kathy-beck – Page 13 – Beck & Company

Affordable Care Act Tips for Employees and Employers

Health Care Plans have led to many questions for organizations who desire to provide and remain in compliance with regulations, while leaving the “affordable” in Affordable Care Act. The cost of healthcare and health insurance is high and seems to increase annually. Today we will take a look at some creative ways to help employees and employers mitigate the complex and expensive health care system.

Ensure that your particular group is fairly treated within the health insurance marketplace. You are likely aware that the nonprofit industry is rated, on average, 15% to 20% higher by health insurers. Typically churches are rated even higher. For this reason, it is imperative to consider how you are going out to market as a group.
1. Timing is everything. You don’t want to get stuck making decisions under the pressure of a deadline. To avoid this – consider when your plan will renew and be sure to allow plenty of time to review the dynamics of your group. Provide information to your insurance company, leaving plenty of time for them to look at all aspects of your group and acknowledge the positives so they can offer you the best possible policy.
2. Approximately 40% of groups that have over 50 employees renew their health insurance January 1. Second to January, December and July are the next most popular renewal months. For this reason, we suggest avoiding those dates and presenting your request for a proposal in the off-season. This way you allow the insurer to thoroughly and objectively look at your group without the added pressures that exist in those busy months.
3. Check the accuracy of your claims data before you submit it to your potential insurer. Errors or incomplete documentation can potentially weigh negatively on your request and risk ratings.
Look at all of the options for your group’s health plans. Self-funded plans are a notable option that are growing in popularity. Although self-funded plans have their own risks associated with them, there are also potential benefits to be considered. For instance, with self-funded plans employers:
1. Are given more information on group claims as well as on larger individual claims.
2. Are given more control of the plans features and drug card program.
3. Can benefit from controlled health risks and lower claims. Because of this incentive, employers tend to be motivated to take advantage of wellness programs, data analytics, and additional opportunities to reduce health risks for their group.
4. Can diversify their providers based on different components of their plan. Vendors such as drug card providers, network, disease management, and more can be selected individually.
Communicate with your employees regularly. Due to the complexities of the Affordable Care Act and increased costs, employees have more questions than ever. This new system offers many different and unfamiliar ways to obtain health care. such as walk-up clinics and free-standing surgery centers. These options are confusing and difficult to navigate. In addition to the annual, one hour health care options meeting be sure you maintain open and consistent lines of communications with your employees to help them understand and make the best choices regarding how to spend their health care dollars. Some ideas for communication are lunch and learns, WebEx meetings, mass-emails or even mass-texts.
Inform your employees of their options before they make a claim. Even within network, health care provider’s costs can vary greatly. Costs for an MRI can vary upwards of 200% depending on where the service is provided. Take advantage of online tools that can aid individuals to better understand the procedures and costs before they have them performed. Your employees will be especially grateful for the opportunity to save on out-of-pocket expenses and co-pays.

As Beck and Company’s Certified Public Accountants and Business Advisors, we understand that you, as small business owners, want to do what you can for your employees and hope this information has helped you understand your options more thoroughly. To learn more about our accounting services to help you navigate through these tricky processes, visit here. Contact us here at Beck and Company CPAs so we can help you with your unique needs as small business owners navigating healthcare and the Affordable Care Act.

New Tax Considerations for Nonprofit Special Events

Events such as annual galas, 5k run/walks, trips, and dinners are a great source of revenue for nonprofit organizations. They gather stakeholders and constituents together and give organizations an opportunity to showcase their charity or cause and invite others into investing in it. One thing to consider when hosting such events are the potential tax ramifications that go along with these types of events. With proper planning there is no need for alarm. Today we will look at some of these tax ramifications and ways you can ensure you’re covered.

A great place to begin is with an understanding of what exactly constitutes a fundraising event according to the IRS. According to their website, the IRS states that fundraising events are dinners, auctions, and other events conducted for the sole or primary purpose of raising funds.

Before you plan

Fundraising efforts are of course, an important part of any nonprofit organizations strategy. Particularly now, it is imperative to brush up on potential pitfalls from such events. Things like unrelated business income and its corresponding filings and taxes for such income. Additionally you will want to become well versed on Form 990, in particular Schedule G.

Oftentimes corporate sponsorships result in the most lucrative fundraising. However, when hosting an event where a corporate sponsorship receives promotion, that can be considered “advertising”, those dollars could be considered taxable. It is allowed at an event to display a sponsor’s logo, company name, provide an address, website and phone number, or list their product line. Should you advertise for them, (induce a product for purchase, offer discounts etc.), designate a sponsor as an exclusive provider, give a sponsor facilities, services, or other privileges, or grant exclusive or nonexclusive rights to the sponsor’s asset, then that could be considered advertising and is taxable.

Form 990 and Special Events

Another challenge when hosting special events is Form 990 and Schedule G. This is the supplemental information Regarding Fundraising or Gaming Activities. In the past, special events were reported on Form 990, Part 1, Line 9 in which a five-column reporting format was presented as an attached statement. However, the new Form 990, requires that any amount raised over $15,000 from a special event or gaming, or both, require reporting more information that was previously required. In some instances detailed reporting for the top two events specifically, as well as a collective report for all other fundraising events. Another change is they are asking for a breakout of amounts for cash prizes, non-cash prizes, facility rental costs, and other direct expenses for each event.

In addition, if you hold any sort of gaming event, think Bingo or Casino nights, the schedule G, Part III requires additional breakdowns for expenses and prizes. If this is the case and an event is categorized under the gaming definition, you will be asked to answer nine special, multi-part questions regarding the activity. These questions will include the name and compensation provided to the “gaming manager”.

Although these new rules and requirements are tricky and may seem overwhelming, it still remains true that this is a great time to host fundraising events. Don’t let these new regulations scare you from holding them. Rather, be prepared. Raising funds through these means can be fun, and the more creative and innovative you are the more funds you will likely raise. Ensure your safety by knowing the tax laws ahead of time or partner with someone who can help walk you through them.

Serving small and mid-sized organizations and individuals, we provide audit, tax, accounting, and consulting service that address all aspects of your business with one goal in mind – exceeding your expectations. We are able to do this by drawing on our combined business backgrounds and experience in public accounting to help you in virtually any area of your business. If you would like help walking through these new tax ramifications, contact us, today.

Lessons from the ALS Ice Bucket Challenge

A little more than one year ago, the biggest, most wide-spread, organically originated, fundraising campaign swept through social media. The ALS Ice Bucket Challenge began when golfer Christ Kennedy accepted a challenged to donate money to a charity of his choice OR dump a bucket of ice over his head, post a recording of it on social media and nominate three others to the same within a day. Kennedy did this and one of his nominees chose to make a donation to the ALS association, as well as post a video and nominate three others. Simultaneously but unconnected, Peter Frates, a form Boston College baseball player currently living with ALS, posted a video on Facebook. The challenge then took on a life of its own and thousands upon thousands participated in the fundraising campaign raising unprecedented awareness and money for the ALS organization. There are some valuable lessons to be learned from this campaign.

The Power of Social Media

It is undeniable that social media was the star player in the ice bucket challenge’s success. Although one cannot guarantee the type of mega success that the ice bucket challenge received, it proves that social media platforms are a great tool to use, to promote awareness of any cause. Ask yourself the following questions regarding your social media strategy.

What is my social media strategy?
How often is my nonprofit active on social media pages?
How many followers/fans does our organization have?
When was the last time our page posted or interacted on social media?

If you want to play, you have to at the very least, get in the game.

How do we engage the millennials?

Another thing we learn from the ice bucket challenge is the power of the younger generation to support causes. The millennials want to be a part of something bigger than themselves. They also want to know that their money is actually doing something good and making a difference. They are active social media users with influence. Learn how they think, what they are passionate about, what concerns do they have, and target a campaign to engage them. Read more about millennial giving habits here.

The fun factor

One reason for the ALS Ice Bucket campaign’s success was its fun factor. The campaign was engaging, specific, simple to do, sharable, and tapped into FOMO (Fear of Missing Out). If you weren’t challenged to participate you felt a little left out of the fun. This “X” factor was key to the viral nature of the campaign. Think outside the box.

Wide end of the funnel

Another key factors to the ALS success was its accessibility. Anyone could play. Whether you made a financial contribution or not you were still positively impacting the cause just by promoting awareness. Furthermore donations were made that ranged from $1 – $200,000 and every donation mattered.

Savvy organizations are taking a tip from the success of the ALS Ice Bucket challenge to find ways to create online community support that will ultimately lead to greater impact for their organizations. Online giving campaigns should definitely be a part of your future fundraising strategy to support your organizations mission.

WHAT IS #GIVINGTUESDAY and How Can #WEPLAY

In a New York City apartment in 2012, Henry Timms, the Executive Director of the 92^nd Street Y, dreamed of a global day dedicated to giving back. Tis’ the Season, right? With a day fully dedicated to giving thanks, followed by two of the biggest shopping days of the year, why not set aside a day dedicated to generosity? #GivingTuesday is a compassionate response to the consumerism of Black Friday and Cyber Monday. Last year more than 10,000 organizations worldwide participated in GivingTuesday and according to The Chronicle of Philanthropy raised over $46 million dollars. Knowing the trend of this generosity the question becomes, how can nonprofits get involved and make the most of #GivingTuesday in 2015.

Step one – Start Planning Now!

Get a head start promoting on social media, marketing collateral, and direct contact with donors. Take advantage of the hype of this global movement to let those who care about your organization know that you are playing too. If you haven’t put a plan together yet, it’s not too late. Set up a meeting time with your most creative thinkers and establish a plan now.

Step Two – Communicate

Make sure your call to action is simple, clear, and compelling. Some ideas would be to integrate #GivingTuesday into your year-end campaign, organize a volunteer project, hold an open house showcasing your nonprofit, or consider matching grants. Whatever you choose, ensure that people know exactly what you want them to do and when.

Step Three – Share Your Story

Throughout the day, be sure you are sharing your results. Post updates on social media every hour. Take pictures and post them. Interview volunteers and capture their story for a follow up blog post or video to share. Additionally, document the process. Write down what works and what doesn’t so you can learn for next year.

Step Four – It’s Not What You Know but Who You Know

Consider recruiting and then empowering people who will promote your organization and influence others to love it too. Consider looking at your social media and identifying your biggest fans and cheerleaders. Those are the ones who consistently like, comment, retweet, and share your posts; or find a local or global celebrity who supports your cause. Even if their only contribution is to share your #GivingTuesday posts on their social media sights, it’s a win. Just think of all of the people who can be reached through networking with your most popular followers.

Step Five – Wide End of the Funnel

Take advantage of #GivingTuesday as an opportunity to be accessible to everyone. This is a great all play day and should be considered a large generator of new first-time donors. Focusing on a campaign that attracts new donors, is accessible to everyone, and has the potential to move the newly generated donors deeper into the funnel to become long term advocates for the cause.

Step Six – Don’t Forget to Say Thank You

Generosity begets generosity, so don’t forget to be generous in acknowledging and appreciating those who have supported your organization on #GivingTuesday. Anyone who has experienced success in fundraising–and the profound responsibility of stewarding generous donors–knows that gratitude is everything.

Assign someone from your team to be responsible for responding to every contributor, immediately with a thank you email. Take it a step further by making a personal phone call or sending a hand written thank you note. These are the types of actions that set you a part and delight those who have supported you.

Making the Most of the Year End

A necessary function of nonprofit organizations is fundraising. While grant proposals are a significant and valid source of raising funds, there are other things your organization can do to encourage donations. Today we will take a look at some other ways your nonprofit organization can raise funds to achieve your mission.

Fundraising Events

Whether it be an organized run, gala, auction, or dinner, gathering people together for the purpose of learning about and supporting your mission is a great way to raise funds. Hosting fundraising events is common throughout the nonprofit world. One of the greatest benefits is that people can get involved at almost any level. From a $25 entrance fee to a $2,500 donation, you can create ways for everyone to play. In addition to raising funds, events provide the opportunity to raise awareness. Through inviting speakers, sharing stories, and showing pictures or videos you can communicate the value of your mission to constituents and influencers. In addition, hosting events like run/walks or theme parties creates an opportunity to tell the public what you’re about and invite them to participate.

Annual Donations

At least once per year, nonprofits can simply ask people to donate in support of their cause. Most often, this is done through a direct mail campaign and the target audience is anyone who may be interested in supporting your organization. It is wise to send this out during the late fall in hopes of tapping into the year-end donations. Did you know that 25% of all donations are made in the month of December with 10% made the last three days of the year? December breeds generosity as well as tax benefits, take advantage of this to invite people to exercise their generosity by investing in your nonprofit.

Memberships

Most regular corporations have stockholders, however, because nonprofits do not issue stock they do not. An alternative to this is offering membership. A formal membership structure may grant certain rights, such as voting power, towards board members and decisions. Although additional paperwork and administration is necessary to support membership, this is another great way to raise funds for your organization. There are two options for membership.

Rolling Membership – this means that membership income is steady throughout the year as people will be paying their renewals as they expire. This requires someone to keep track of memberships and send out renewals accordingly. The alternative to this is:
Annual Memberships or Memberships that are renewed one time of the year. This has its advantages, as you are able to time your renewal to bring in donations at a set time of the year, which helps with cash flow. On the other hand – you may lose out on potential members and funds if you’re not on top of membership offerings throughout the other months of the year.

Planned Giving

Planned giving is the act of making a commitment to give a charitable organization a gift, over time or in the event of death, as part of the donor’s overall financial and estate planning. All too often, this opportunity to generate donations is overlooked or avoided by nonprofits. Understandably, it is a tricky subject to broach, however, it is important not to underestimate the power of legacy. People want to leave a legacy in an area that they are passionate about. Keep in mind – you are inviting people who care about your nonprofit to make a lasting investment, to keep pursuing your mission. This is not a forced act but an opportunity that can be accepted or declined, but you will never know if you do not ask.

At Beck & Company, Certified Public Accountants and Business Advisors, we are an accounting and consulting firm delivering specialized expertise, creative thinking, and unsurpassed service to ensure that our clients’ financial endeavors flourish. Specifically, we offer nonprofit services such as CFO, Controllership, and Accounting services. Contact us to see how we can help your organization flourish.

Tax Planning & Preparation Services

Beck & Company, Certified Public Accountants and Business Advisors is an independent certified public accounting firm serving the Greater Washington D. C. metropolitan area with clients also along the Eastern Seaboard. Our firm has been built upon a tradition of service, technical expertise, and creative thinking. Did you know that here at Beck & Company, Certified Public Accountants and Business Advisors, we provide audit, tax, accounting, nonprofit, and consulting services? Our goal is to help our clients’ financial endeavors flourish while exceeding their expectations. Our background and experience in public accounting and business allow us to offer qualified assistance in practically any area of your business. Over the past few weeks we have taken a deeper look into the services we provide so that you can take full advantage of our expertise, to help your organization meet its business and personal financial objectives. We have delved into the different client accounting, audit services, and nonprofit services offered here at Beck & Company, CPAS. In this article we want to highlight our Tax Planning and Preparation Services.

Whether you are an individual, partnership, corporation, or a not-for-profit organization, our experienced staff can develop tax strategies that take advantage of new tax laws and legislation. By seeking to provide individualized, quality tax services in a way that best suits your goals and vision for the future, Beck & Company can provide you with innovative tax solutions.

Our efficiency and cost-effectiveness are further strengthened by our use of computerized tax tools to support our staff, which can, in turn, yield tangible benefits to you. Beck & Company utilizes the latest in tax research tools.

We provide innovative tax compliance and consulting solutions utilizing automated tax tools to enhance our efficiency and cost-effectiveness for our clients, including:

Tax compliance and return preparation for individuals, corporations, partnerships and not-for-profit organizations
Tax planning and preparation to develop tax strategies that take advantage of new tax laws and legislation
Advising on the tax effects of buying/selling a business
Providing representation before taxing authorities as needed

We will help you realize your goals and achieve success through:

Investing in ongoing learning and education that keeps us current on regulations, standards and emerging issues that will help our clients maintain compliance, improve processes, and achieve their financial goals.
Uncompromising commitment to the highest standards of quality on every engagement and participation in the American Institute of Certified Public Accountants Quality Review Program that requires us to maintain quality control systems over our accounting and auditing practice.
Development of service methodologies that achieve the highest standards while maximizing efficiencies for our clients.
Ongoing communication between our staff and clients throughout each engagement to resolve issues as they are identified so we accomplish your financial goals in the timeline committed.
Creative and innovative approach to developing solutions for our clients based on our understanding of your unique circumstances, needs and objectives.
Team of experienced professionals with senior or owner involvement in all client engagements so you know you have direct access to specialized expertise on which you can rely and trust.

At Beck and Company, CPAS we’re different because we’ve been where you are – either in our professional experience in running our practice and business or we’ve seen situations similar to yours when working with clients much like you. Our broad base of managerial accounting and systems experience and our deep understanding of business process and technology enable us to apply knowledge from the past, together with up-to-date best practice know-how to help you solve your challenges and capitalize on the opportunities you face. Our creative and innovative team of experienced professionals with senior or owner involvement in all client engagements ensures you know you have direct access to specialized expertise on which you can rely and trust.

Benefitting with Outsourced Nonprofit Services

The partners and staff of Beck & Company, Certified Public Accounts are dedicated to providing high quality professional services to our clients. We will maintain the highest moral, ethical, and professional standards. We realize that we can only be as successful as our collective clientele; therefore, we dedicate all of our resources to the long-term success and general well-being of our clients. Over the past few weeks we have taken a deeper look into the services offered here at Beck & Company, CPAS. We have delved into the different client accounting and audit services. Today we wanted to focus on our Nonprofit Services.

At Beck & Company we specialize in not-for-profit accounting and auditing. We understand the unique challenge of balancing the needs of your various stakeholders – contributors, members and your board, too. We have experience serving not-for-profit organizations such as unions, homeowner’s associations, religious organizations, charities, and social service organizations. Our Nonprofit Services team is committed to assist you with your back-office accounting and financial needs so you can focus on your mission. Our nonprofit specialists provide professional advice and assistance in a number of areas, including:

Financial Statement Audits
Reviews or Compilations Accounting
Bookkeeping Services
Tax Preparation and Reporting

In addition we provide CFO Services such as business planning, budgeting, cash flow analysis, executive search, and information security.

At Beck and Company, CPA’s we offer controllership services like monthly close, financial statement preparation, financial policy review and development, operational procedure review and improvement and accounting staff evaluation and management. Additionally we offer not-for-profit Account Services which include bookkeeping services such as Accounts Payable and Payroll. Audit Services, Tax Solutions, Transaction Support, Enterprise Resource Planning and SAS 70 and SSAE 16.

Danny Gray, Secretary Treasurer, Fairfax Fire Fighters and Paramedics knows first-hand the benefits of our nonprofit financial services. He stated, “Beck & Company, CPAs is truly exceptional. The fact that they have stood by our side through three different Presidents and several Secretaries and Treasurers proves that they are committed to their clients. After all, we are firefighters, not accountants. We depend heavily on the firm, and they do not disappoint. Beck & Company, CPAs has become an extension to our organization; it really has been – and continues to be – an exceptional relationship.”

Today, many nonprofits are moving toward outsourcing their accounting services. There are five primary reasons why nonprofit organizations would consider outsourcing their finance and accounting functions:

Reduce costs and save money on internal staffing
Gain a higher level of specialized accounting expertise
Save time while maintaining accurate with meaningful financial information
Improved business processes and controls
Eliminate risks associated with poor internal hires

Outsourcing is oftentimes a good fit within smaller organizations who don’t require a full-time accounting staff, but needs someone with an accounting specific education and experience. Or when the organization can’t afford or would prefer not to afford accounting staff. Whatever your reason we here at Beck and Company, CPAS are different because we’ve been where you are – either in our professional experience in running our practice and business or we’ve seen situations similar to yours when working with clients much like you. Our broad base of managerial accounting and systems experience and our deep understanding of business process and technology enable us to apply knowledge from the past, together with up-to-date best practice know-how to help you solve your challenges and capitalize on the opportunities you face. Our creative and innovative team of experienced professionals with senior or owner involvement in all client engagements ensures you know you have direct access to specialized expertise on which you can rely and trust.

Beck & Company CPA’s Client Accounting Services

Founded in 1987, Beck & Company, Certified Public Accountants and Business Advisors is an independent certified public accounting firm serving the Greater Washington D. C. metropolitan area with clients also along the Eastern Seaboard. Our firm has been built upon a tradition of service, technical expertise, and creative thinking. Did you know that here at Beck & Company, Certified Public Accountants and Business Advisors, we provide audit, tax, accounting, nonprofit, and consulting services? Our goal is to help our clients’ financial endeavors flourish while exceeding their expectations. Our background and experience in public accounting and business allow us to offer qualified assistance in practically any area of your business. Over the next few weeks we would like to take a deeper look into the services we provide so that you can take full advantage of our expertise, to help your organization meet its business and personal financial objectives.

Last week we took a look at the Accounting and Audit Services provided by Beck & Company, CPA’s. More than audit services we provide an array of accounting and other services for small and middle market organizations, privately owned companies, partnerships, not-for-profit organizations and other forms of businesses. Another valuable service is our:

Client Accounting Services

Reduce cost while increasing the value delivered by your accounting functions and better utilization of accounting resources. Nonprofit organizations are constantly looking for ways make the best use of their resources to focus on their cause. The complexity of managing the business aspects of a nonprofit organization while furthering its mission may inspire the need to seek outside support for some elements.

Almost every nonprofit can benefit from the insights and expertise of a chief financial officer (CFO) or a Controller, but unfortunately, few can afford to staff that position full-time, at this level and if they do, they may only have five to ten hours of work for this person per month. Overcoming this objective by outsourcing these functions, your organization will be positioned to access CFO and Controllership skills, tailored to meet your specialized needs.

Reducing Costs through Business Process Optimization (BPO)

With a thorough assessment and analysis of your operations and the reorganization and optimization of your processes, which can reduce cost and increase efficiency.

When you outsource some or all elements of your accounting, you will:

Significantly reduce overhead – The finance and accounting function is a cost center and does not generate income.
Optimize processes and improve workflow.
Allow management to spend more time and effort on your operation.
Improve operational efficiencies that impact your bottom-line.
Re-direct finance and accounting expenses to pay for new programs and events.
Gain faster, better financial information to help direct your leaders and drive your mission.

Beck & Company, Certified Public Accountants and Business Advisors is an accounting and consulting firm delivering specialized expertise, creative thinking, and unsurpassed service to ensure that our clients’ financial endeavors flourish. At Beck and Company, CPAS we’re different because we’ve been where you are – either in our professional experience in running our practice and business or we’ve seen situations similar to yours when working with clients much like you. Our broad base of managerial accounting and systems experience and our deep understanding of business process and technology enable us to apply knowledge from the past, together with up-to-date best practice know-how to help you solve your challenges and capitalize on the opportunities you face. Our creative and innovative team of experienced professionals with senior or owner involvement in all client engagements ensures you know you have direct access to specialized expertise on which you can rely and trust.

Helping companies reach their financial goals through Accounting and Audit Services

Founded in 1987, Beck & Company is an independent certified public accounting firm serving the Greater Washington D. C. metropolitan area with clients also along the Eastern Seaboard. Our firm has been built upon a tradition of service, technical expertise, and creative thinking. Did you know that here at Beck & Company, Certified Public Accountants and Business Advisors, we provide audit, tax, accounting, nonprofit, and consulting services? Our goal is to help our clients’ financial endeavors flourish while exceeding their expectations. Our background and experience in public accounting and business allow us to offer qualified assistance in practically any area of your business. Over the next few weeks we would like to take a deeper look into the services we provide so that you can take full advantage of our expertise to help your organization meet its business and personal financial objectives.

Accounting and Audit Services Overview

We provide an array of accounting and audit services for small and middle market organizations, privately owned companies, partnerships, not-for-profit organizations and other forms of businesses. They include:

Financial Statement Audit In a financial statement audit we will examine an entity’s financial statements and accompanying disclosures and provide a report which attests to the fairness of presentation of the financial statements and related disclosures. This service provides the client with the highest level of assurance.
Financial Statement Review A financial statement review of the annual and quarterly financial statements, will include some analytical procedures and result in limited assurance. We will verify that there are no material modifications that need to be made to your financial statements for them to be in conformity with the applicable financial reporting standards, such as GAAP, General Accepted Accounting Practices.
Compilations of Annual and Quarterly Financial Statements. A process in which we will read through financial statements and considers whether they are appropriate in form and free from obvious material errors.

Additional accounting and audit services include, financial statement preparation, bookkeeping and payroll services on an interim or long-term basis, outsource CFO or controllership services, and other services as needed for public companies where Beck & Company is not the auditor of record. In public companies where we are not the auditors, Beck & Company can assist the audit committee and management in a wide variety of services that are considered prohibited, non-attest services; services that cannot be provided by the auditor of record. Simply stated, we are a full-service firm committed to providing you the best possible service. Our goal is to earn your trust and respect and to be considered part of your team

Is My Nonprofit Organization Susceptible to Fraud?

It is hard to believe that an organization dedicated to improving society and filled with well-meaning, hard-working people would be susceptible to fraud. However, even the most well-meaning nonprofits can find themselves in financial hot water.

All too often, when financial issues arise, there is a temptation to mask them. This can be particularly tempting for nonprofit managers. One reason for this is that federal law only requires nonprofits to report financial inconsistencies which are over $250,000, or five percent of the organization’s annual gross receipts.

Sometimes, by the time a nonprofit realizes their misappropriation of funds, they find themselves at risk for losing significant amounts of money should they choose to come clean. Here are two things to look for that could indicate you may be experiencing some financial irregularities.

1. Financial statements are difficult to obtain. Most healthy nonprofit organizations are financially transparent. Stakeholders and constituents should have unfettered access to financial numbers. In fact, certain documents should be available at all times for review such as:

• Bank Statements including all cash balances

• Accounts Payable reports showing money owed to vendors. You will want to ensure vendors are being paid in full and on-time. Any issue here could mean financial fraud.

• A report showing credit lines with the amounts borrowed.

• Accounts receivables reports.

• A list of fixed expenses.

2. Income and cash flow statements as well as balance sheets should be automatically sent to stakeholders on a monthly basis. It is important to read these reports and have an open line of communication should anything seem out of place.

One of the best tools you have is to be proactive in mitigating financial fraud risk. You can conduct a fraud risk assessment by creating a risk map and linking it to your internal controls. Ensure your internal controls are being followed, and test their functionality. Arm your staff with training so that they can become aware of things to look for that may be fraudulent activities.

Organizations with fewer employees oftentimes have less segregation of duties with fewer internal controls. Having a smaller staff often leads to closer relationships and trust, which can create a false sense of security. There are ways to protect a small organization to mitigate their risk. Creating a fraud prevention environment with the following tools is a great start.

1. Use an accounting software solution. Utilizing accounting software can mitigate fraud risk as it automates transactions, provides user security levels, and creates an audit trail and Internal Accounting Review.

2. Conduct employee background checks.

3. Ensure the senior leadership reviews the monthly bank statements. This provides a level of accountability as well as mitigating check tampering.

4. Look for missing or altered checks–anything signed by an unauthorized individual or other inconsistencies.

5. Payroll oversight. Centralize the payroll program in order to eliminate “ghost” employees, which could be fictitious persons on the payroll.

6. Ensure compliance to internal controls.

7. Offer fraud prevention training. Remember, by nature, fraud is hidden. There are no 100% solutions to avoiding fraud. Research has shown that one of the most important deterrents to fraud is “tone at the top.” Management’s stance on ethics has a direct effect on employee behavior. The first goal is to prevent fraud, and the second is to catch it as quickly as possible.

Beck and Company Certified Public Accountants and Business Advisors are here to help. We are passionate about helping nonprofits get their financial reporting in order so that they can reduce the risk of fraud. Learn more about all of the nonprofit services we offer in addition to auditing services. Contact us to lo let us know how we can help your organization with financial services, internal audits, and other services to keep your finances in check and to prevent fraud.