Non Profit Audits – Beck & Company

Tips to Help You Prepare for a Nonprofit Audit

Greater benefits require greater transparency, and the tax-exempt status of nonprofit organizations puts them at greater odds of an audit. The scrutiny required of a nonprofit’s finances and accounting is part of the trade-off for being a tax exempt organization. Donors and members trust you to fulfill your organization’s mission using their money, and in return, they expect reasonable use of their funds and clear reporting of how that money is used.

Who Requires Audits?

Depending on your organization and how it is funded, you may be required to perform a federal or state audit. The National Council of Nonprofits provides a list of states requiring an audit. This list changes frequently, so please check back with your state or your accounting firm for the current regulations.

Nonprofits that receive federal funding during a fiscal year that exceeds a certain amount (which can change annually) should keep an eye on whether or not they need an audit. Chances are good that you should have an independent audit conducted. Learn more about this requirement from the National Council of Nonprofits.

Preparing for an Audit

Preparing for an audit is a combination of common sense and detective work. Your goal should be to provide as much accurate documentation to the auditors as possible in a timely fashion so that they can go about their work without delay.

To prepare for an audit, you should:

Draft an engagement letter, which specifies the details of the independent audit that you have commissioned.
Meet with the auditing firm to ensure mutual understanding of goals, expectations and timelines.
Organize documents required for the audit.
Prepare folders for the auditors that include pertinent documents.
Read the “prep pack” provided by the auditors if they include one. A prep pack provides background on what you need to do to prepare for the audit.
Identify staff contacts for the auditors.
Schedule a meeting to brief the staff about the audit.

After the Audit: What to Expect

Depending upon the timeline you’ve set for the audit, you should receive the auditor’s report within a reasonable amount of time after the audit itself is completed.

The audit review committee, board of directors and senior staff should meet to review the initial draft of the audit. You can provide consolidated feedback, and request clarification of any findings. Then, the final audit can be prepared.

A good audit will identify any internal weaknesses or problems with compliance to generally accepted accounting standards and rules for nonprofits. Review the issues uncovered during the audit, and prepare a plan to respond and correct and problems. Operating inefficiencies discussed in the audit documents should also be thoughtfully considered and corrected.

An audit may not necessarily uncover evidence of fraud, although inefficiencies and problems may point to fraud. It’s up to your staff and board of directors to follow through on any issues described in the audit.

A formal presentation of the audit report closes out the process. The board of directors and management may offer suggestions to fix any issues, which can be included in the auditor’s report.

Is It Time for an Audit?

Audits are an important component of proper nonprofit management. An audit shouldn’t be viewed as a burden, but rather a chance to improve your operation’s management and ability to fulfill its mission.

An upcoming webinar will discuss how the demands on nonprofit finance teams have continued to increase. Also, how you must create greater levels of transparency and visibility, enhance the governance of the organization, and strengthen decision-making and strategic focus – all while improving productivity. Click here to register for the Survival Guide for Nonprofit Finance Teams Webinar on Thursday, June 23rd at 11 AM PT/2 PM ET.

The team at Beck & Company can provide the expert insights into your finances and operations to help your nonprofit grow and thrive. Founded in 1987, the CPAs and consultants at Beck & Company understand the complexities and nuances of the nonprofit world. Please contact us at 703-834-0776 for a consultation.

Nonprofit Leaders and How they Influence Board Members

The factors that contribute to the success (or failure) of nonprofits are many. Over the past month, we have taken a closer look at many of these factors. These include following through on commitments to staff and nonprofit constituents, prioritizing people over tasks, advocating for instead of simply satisfying the needs of constituents, using data to inform decisions, and using technology to take advantage of all possible venues with which to connect with all involved in the organization. In addition, we looked at how directors can help their board members to enhance organizational success by the ways in which meetings and other interactions with board members are structured in order to maximize the boards’ expertise. To learn more about this, visit here.

In addition to structuring board meetings and other interactions, leaders and directors of nonprofits have other powerful potential to positively influence the board of directors. These can be split into tasks and effective use of time. Let’s take a closer look at both.

Tasks Essential to Leaders and Directors of Nonprofits Positively Assisting Boards in their Job and the Organization Overall

Ensuring compliance and control of organizational practices even as the organization grows, changes, and increases in complexity
Ensuring financial practices are in place, monitored, upheld, and secure
Helping structure, navigate, and implement the strategic direction of the nonprofit and being sure operations are matching intended goals and outcomes
Building capability for the future by guiding current practices, future decisions, and daily operations well in addition to evaluating prior actions for effectiveness

Tips Essential to Leaders and Directors of Nonprofits Using Time with Board Members Effectively

Carefully plan interactions, meetings, and prioritization of tasks/decisions that need to be done/made
Manage expectations of what can be achieved in the time given to make strategic decision-making possible instead of challenging by not overwhelming board members but still wisely using instead of wasting time
Use opportunities for conversation unrelated to actual board meetings (such as dinners or other gatherings) to gain better overall insight into board members and their skill sets in order to better leverage the talents they possess
Think strategically about what the board truly needs to hear about and be involved in versus what can be handled within the organization’s daily operations instead. The ultimate waste of valuable time is spending it on areas that are unnecessary and not seeking guidance and direction in areas that are essential to success.
Use technology effectively to communicate with board members in a convenient way that also keeps communication flowing. This means using emails or other forms of communication for check-ins between scheduled board meetings. In addition, this can involve telephone and video conferencing to make it possible for meetings to occur without requiring everybody to be in the same place at the same time in order for a meeting to be held.

Beck and Company Certified Public Accountants and Business Advisors know that achieving success as a nonprofit and positively impacting board members are no easy feats. That is why we are here to help. Needing to focus on so many people (including board members) even with time limitation plus carrying out important tasks makes it hard to also need to focus time and energy on the financial side of operations. We can help with this aspect so you can focus on the others areas that will help you be successful. Beck and Company CPAs offer a large variety of financial services that are tailored to nonprofit needs. For more information on these nonprofit services, visit here.

Contact us here at Beck and Company CPAs to request financial nonprofit service offerings or to get more information on how to help your board and constituents in order to be successful as a nonprofit.

4 Keys to Being a Truly Successful Nonprofit

It is often the case that mainstream businesses are a bit “ahead of the times” of what most nonprofits are doing. High-performing companies are not just sitting on the sideline in order to get ahead of the curve. Instead, they are actively implementing innovative processes and honing their focus to get ahead. These companies are increasing revenue, growing in profits, raising market shares, and improving customer satisfaction. Although the desired outcomes are a little different for nonprofits, the desire to achieve success in goals is no different between mainstream businesses and nonprofit organizations. By implementing some of the same practices these successful companies are using at your nonprofit, you can help your organization to not only get out of its own ruts but be a leader and innovator among nonprofits. In turn, you can have the level of success in achieving your mission and goals that many large and successful businesses are having in achieving their desired profits.

It all starts by putting your focus in the right place. When it comes to businesses, they have found that there is connection between strong customer and employee engagement. A genuine customer focus is needed in order for businesses to thrive. This is no different for nonprofits. There needs to be a focus on nonprofit constituents and staff members instead of just day-to-day operations. To evaluate where your organization lies in putting your focus on the people and fulfilling commitments made to them, visit here.

If the focus of your organization, just like high-performing businesses that focus on customers and employees, is on the mission/constituents and staff, you are on the right track. Now, let’s take a closer look at four key areas that will help you, along with the right focus, to be truly successful as a nonprofit that are based on keys to success found amongst successful mainstream businesses.

4 Keys to being a Truly Successful Nonprofit

Right priorities start from the top but run deep. The behaviors of nonprofit leaders and board members support a focus on nonprofit constituents and the mission in high-performing nonprofits, and the practice is drilled down to include the behaviors of staff members, too. Success stems from supporting the execution of constituent- and mission-focused strategies. Leadership involvement includes crafting a formal strategy (such as a solid mission and action steps to meet it), setting clear goals, and aligning internal systems and processes with the needs that need to be met.
Focus beyond just constituent satisfaction to extend to customer advocacy. Satisfaction is the global standard for measuring a focus on customers for businesses and constituents for nonprofits. But, high performers across the spectrum recognize that active engagement is essential. Feedback and referrals are both important. In addition, advocating for constituents as a whole instead of simply meeting a need or two is essential.
The focus of the nonprofit should be driven, at least in part, by data. In the age of Big Data and evidence-based business activity, high-performance companies use customer insights, shared organization-wide, to shape products, services, and strategy. This should not be any different for nonprofits. Are you regularly collecting and actively using data to help meet your mission and goals?
Connect with constituents in as many ways as you can, including the use of technology. Are you putting technology to good use to better make connections with everyone from donors to those who receive the services offered by your nonprofit? This can include social media venues and technology offerings meant to track interactions plus marketing initiatives. These connections should encompass sharing stories and service offerings, soliciting feedback, listening to and acting on feedback, and promoting participation.

Beck and Company Certified Public Accountants and Business Advisors know that being a truly successful nonprofit, just like a successful business, is no easy task. That is why we are here to help. With so much focus needed on prioritizing, keeping people satisfied, advocating for constituents, using data to enhance success, and connecting well with those involved, it is hard to also need to focus time and energy on the financial side of operations. Leave this part to us so you can focus on the others areas that will help you be successful. We can help with a large variety of financial services that are tailored to nonprofit needs. For more information on all of our nonprofit services, visit here.

Beck and Company CPAs would be happy to help you achieve your nonprofit goals by helping with your financial practices and carrying out audits, etc. Contact us to learn more.