization. Use every correspondence and each opportunity when meeting with others in person to direct traffic to your social media channels and sites. This provides a way for new audiences to stay engaged with your cause and what your organization is doing about it.

4.       Be consistent about informing and educating others

Use every opportunity you have whether it be on social media, over email, or in person to educate people on the impact of their donation. This is most powerful and eye-opening if precise and detailed examples are used that clearly depict how their money can make an impact and what it can fund. Use relevant happenings, events, news, and informational studies as an opportunity to educate others about your cause.

5.       Keep it up and don’t lose heart

There is still no guarantee that funds will start pouring in through donations. It can be disheartening to look at your data statistics and wonder why more isn’t coming in. Although all of these online technological advances are powerful, social fundraising still takes time and does not happen immediately. Keep at it, and you’ll see the efforts will pay off over time.

For more information about nonprofit fundraising and the intended outcomes of it through audits, contact us here at Beck and Company CPAs.

Tips for a Successful Non-profit Financial Audit

Nonprofit organizations undergo financial audits for a variety of reasons. In addition to being in compliance with various covenant and membership requirements, audits also provide an organization with tools that can help with best practices and offer accountability to the institution. Just like the notion of having surgery, the idea of undergoing a financial audit can be less than appealing. At the same time, it is important to focus on the significant value that results. Here at Beck and Company’s Certified Public Accountants and Business Advisors, we can help you properly prepare for an audit and make the process less painful and more beneficial. We offer an array of auditing services to assist you.

How can your nonprofit prepare for, manage, and benefit from a financial audit? The following tips offer suggestions to do just that.

1.       Before the Audit- The Pre-Op:

Advanced preparation for your audit is essential. Your team should create and use a list of items that will need to be prepared before the auditor arrives. Having all of the necessary documentation ready for the auditor saves time and money in addition to resulting in less staff distractions during the actual audit process. Through many years of auditing and assisting nonprofits with this process here at Beck and Company CPAs, we have compiled a list of task items designed to help you successfully prepare for an upcoming financial audit. You can access it here. Remember that auditors are likely to request additional reports and information based on what is initially supplied. These requested reports should be added to the preparation list for the following year.

Choosing the right professional who will work with your company is extremely important. Just like choosing a competent surgeon that specializes in what needs to be operated on, you’ll want to choose an auditor that you feel comfortable with and who is experienced at working with not-for-profit organizations. Think of your choice in auditor as a partner not a distant professional.

In the preparation process, be clear about deadlines. The time frames for your audit are crucial. If bank submission, board meeting, audit committee session, or grant deadlines need to be met, be sure to communicate these to all teams involved and do this early on in the process. Clear communication eliminates surprises and delays.

2.       During the Audit- The Surgery:

Similar to the notion of having surgery without the surgeon present, the greatest efficiency and most useful results come from maximizing your time with the auditor. Be sure to get as much done and as many questions answered while the auditor is onsite. If there are any open items that cannot be accomplished, set completion deadlines before the auditor leaves.

3.       After the Audit- The Post-Op:

The most significant aspect of an audit is what results from it just as the results of surgery are why you had it in the first place. Without following recovery and therapy instructions, a successful operation still will not produce the intended outcome. Similarly, an audit will not be beneficial to your organization without implementing changes and using suggestions to make improvements. The most valuable part of an audit is often the management comment letter. It should highlight areas of control deficiency, concerns, and needed improvements. The implementation of changes, as appropriate, are the central benefit that an audit affords your organization. In addition, the results can help make future audits even smoother in the upcoming years.

Beck and Company CPAs have helped many nonprofits prepare for annual financial audits and would be happy to assist you as well. Please contact us and request a complimentary audit services consultation by visiting our website.

How Can I Prepare for My Upcoming Nonprofit Financial Audit?

While it’s always a good idea to ensure your organization’s financial accountability through an audit, not all nonprofit organizations are required to undergo extensive audits on a yearly basis. As of now, if your nonprofit organization expends more than $500,000 or more in direct or indirect government grants and awards, you are required to undergo a single audit in accordance with the Office of Management and Budget (OMB) Circular A-133. You can determine if your organization is required to undergo this audit by reading our blog, “How the Proposed A-133 Changes Could Affect Nonprofit Organizations”. This single audit is similar to that of a traditional audit prepared by a CPA; however, it is conducted according to government accounting standards (also known as “Generally Accepted Government Auditing Standards”). Like a traditional audit, the auditor is required to determine whether the organization’s financial statements comply with the standards set apart in the government accounting standards.

Preparing your organization for a nonprofit financial audit can be stressful, to say the least. It requires you to stay on top of your organization’s financial processes throughout the year so you aren’t scrambling right before the scheduled audit. Over the years, we have audited several nonprofit organizations and have helped numerous nonprofits prepare for the dreaded annual audit. From our experience, we’ve compiled a list of tips designed to help you successfully prepare for your upcoming nonprofit financial audit:

  1. Make sure key staff are available on the days you’ve scheduled your audit to occur (this includes both preliminary and fieldwork). The auditor will need full access to your staff in case any questions or concerns arise during the audit, so make sure key staff members are aware of the upcoming audit and present.
  2. Review your client assistance letter and prepare the requested documents beforehand. This document is designed to help nonprofit organizations gather the right information for the audit, including details of internal controls, government contracts and summaries, and major program compliance. Your letter should include a timeline to help you prepare all of the necessary information before the auditor arrives to complete the final fieldwork. Make sure you review this letter with your staff as soon as you receive it, and relay any questions or concerns to the auditor as soon as possible.
  3. Make sure you have a thorough understanding of the compliance requirements for each of your government grants. Read over your grant agreement before your audit, and ensure that program staff are made aware of compliance areas that will need attention. This agreement will become a compliance roadmap for both you and the auditor, so make sure you know it well.
  4. Review the current OMB A-133 Compliance Supplement for an idea of additional compliance requirements.
  5. In order to determine whether a federal expenditure is an allowable cost, you need to have a thorough understanding of the cost principles applicable to your organization. This information can be found in OMB Circular A-133 – Cost Principles for Nonprofit Organizations. Once you are familiar with these principles, hold a meeting to discuss what is allowable under each federal grant and what is not. Determine if any unallowable costs can be identified and segregated in your current accounting records.

Preparing for a nonprofit financial audit takes time as you still have to continue managing the day-to-day tasks of running your organization. Auditors understand that you need time to prepare, and they are willing to work with your organization to answer any questions or concerns you have before the final fieldwork. For a detailed checklist designed to help your organization prepare for your upcoming nonprofit financial audit, click here.

Did you know Beck & Company can help you with your auditing needs as well as your accounting needs? Learn more about our accounting and auditing services for nonprofit and government organization.

Checklist for a Financial Audit of a NonProfit Organization

The term “audit” usually sparks fear and apprehension in businesses and nonprofit alike. An audit can refer to any internal review, contract review, or external review by the nonprofit Board or other managing body; however, many people immediately think of a visit from the IRS.

This is not the most common type of audit for nonprofit organizations. A financial audit typically refers to an independent review of a nonprofit organization’s books and accounts. This is usually done annually as a way to ensure that the nonprofit is in compliance with federal regulations and private donor requirements.

If your organization is getting ready to undergo a financial audit, you need to be prepared. In order to ensure a smooth auditing process for all parties involved, we’ve compiled a checklist for a financial audit of a nonprofit organization. The following checklist is designed to help you prepare for your financial audit and know what to expect from your auditor.

Before the Audit

Before you even begin to compile documents and reports for your financial audit, you need to select a CPA or auditing firm. When it’s time to find a CPA or audit firm for your nonprofit’s financial audit, keep the following in mind:

  • Ask other nonprofit organizations for recommendations on CPAs or auditing firms in your area
  • Check each professional’s references and request a copy of their Peer Review
  • Prepare a Request for Proposal (RFP) once you have narrowed your selection down to a few CPAs or audit firms
  • Involve your board members in the selection process
  • Interview all potential CPAs and audit firms
  • Ask for the references or resumes of CPAs in larger firms
  • Make sure the CPA or audit firm has experience in nonprofit financial audits
  • Research their memberships and associations in the accounting profession
  • Review each firms costs and fees

Preparing for the Audit

There is a lot your nonprofit organization can do to successfully prepare for a financial audit. The following checklist will help you save time (and frustration) during a nonprofit financial audit:

  • Ask the auditor for a list of documents you will need during the audit and compile these documents before the auditor arrives
  • Make sure the documents are in the proper format suggested by the auditor
  • Make sure your accounting records are organized, accurate, and up-to-date
  • Create an electronic folder on your computer for all of the documents and records you will be needing for the audit
  • Make sure that you have the proper documentation for every financial transaction made throughout the fiscal year
  • Create an audit committee or oversight group
  • Plan a pre-audit meeting to get further guidance on what your organization will be needing for the audit

After the Audit

  • Once the audit is complete, the audit committee meets with the auditor to ask the following questions:
    • Was our team cooperative and forthcoming with the requested information and documentation?
    • How do our accounting procedures and policies compare to similar nonprofits?
    • Are there any “at-risk” items that could be disputed by the IRS? If so, what documentation do we need to prepare in order to support these items?
    • Did the team follow suggestions recommended by past auditors to improve our internal accounting system?
    •  Do you have any suggestions for improvement in reporting, accounting, or other procedures?
    • The audit committee, financial directors, and executive director reviews the draft of the audit report
    • The above group asks questions about the auditor’s discoveries
    • The group evaluates any recommendations prior to presenting the final audit report to the board
    • The final audit report (signed and dated by the auditor) is delivered to the board of directors
    • The final audit report is presented to the board of directors

As you can see, the audit process is a lengthy one. However, it does not have to be a scary one. With the right amount of information and preparation, you can come out of a nonprofit financial audit successfully.

If you’d like to learn more about the auditing process or would like to connect with a CPA, contact us today. Our CPAs are experienced in nonprofit financial audits and have the tools and information you need to prepare you for a smooth auditing process.

How to Prepare for a Nonprofit Financial Audit in Five Easy Steps

Nonprofit financial audits are unfortunately a common occurrence. Because nonprofit organizations rely solely on donated funds from the government and private donors, they are more susceptible to financial audits than businesses in the for-profit sector. In addition to ensuring that your organization complies with the various nonprofit financial reporting requirements, nonprofit financial audits can be used as an accountability tool and best practice for nonprofit success.

A nonprofit financial audit – though unwelcome – can highlight your organization’s weaknesses so you can focus on areas to improve over the next year. Keep the following tips in mind as you prepare for your upcoming audit. While it may seem unappealing and stressful now, your nonprofit financial audit can provide significant value to your organization. With the right amount of preparation, you can successfully survive and conquer any nonprofit financial audit thrown your way.

  1. Choose your auditor carefully.
    Just as you would choose any financial service provider, choosing the right auditor is crucial to making the audit process less painful. You need to select a nonprofit financial auditor that you and your team feel comfortable with. Make sure that your auditor understands your organization and can provide valuable recommendations and insight. If they are not familiar with your organization or industry, look for somebody else. Remember that choosing an auditor is essentially choosing a partner for your organization, so choose wisely!
  2. Prepare ahead of time.
    Your auditor will send you a list of items to prepare prior to his or her team’s arrival. Make sure that you have all of the items on the list and are fully prepared when the auditors arrive. Preparing these documents ahead of time will allow you to relax and focus on the actual audit, rather than scrambling around trying to find certain documents or information.You should also be prepared for the auditor of your nonprofit financial audit to request additional reports and information based off of the documents you supply. Make a note of any of the items requested during the audit so you can have them prepared in advance for the next nonprofit financial audit. Maintaining your reports and documents throughout the year can also help you come audit time.
  3. Set clear deadlines – and follow them!
    Be sure to communicate any deadlines to your audit team early on in the process. These deadlines could include bank submission deadlines, audit committee deadlines, board deadlines, or grant deadlines. If you begin the nonprofit financial audit process communicating clearly, you will be less likely to experience surprises or delays further on in the process.
  4. Set a timeframe for completion.
    Your nonprofit financial audit should be completed onsite as much as possible. Talk to your auditor and agree on a set completion goal before you even begin the process. If there are outstanding items after your auditor leaves, agree upon a deadline for open items before they leave your office. The more you know what to expect, the less you will stress over the unknowns.
  5. Incorporate the auditor’s suggestions into your organizational plan.
    Nonprofit financial audits are invaluable to nonprofit organizations. At the end of an audit, you should receive a management comment letter. In this letter, your auditor will highlight any areas of deficiency and concern, as well as provide suggestions for improvement. Don’t let your audit (and audit stress) go to waste. Implement the auditor’s suggestions wherever they are appropriate. This will not only improve your organization, but it will also prepare you for future audits.

If you are looking for an accounting firm who specializes in nonprofit financial audits, contact us today. In addition to our accounting services, we also provide nonprofit financial auditing services. Give us a call at (703) 834-0776 extension 8001 to learn more about our auditing and accounting services.