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:

  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.

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.

After Your Nonprofit Audit: How to Handle the Client Representation Letter

Over the past month we have looked at various aspects of a nonprofit audit. Being prepared with software systems, independent audits and checklists to keep information organized are at the top of the list to not only survive but thrive during the audit experience. But after the audit has been completed, you are not quite out of the woods. There are a few follow up tasks that if left undone can create added stress for the nonprofit accounting team.

The management letter is a review of the operations or procedures that the auditors identified as deficient. Since most auditors work with a variety of nonprofits, they have a good working knowledge of best practices for organizations and can give wise advice on bringing deficient areas up-to-par. Their suggestions can help streamline your organization, which will make it run more efficiently. Sometimes the staff in charge of the audit might ask to review a draft of the letter before it is sent to the board to verify the information because deficiencies in the accounting of a nonprofit organization, will cause anxieties in the board of directors.

What Can We Do to Correct Deficiencies?

If the auditors have spotted any deficiencies, it is best to start correcting them immediately. Eliminating deficiencies will only make your nonprofit stronger, it will also demonstrate the integrity of your organization. After the auditors have shared any concerns or red flags that were signaled by the audit, it is important to sit down with the management of your nonprofit to discuss not only the needed changes for the organization, but also the overall satisfaction with the auditors.

Is Your Organization Satisfied with the Auditor’s Work?

It is very important for your organization to be satisfied with the scope, nature, and timing of the work of the auditors. Did you feel that the auditors had the skills and knowledge to efficiently conduct the audit? Did the auditors work with the staff with minimal disruptions to the workflow of the office? Did the auditors work diligently on the review? (Read more auditor satisfaction questions available at the National Council of Nonprofits website).

Beck & Company has been in the business of helping nonprofits succeed with a broad base of managerial accounting and systems experience for over 25 years. Our understanding of business practices and technology will help you solve nonprofit accounting organizational challenges. We have a commitment to the highest standards of integrity and quality. Call us today at 703-834-0776 for a consultation to streamline your accounting methods. We can help you start preparing for your next audit to ensure an even smoother process the next time. Sign up today for one of Beck & Company’s upcoming convenient, informative webinars that will help you focus and solve many of your accounting growth challenges.

Nonprofit Audit Checklist

“Start by doing what’s necessary; then do what’s possible; and suddenly you are doing the impossible.” -Francis of Assisi

As preparation for the audit continues, it is essential to keep a checklist. A comprehensive checklist that will keep your organization on track is available at the National Council of Nonprofits website.

An audit centers on the documentation of your organization’s accounting methods and practices. You will want to have all the required financial documentation from the fiscal year organized and ready for the review of the auditors. This will save time for the auditors and stress for your organization.

Tip #1

Place all your documentation in a single folder to allow easy access to the auditors. Think ahead of what documentation they will want to review and have it ready. Not only will this make the auditor’s job easier, it will also allow you to keep track of what the auditors are reviewing.

Tip #2

Ask the auditors what format would make the documentation most easily accessible for them.

Tip #3

Have a pre-audit meeting with the auditors and all the nonprofit staff relevant to the audit. Set a timeline for the audit with the auditors and staff. Ask the auditors at this meeting for their document expectations, so you will know what information to have ready for them.

Tip #4

Don’t schedule any other staff events during audit time. If possible, assign specific people to oversee the information for the audit, as well as staff to be “on call” for the auditors, in case of questions. The organization needs to realize the audit process is a priority. It’s not good time for personal leaves or vacations.

Tip #5

Have a place set up for the auditors to work comfortably. If an auditor is extremely familiar with an organization, the audit might be able to be conducted via the Internet. However, the auditor is most likely going to want to do the work onsite. Sometimes more than one auditor will work on the audit. It is important to create a private, comfortable area to work through the documentation.

Tip #6

The auditors will probably have questions for the staff to familiarize themselves with your organization and its activities. All staff should be instructed to cooperate and answer the questions as honestly as possible. (These tips and more found at the National Council of Nonprofits website).

For solid expertise from a company with over 25 years of nonprofit accounting and audit experience, call Beck & Company at 703-834-0776. Our commitment to excellence is demonstrated in our team’s understanding of your business and personal financial objectives and then delivering innovative solutions to achieve them. Let us help make your audit process go smoothly.

Does My Nonprofit Organization Need an Independent Audit?

Accounting practices of all businesses and nonprofits are of extreme importance, but nonprofits follow strict federal and state regulations due to the amount of funds received and the source of those funds. One way to carefully monitor the accounting practices of nonprofits is with independent audits.  However, not every nonprofit organization is required to have an independent audit. The first step in preparation of an audit is to determine if your organization requires one.

Does Your Nonprofit Have the Time to Stay Abreast of Changing Regulations?

The simplest and wisest way to start the nonprofit independent audit process is to find a reputable, solid accounting firm that will guide you through the process. Accounting firms, such as Beck & Company Certified Public Accountants and Professional Advisors, are not only up-to-date with all the government changes in nonprofit accounting requirements, but also know how to find creative solutions for the challenges nonprofits face because of governmental requirements. Some of the regulations, especially with nonprofits that accept federal funding, are complicated and can take your valuable time to understand.

Most of the time, federal and state regulations drive the need for nonprofit audits. However, there are other reasons for obtaining an independent audit. If your organization is required by federal and state laws to get an audit, it will be because of the amount of funds your organization has received in any single fiscal year. It is important to know and follow nonprofit federal and state laws carefully because a lapse in following the laws could result in compliance issues and a loss of funding.

Do You Want to Create Confidence in Donors?

Many times a nonprofit will want to have an audit so that the integrity and transparency of the organization can be seen by the donors. An independent audit that reflects the integrity of an organization creates a solid confidence in donors, especially in a culture that is accustomed to examples of integrity deficiencies.

How Can I Work Through the Legal Requirements?

One of the mistakes that a nonprofit organization can make is to try to wade through the legal requirements of an audit without the specialized expertise of a solid accounting firm. Employing a knowledgeable CPA firm to consult on accounting methods and audit practices is a very wise move. Beck & Company CPAs deliver specialized expertise, creative thinking, and unsurpassed service to ensure that our clients’ financial endeavors flourish. At Beck & Company CPAs, we understand your audit, tax, accounting, and consulting needs and want to work to help make your nonprofit organization efficient.

We are locally owned and operated; providing services in Washington D.C., Maryland, and Northern Virginia. Call us today at 703-834-0776 for more information on how we can help streamline your accounting methods to make your audits go more smoothly.

Eliminate Nonprofit Audit Stress with Stress-Free Accounting Software

“The best preparation for tomorrow is doing your best today.” -H. Jackson Brown, Jr.

Spring has sprung. The grass is green and it’s time for an audit. No, that isn’t really how the saying goes but it might be time to plan for your audit. Sometimes the audit process can be somewhat lengthy, but wise planning on the front side of it can make life much easier as you work through it. The best time to start planning is today.

One of the first things to do to plan for an audit is to consider the efficiency of your software. Trying to pull data from several different systems to formulate into a report can not only cost your nonprofit efficiency but it will most likely result in inaccuracies. Compliance issues are the end result of inaccuracies. It is very difficult for an auditor to stay on track with the necessary financial reports when trying to follow trails of data inaccuracies. Be proactive and verify that your software is up-to-date with a solid coverage of all your accounting needs. This is an essential step which can eliminate a lot of audit stress and also many hours of unnecessary labor.

Important software questions to ask:

  • Do I have the necessary flexibility in the chart of accounts in my current system?
  • Do I have the ability to track and report on spending and revenues with efficiency in current accounting systems?
  • Is my requisition process easy to review and understand?
  • Am I able to allocate revenues and expenses to the correct funds?
  • Is my financial data well-maintained to allow for easy preparation of reports, internal, and external audits?
  • Do financial data and reports consistently show accountability and transparency?

Upcoming Webinar on April 27, 2016

If you answered no to any of the above questions, you will want to seek experienced advisors to help you make the best decision in what will make your business run more smoothly. Register today for a no cost webinar, “Nonprofit Accounting Experts Sharing Best Practices for Selecting Accounting Software,” April 27 at 2 pm EST. Click here to register.

Beck & Company CPAs has over 25 years of experience in helping small to mid-size nonprofits and businesses creatively solve accounting issues.  Let us put our high-quality, professional expertise to work for you. Call us today at 703-834-0776  for a consultation to see how we can put our professional expertise to work for you.

Setting your Nonprofit Organization Apart: Where Do Your Commitments Lie?

It is undeniable that you want your nonprofit organization to be as successful as possible, but do you really know what that takes? It can be easy, almost too easy, to simply do what has always been done at your organization instead of trying to be the best you can be and set yourselves apart from the pack. Too often, nonprofits do what they have always done instead of being innovative leaders themselves. Don’t let the success of your organization be robbed by a lack of initiative and best practices to simply maintain what has always been done and what is comfortable.

If you agree that you want to be as successful as possible as a nonprofit, that some things will need to be developed instead of staying the same in order to get there, and that you want to separate yourselves from the identity of “surviving” with acceptable practices to “thriving,” how do you do this? It starts by having a true focus on so much more than just day-to-day operations and tasks. It stems from a focus on people.

Developing the Right Focus on People instead of Operations

Let’s take it a step further and consider if your organization really does even focus at all beyond the day-to-day operations. Should your focus just be on routines and practices or should there be more of a focus on the people? Have you considered the people you are trying to reach and the people trying to make this outreach possible by working for your organization? This is an important starting point to evaluate your priorities and where your focus actually lies. It takes being focused on your mission and its constituents and helping your staff to be successful in these efforts.

If the focus of your organization should be on the mission/constituents and staff, you need to evaluate how they currently are being reached and how they are feeling. Let’s take a closer look at how to evaluate this by using some reflection questions you can ask yourself. The reality is that these questions should highlight if you are keeping your commitments to these groups because keeping commitments is essential to success.

Questions to ask yourself regarding those you are trying to reach based on your mission (your nonprofit constituents):

  • Are we meeting the needs we said we would meet or failing to provide what was promised?
  • Are constituents satisfied or disgruntled?
  • Does our mission come across to our constituents in how we act upon it or not?
  • Do constituents feel comfortable interacting with staff members and that their needs are being understood and responded to?

Questions to ask yourself regarding your organization’s staff:

  • Are we keeping promises made to our staff?
  • Are staff members feeling like they are being taken for granted, or are they appreciated?
  • Are staff needs being met by the organization to the point that they can truly focus on meeting the needs of others—of the nonprofit constituents being served?
  • Are staff members treating constituents well?
  • Are staff members bought in to the mission?
  • Are staff members equipped with the resources and training they need or not?

As Beck and Company Certified Public Accountants and Business Advisors, we realize just how much goes into being successful as a nonprofit. This is so much more than just day-to-day operations but requires pouring time, energy, and resources into the people serving and being served by the nonprofit. That is why we are here to help. You can allow yourself to focus on your mission and the important people involved with your nonprofit more if you have less to focus on in terms of the financial side of daily operations. We would be happy to assist you with your auditing, accounting, and overall financial needs. For more information on the variety of nonprofit services we offer including CFO, controllership, and accounting services, visit here.

Contact Beck and Company CPAs to find out more about helping your nonprofit to be successful and how we can help you achieve this by meeting your auditing and accounting needs.