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Finding the Best and Brightest Nonprofit Financial Management Talent

An organization is only as good as the people who work there, so finding the best and brightest nonprofit financial management talent is critical. Strong finance leaders can help your organization manage its money so that you can serve more constituents and use your margin to fulfill your mission.

But where do you find the next group of leaders for your organization? Many nonprofits struggle through the hiring process. Here’s how to improve your hiring process to recruit and hire top talent.

Recruiting Is an Ongoing Action

Think about top-rated athletes and sports teams. Wouldn’t it be funny if they simply put out an ad on a website: “Wanted: Quarter Back for NFL Team.” Not only would they be inundated with ill-qualified responses, but there would be thousands, perhaps millions, of people lining up, sending in resumes, and putting their qualifications out there for such a coveted spot.

No, sports teams never stop recruiting. They send talent scouts to the minor leagues or to college campuses to watch young players in action. Recruiters follow good players in the news, on social media, and even meet with them to gauge their interest in joining their teams. It takes months and years to find the best athletes in the nation and to hand-pick the ones teams want to try out.

Companies who want the best people for their staff must also continuously recruit. Most companies are reactive rather than proactive when it comes to recruiting. They wait until there’s a vacancy, then they dust off the job description and post an ad on a website. Then they wonder why they can’t find the best people for the job.

Like a professional sports team, your organization should always be recruiting. It sounds difficult, but you can make it part of your team’s daily work if you include these recruiting tasks in your typical workday.

Network with professors and local colleges: These are akin to the minor leagues of your profession. Get to know the colleges and the professors teaching in the departments that produce graduates for your specialty area. Once you know the professors and they know your organization, they will be more likely to refer people to your company when you’re recruiting.
Develop broad talent networks: Where did you find your best employees? Consider making those routes a priority as you cultivate your talent networks. Joining local business associations and groups is one way to build your talent network. The more people you know, the better the opportunity to find help when you need it.
Offer apprenticeships: In olden days, newcomers to a profession worked as apprentices to the smith, the baker, or other skilled professions to learn the trade. Although apprenticeships are rarely heard of today, you can begin an apprentice program for specific nonprofit skills such as your internal auditing team or your fundraising team. Paid apprenticeships and internships are a great way to find potential candidates for entry-level positions, and your organization will become known as a place that values and helps newcomers to the profession.
Consider a competition: A competition for the best fundraising ideas or other plans may be just the thing to bring really talented candidates to the forefront of the talent pool. Think about the ways in which a competition may be helpful to your company to find and assess potential employees.
Promote your company brand: Companies and organizations have an employment “brand” that helps them develop a reputation in the industry for their workplace. Your company’s workplace has its own style; formal, informal, casual, open, etc. You also develop a reputation for what you do, whether it is an environmental, political, or other cause, a membership organization, or some other nonprofit focus. Understanding and promoting your organization’s workplace brand throughout the year is another way to keep recruiting. By the time you get to posting that ad, candidates will have heard of your organization and what it is known for and may be eager to join.

The next time you have a vacancy, don’t panic. If you’ve taken these steps to heart, you’ve always been recruiting. It will be much easier to pick from among a small, well-known talent pool than to recruit among strangers. You may even have people vying for a job with you if you’ve really handled recruiting well. Always be recruiting!

Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

Accounting for Nonprofits: Finance and Fundraising Cooperation

Accounting for nonprofits includes both the finance and fundraising departments. These departments may be in the same division: accounting. Yet, although you work in the same office, it may feel as if you’re in entirely different organizations.

Although two entirely different groups, both share similar challenges. It’s important for both finance and fundraising to understand the duties they each perform, as well as the challenges they share. Understanding these facts leads to better communication and outcomes for all.

Similar Challenges

The finance and fundraising departments reflect different functions. Finance manages the money within a nonprofit; fundraising generates income to support programs. Both offer valuable services but have different budgeting needs. Often, these needs come into conflict.

The fundraising department wishes that the finance department could:

Understand that you must spend money on marketing to raise money for donations.
Acknowledge the inherent challenges of fundraising, especially during economic downturns.
Assist with improving and maintaining strong donor relations.
Be flexible with fundraising—it’s not always black and white in this group.

Meanwhile, down the hall or across the room, the people in the finance department also face challenges that they wish the fundraising department understood. Your colleagues in the finance department probably wish that you could:

Ask for help when you need it.
Understand and acknowledge that finance’s job is both time-consuming and complicated.
Help them by providing information when they ask for it and need it.
Learn basic accounting best practices.
Adhere to deadlines.

When you look down the list of things each group wishes the other knew, the commonalities stand out. Respect. Understanding. Better communications. It’s a simple wish list that can be a reality with the addition of a few steps and tools to help all do their work better.

Bringing Together Finance and Fundraising – Happy Together

You can help both fundraising and finance meet in the middle by offering software that makes accounting for nonprofits easier. Software such as Intacct ERP software provides support for all financial transactions and obligations, including fundraising.

Data that is entered into one central database can be shared without barriers. It makes communication around issues related to the data easier. Finance can offer insights and support to fundraising; fundraising can share their needs and goals with finance. It’s a simple best practice that facilitates better communication and shared goals.

Other best practices that both finance and fundraising might consider implementing include group meetings, stand up meetings, and meetings with the entire accounting team. Such meetings need not be lengthy. “Stand Up” meetings come from the literal requirement that people remain standing during a meeting. Because you can’t get comfortable, you keep the meeting short. Each person reports quickly and succinctly on their team’s accomplishments and needs for the week. It’s also a time when groups can ask questions of one another and share information so that everyone is on the same page.

Accounting for Nonprofits: Improvements with Communications

Accounting for nonprofits includes both fundraising and finance. By focusing on what you hold in common and on the shared goals that support your organization’s mission, you’ll find that many aspects of your work improve. Software such as Intacct ERP software facilitates this transition as it provides enhanced reporting and insight into your organization’s data.

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Nonprofit Financial Management – Funding Technology Upgrades and Projects

Nonprofit financial management includes budgeting for special projects. One such project you may be considering is a technology upgrade or special project. Purchasing new systems, updating hardware, or even finding a better smartphone plan for your nonprofit’s employees are all part of technology upgrades.

As a nonprofit organization, you may have even bigger aspirations than new hardware. Perhaps your organization uses technology to help achieve its mission. A big technology project can be costly, but with the right nonprofit financial management and a few tricks up your sleeve, you may be able to find ways to pay for it that won’t break the bank.

Read today’s article to learn how to plan for your next fund accounting investment using Intacct, Beck & Company’s nonprofit accounting solution. If you’d like to know more right now, contact Beck & Company online or call direct: (703) 834-0776 x 8001.

Donated Computers

Donated computers offer many pros and cons. The condition of the equipment affects its value. Newer equipment is, of course, more valuable, and given the two to four-year utility of computers, an important consideration.

Monitors, printers, copiers, and other devices can also be donated to your nonprofit. A donation drive for technology can be a productive endeavor, especially if you are seeking several computers to fill a classroom or as part of a giveaway program.

Corporations may contact your organization to donate computers when they upgrade their own hardware. It’s important to find out all you can about the potential donation before it arrives on your doorstep. Ask how old the computers are, if they are Mac or PC, and when they were last used. Confirm if the company will deliver the equipment of if you should pick it up yourself.

If you cannot use the donation, be honest with the company. What you cannot use, another charity may be able to use.

Donated computers may need their hard drive reformatted and updates installed. It’s a good idea to have a technician run a virus scan on them, as well, to make sure there’s nothing malicious accidentally lingering on them.

The unfortunate drawback of donated computers is that given a short lifespan for the average PC, the donated machines may not last very long. Corporations get heavy use out of their computer equipment and only trade up when they can no longer justify the cost of keeping up old equipment. You may not be getting a great bargain.

Finding Technical Help

If you need technical help with updates, upgrades, or programming needs, there are several options to find volunteers. You can check with your local college or high school’s computer science department to see if they have a job placement board. Ask if they place interns, too. You may be able to offer someone a hands-on internship and a letter of recommendation.

Finding Funds: Focused Donation Drive

Another route you can explore is a focused donation drive, with the proceeds benefiting a specific technology project. A special alert sent to donors, a landing page constructed just to announce the project, and the promise that 100% of the donations received from this drive will go towards the purchase of technology may inspire people to give for your project.

The more specific you can be about the project requirements, the better. Spend time in your marketing and donation materials explaining how the computers will be used and how they will benefit the end users.

An education nonprofit dedicated to helping at risk kids in a poorly funded school may share pictures (with the school’s permission) of the classrooms where the computers will be used, the school budget deficit that led to the drive, and other facts that help paint a clear picture of the need. All these ideas go a long way towards helping donors see how their money will be used to support the organization’s mission and goals.

Approach Your Trusted Donors

There’s a cadre of trusted donors, friends of the organization, and people who you can rely upon to come through for your nonprofit in a crunch. Consider making a personal appeal or pitch to these people, explaining the technology need and requesting donations.

Nonprofit Financial Management Help from Beck & Company

Beck & Company is a Washington D.C. area nonprofit accounting firm with a team of expert auditors, accountants, and advisors available to help nonprofits of all sizes. We provide a variety of consulting, auditing, and accounting services to help you improve operations and efficiency. For more information, please contact us at 703-834-0776 x 8001.

Accounting for Nonprofits Update: Implications of Revenue Recognition changes

Here’s an update from the world of accounting for nonprofits on FASB Accounting Standards Update (ASU) No. 2014-09, Revenue From Contracts With Customers (Topic 606), perhaps the most comprehensive set of changes to accounting principles ever released by the organization. These changes in revenue recognition impact almost every company in the United States applying GAAP. In fact, any company with tax compliance requirements should consider themselves affected by Topic 606.

Find out how Beck & Company can help work smarter the easy way with Outsourced Accounting. Contact Beck & Company online for more information, or call us directly at (703) 834-0776 x 8001. We look forward to hearing from you.

Effective Date

If you handle accounting for nonprofits, you need to know the effective dates. These are the dates by which you should begin applying the changes in revenue recognition. The current dates are as follows:

December 15, 2017: Public entitles, certain not for profits, and certain employee benefits plans.
December 15, 2018: All other entities.
Interim periods in fiscal years after December 15, 2019, will impact other entities.

Improving Transparency and Clarity

FASB launched these recommendations after lengthy consideration, considering feedback from many quarters in the world of accounting for nonprofits and for profits. The goals of Topic 606 are to improve transparency, clarity, and usefulness of reported accounting information.

The goals include the desire to:

Streamline statement preparation
Reduce essential guidance
Offer a more robust revenue framework
Improve comparability across entities
Remove inconsistencies
Fix and remove weaknesses in prior revenue standards

These sweeping changes were well received by most accountants, but as the date for implementation draws nearer, there are some concerns being voiced.

Over time, industry-specific revenue reporting nuances and eccentricities crept into accounting, until the actual revenue reporting became complex and difficult for people outside of the accounting world to understand. The new standard seeks to streamline reporting so that all industries report along similar lines.

Questions and More Questions

Those responsible at nonprofits for implementing Topic 606’s guidelines have voiced several important questions related to implementation.

FASB has, to date, released four sets of clarifications:

ASU No. 2016-08, addressing principal versus agent considerations;
ASU No. 2016-10, identifying performance obligations and licensing;
ASU No. 2016-12, a clarification of narrow scope improvements and practical expedients (directed at items such as the reporting of noncash consideration, contract modification and completed contracts at transition, collectability matters, and other concerns); and
ASU No. 2016-20, 13 specific corrections and/or improvements on an array of issues, including loan guarantees, contract costs—impairment testing, and provision for losses on construction-type and production-type contracts.

People responsible for accounting for nonprofits are encouraged to follow the FASB’s updates online in case additional clarification is released before the first date arrives.

Revenue Recognition and Accounting for Nonprofits

Revenue recognition is one of the biggest areas impacted by Topic 606. The new guidelines request that nonprofits recognize revenue when they reasonably expect to receive it. This may impact donations, such as donations made in wills or trusts bequeathed to a nonprofit. In the past, it was up to the nonprofit to decide when they chose to recognize the revenue. Now, FASB recommends as part of GAAP, that nonprofits only recognize the revenue when they have a reasonable chance of receiving it.

Let’s assume that someone leaves $100,000 in their will to the local animal shelter, a nonprofit organization. The animal shelter should wait until the will is in probate and the executor announces all debts have been settled and there is $100,00 left to give to the shelter before recording it.

Accounting for Nonprofits and Tax Implications: Call Beck & Company

Beck & Company is a Washington D.C. area nonprofit accounting firm with a team of expert auditors, accountants, and advisors available to help nonprofits of all sizes. We provide a variety of consulting and accounting services to help you improve operations and efficiency. For more information, please contact us at 703-834-0776 x 8001.

Nonprofit Financial Management and the Need for Security – Even for People You Trust

“Trust, but verify.” That adage is quite true, especially in nonprofit financial management. Even among the best-managed nonprofit organizations, people can be tempted to commit fraud.

It’s important to trust your employees. No one likes to work in an environment of suspicion and doubt. However, trusting employees is one thing—never checking on their work is another.

Many tasks in nonprofit financial management can provide an opportunity for embezzlement, workplace fraud, theft, check forgery, and other financial crimes. Fraud prevention is an important task that many nonprofits leave until it is too late. Then, the proverbial barn door is wide open, the horse is out, and he’s nowhere in sight. Closing the barn door or protecting your systems by putting into place strong checks, balances, and fraud prevention tips is an important part of nonprofit financial management.

Don’t panic! Setting up internal controls for your nonprofit can be easy with Beck & Company’s nonprofit services. Get fast answers when you contact Beck & Company.

Too Much Trust Leads to Temptation

Nonprofit leaders may be completely unaware that theft is taking place. A little money knocked off the top here and there, a dollar or two skimmed from a charity event … it all adds up, even if you can’t see it.

Too much trust can lead to temptation. Take the hypothetical example of Mary Money. Mary is the bookkeeper for a small nonprofit organization. She has two employees working with her, an accounts payable clerk and an assistant she shares with the donation and fundraising person.

Mary has been with the nonprofit for over 17 years, since it was founded. She volunteered with the organization for a year, then became a paid staffer. Today, volunteers and employees alike know they go to Mary with any question or issue and she has the answer.

Mary is so trusted, in fact, that she can sign checks on her own, without the president’s signature. The present travels often on fundraising trips and isn’t in the office every week to sign checks, so she thinks it expedient that Mary can sign off on checks. The president rarely asks to see the accounts.

Auditors, however, find problems. They discover that Mary has embezzled more than $600,000 in dribs and drabs throughout the years. In the past several months, temptation has gotten the better of her, and she has made out several checks to cash which were easy to spot. With a little probing into the company’s security arrangements, it becomes clear that Mary has been using the nonprofit association as her personal piggybank for several years.

Loss Control Methods

No one likes to work in an organization that doesn’t trust its employees. When it comes to nonprofit financial management, however, loss control methods should be in place to deter fraud. It isn’t a sign that you don’t trust your employees. It’s a sign that you care about your organization and the trust that donors and others have placed in it through their financial contributions.

Loss control methods for nonprofit financial management include:

Employee background screening: While screening would not have picked up anything in Mary’s case since she was a long-time employee, it might pick up applicants who have financial woes that could lead them to succumb to temptation.
Financial oversight: Review your organization’s finances on a regular basis. In Mary’s example, the president didn’t review finances regularly enough, leaving plenty of time for Mary to cover her tracks. Both scheduled and spontaneous reviews can help you catch any errors or fraud attempts early.
Anonymous reporting: Set up an anonymous tip line or email box for employees to voice their suspicions. Perhaps the two people who worked with Mary had noticed something amiss but hesitated to “tell” on their supervisor. An anonymous program makes it easier for people to share any problems or issues.
Quick follow up: Any items reported through the tip line should be followed up on promptly. This ensures early detection of fraud.
Two-fer: Always have two people sign checks or have one person sign with the other giving written approval, and two people present when counting out cash or checks.

These are just some steps to take for fraud deterrence and detection. A comprehensive program and policy, along with a process to follow to both detect and report fraud, can save your organization a great deal of headache and heartache later. We can provide services for both accounting and auditing to assist you.

Although it is admirable to create a corporate culture that inspires trust, it is not always wise to trust blindly. Following simple fraud deterrence procedures isn’t a mark of lack of trust, but rather, a simple step that can prevent good people from making bad mistakes.

Nonprofit Financial Management and Consulting from Beck & Company

If you need help planning, preventing, and formulating a response to potential fraud, Beck & Company can help. We are Washington DC area nonprofit advisors and are Virginia certified nonprofit accountants. We work with nonprofits of all sizes, serving many different constituents nationwide, providing a variety of consulting, auditing, and accounting services. For more information, please contact us at 703-834-0776 x 8001.

Accounting for Nonprofits: The Basics of Charitable Deductions

Accounting for nonprofits includes understanding the basics of charitable deductions. Many nonprofit organizations promote the fact that donations count towards charitable deductions on the donor’s income tax without truly understanding what this means and the ramification of such deductions. This primer will help you understand the basics of how charitable deductions work, the limitations on them, and what this means for your nonprofit organization.

Accounting can be easy with the wide range of nonprofit services from Beck & Company. Get trusted answers and solutions when you contact Beck & Company.

Cash and Noncash Deductions

Both cash and noncash donations may qualify for deductions. Nonprofit donors can deduct the gift of money or the gift of an automobile, for example.

To be a valid tax deduction, however, your donation must contribute towards the overall good of the organization. It must also be a contribution to an eligible organization. An eligible organization is defined as any organization the IRS has recognized as a nonprofit. This may include a social, religious, medical, political, or other nonprofit organization.

Why People Donate – Financial Management for Nonprofits

Why people choose to donate to a nonprofit organization is an intensely personal decision. Many choose the nonprofit because of its mission; they believe in what the organization stands for or want to support its projects.

As part of accounting for nonprofits, however, the budget that you help prepare annually can be a powerful tool to support someone’s decision to donate or discourage them from donating. Building an effective budget that supports programs first and puts donations behind programs is an important step. Preparing an annual report that the general public can read and understand is also critical to help people choose your organization as the recipient of their donations.

Maximums for Charitable Deductions

Of course, you want to encourage people to donate as much as they can. But only a certain portion of their donation can count towards a charitable deduction. Charitable cash donations, for example, are limited to 30 – 50% of a patron’s gross annual salary, depending on the type of organization.

You should always provide donors with a receipt for their cash or noncash donation. Cash receipts can be for the face value of the donation, but noncash donations can sometimes be tricky to calculate. How much is a used living room set or a bag of clothing worth to a charity? Many charities can offer you a receipt with a set amount of the donation on it such as $25 for noncash items that are difficult to evaluate and estimate.

Generally, charities give receipts out for donations exceeding $250. However, most charities provide receipts for most donations, no matter how small the amount. Online giving makes it very easy for nonprofits to issue receipts automatically, which can then be printed by the donor and saved for tax purposes.

Affix a Value

Do you give items to donors as a thank you gift? For example, many nonprofits give tote bags away at events. Assigning a value to that tote bag helps recipients deduct the value of it from their charitable contribution. For example, if you give away a $5 value tote bag with every $50 donation, the charitable deduction is only valued at $45.

Although you can’t control how donors will ultimately prepare their taxes, by providing gift receipts, documenting thank-you gift costs, and preparing accurate budgets, you can encourage donations. Accounting for nonprofits isn’t only about numbers on a report; with the right accounting approach, you can help your nonprofit meet its mission goals.

Nonprofit Accounting with Beck & Company

Beck & Company is a Washington D.C. area nonprofit accounting firm with a team of expert auditors, accountants, and advisors available to help nonprofits of all sizes. We provide a variety of consulting, auditing, and accounting services and blend knowledge from the accounting and nonprofit worlds to help you improve operations and efficiency. For more information, please contact us at 703-834-0776 x 8001.

Using Nonprofit Accounting Audit Services for Better Business Insights

Did you know that you can glean important business insights from nonprofit accounting audits? Nonprofit accounting audit services may seem like a necessary annual expense to adhere to the law when it comes to running a nonprofit organization. However, a good audit is worth so much more. Auditing services provide valuable information that can be used to improve many areas of your nonprofit organization.

Many nonprofit organizations are leaving valuable information in the files without understanding how an audit can help them. Here’s how you can leverage your audits for better nonprofit financial management.

Improve Business Performance

According to Deloitte, audits can be used to improve business performance. Currently, more than three-fourths of respondents to the Deloitte survey state that they use their annual audits as a benchmark against which they can check business performance. By examining key areas and financial information, they can assess how well their organization is performing against goals and where they may need to focus their attention in the future.

Finding the Information Needle in the Haystack

Another area in which nonprofit audits can be helpful is finding small pieces of information that have big ramifications. Such so-called information “needles” in the haystack of information may be enough to use as a springboard for improvement. The audit process may uncover such small bits more readily than typical business processes because audits examine everything in an organization’s business and finances.

Learning About Their Market

Another area in which audits may prove valuable is to learn more about the industry and market in which nonprofits work. Auditors who work with multiple organizations may provide insights into industry trends and marketplace knowledge which can be used to improve a nonprofit organization’s ability to compete in the marketplace.

Keeping an Open Mind and Communicating with Auditors

Two things are essential to getting the most value from your audit: keeping an open mind and communicating well with your auditors.

The auditing team may make suggestions or point to information in your audit which can be difficult to accept. It can be a struggle to keep an open mind, but if you do, you can learn more from the audit.

Communicate your needs to the auditing team. Ask them for their expertise and business insights. They will probably be glad to help! Most nonprofit accounting audit services are intended to help organizations grow stronger. It’s more than about compliance with the law; it’s about building better organizations.

As part of your nonprofit financial management, you can gain many business insights from a nonprofit accounting audit service. Work with your auditing team to set expectations and build a process by which their findings and insights can be communicated to the right people within your organization so that every bit of information can be shared and used to make your nonprofit stronger.

Nonprofit Accounting Audit Service with Beck & Company

Beck & Company is a Washington D.C. area nonprofit accounting firm with a team of expert auditors, accountants, and advisors available to help nonprofits of all sizes. We provide a variety of consulting, auditing, and accounting services and blend knowledge from the accounting and nonprofit worlds to help you improve operations and efficiency. For more information, please contact us at 703-834-0776 x 8001.

How to Deter Fraud Risk

Did you know that the typical nonprofit organization loses nearly 5% of revenues in a given year due to fraud? Or that the average loss per incident is $150,000?

These and other facts are included in the Report to the Nations in the global fraud examiners’ study. Deterring fraud should be a priority of nonprofit financial management. Ongoing fraud saps an organization’s finances and can harm its reputation among donors and other constituents. To prevent fraud, the following guidelines may be of assistance. Understanding and enacting each of these guidelines can go a long way towards preventing fraud.

Fraud Risk Governance

Fraud risk governance refers to a set of policies or procedures put in place to communicate the expectations of the nonprofit financial management team, the Board of Directors, and others. It is a system by which risks are controlled, and in which the process that organizations use to respond to fraud is outlined and shared with others. A written fraud risk governance policy is an essential first step to preventing fraud.

Fraud Risk Assessment

A fraud risk assessment conducted by your nonprofit financial management team can provide you with a broad overview of the potential risks and remedies available. As part of a fraud risk assessment, teams create a list of potential fraud schemes and risks. Then, they outline the likelihood and significance of each risk. Current fraud control methods are analyzed, and recommendations are given to mitigating potential risks.

Fraud Investigation – and Correction

Next on the list of best practices is fraud investigation and correction. Steps must be taken to ensure that anyone who is aware of potential fraud reports it and that those receiving the reports act quickly upon the information received. A coordinated investigation should be conducted in a timely manner to address, correct, and remedy any fraud situations.

Monitoring Future Activities

Lastly, steps should be taken as part of good nonprofit financial management to monitor future activities and prevent potential fraud. Learning from the past is a good way to prevent future problems. Close any loopholes, remedy poor procedures, segregate duties, and put into place strong internal controls to prevent future fraud occurrences. Consistent, ongoing monitoring is the best way to prevent and correct fraud once it occurs.

Common Fraud Schemes

Can you recognize some of the more common fraud opportunities and schemes? This list is derived from the findings found in a Report to the Nations previously cited above.

Misappropriation of an organization’s resources such as stealing office supplies, taking petty cash, using the copy machine for personal needs, etc.
Billing schemes that pad bills so that the person enacting the fraud keeps the difference between billed and owed amounts.
Check tampering schemes.
Financial statement fraud.
Ongoing, small thefts that add up to large amounts.

Your Best Defense: A Good Offense

Your best defense against fraud at a nonprofit organization is always vigilance. Good internal controls, consistent monitoring of financial information, and providing employees with a hotline or anonymous tip line to report fraud are all good ways to defend against fraud.

Nonprofit Accounting with Beck & Company

Beck & Company is a Washington D.C. area nonprofit accounting firm with a team of expert auditors, accountants, and advisors available to help nonprofits of all sizes. We provide a variety of consulting, auditing, and accounting services and blend knowledge from the accounting and nonprofit worlds to help you improve operations and efficiency. For more information, please contact us at 703-834-0776 x 8001.

Importance of Internal Controls

In the world of nonprofit financial management, internal controls are the steps organizations put into place to guard against theft, loss, and fraud. Think of internal controls as locks or safeguards against temptation. With the right internal controls in place, you’re less likely to find yourself in the uncomfortable position of discovering employee fraud.

These tips or best practices for internal controls can help your organization take good care of its finances.

The Need for Internal Controls

Some organizations may question the need for internal controls. After all, you trust your employees, right? Trust has nothing to with good nonprofit financial management. They are an important step to remind employees of your organization’s commitment to ethics and integrity.

Internal controls provide a shared set of guidelines that outline exactly what procedures should be followed when employees handle the organization’s finances. This shared set of expectations avoids guesswork and builds a common understanding of the way in which you expect finances to be handled. By making things clear to all, you’re avoiding gray areas which can be exploited as loopholes.

Best Practices for Nonprofit Financial Management and Internal Controls

Some organizations have multiple steps when outlining internal controls, but these four steps have been found to be quite effective at helping to avoid fraud and mistakes. Use these four nonprofit financial management tips to outline expectations around internal controls with your team.

Document the process: The first step is to document all of the procedures that you want followed around the handling of donations, checks, cash, and other financial assets. When information is in writing, it is easy to share and use to train others. A simple, streamlined process for nonprofit financial management is best since it is easier for people to remember and follow. Outline the process for each task, and use bulleted lists of steps. Share the documentation, post it publicly in your company, and train everyone on the steps so that the entire team has a shared understanding of the expectations.
Segregate duties: One person should not be assigned the job of handling money. Anytime money is counted, transferred, or prepared for a bank deposit, two people should be present. The person who signs the checks should be different from the person who writes the checks. Separating or segregating duties around money makes it difficult for one person to perpetuate fraud.
Monitor operations: Keep a close eye on your bank statements, credit card charges, and accounting system. Review accounting reports monthly. Do not wait to reconcile bank and credit card statements as reconciliation can uncover problems quickly such as unauthorized charges or withdrawals. When you keep a close, attentive eye on your finances, it is harder for someone to sneak money out of an account without getting caught.
Stay consistent: Maintaining a consistent amount of money in your checking accounts helps you watch the financial situation. Sudden changes in the account balance may signal a problem unless you anticipate paying large bills or receiving hefty donations. Consistently paying bills at the same time each month, reconciling bank statements on the same day or week, and monitoring charges are all part of keeping a healthy eye on your financial situation.

Nonprofit Financial Management Starts with Vigilance

The best tool for nonprofit financial management is vigilance. Monitoring your organization’s finances signals to all that not only do you care about it, but that you are going to take steps to intervene if something goes wrong. Hopefully, nothing ever will. But with the right internal controls, you can make sure of it.

Nonprofit Financial Management and Consulting from Beck & Company

Beck & Company can help you create your own set of internal controls or with any nonprofit financial needs. We are a Washington DC area of nonprofit advisors and are Virginia certified nonprofit accountants. We work with nonprofits of all sizes serving many different constituents nationwide, providing a variety of consulting, auditing, and accounting services. For more information, please contact us at 703-834-0776 x 8001.

If You Need Nonprofit Accounting Audit Services, You’re Not Alone

Many companies struggle to find employees who can perform audits. Here’s why.

Nonprofit accounting audit services can be handled by staff or by a consulting firm, CPA, or another nonprofit accounting service. Larger nonprofits who seek employees to perform audits may find the task harder than it looks. Research suggests that filling internal auditing positions is challenging.

A study conducted by Deloitte found that 13% of chief audit executives (CAE) were very satisfied with the skills of their audit teams. That’s a lot of people who are less than thrilled with their teams! More than half are dissatisfied with the skills of their teams, which leaves a lot of room for improvement.

Many companies today struggle to fill vacancies on their internal audit teams. It’s not your imagination – it’s hard to find skilled auditors, and here’s why.

Lack of Formal Training in Auditing Skills

Nonprofit audits require extensive knowledge of both the nonprofit world and accounting. Specialized programs to teach auditing skills are few and far between, with only a handful of universities offering auditing majors and courses. Students interested in auditing tend to have general accounting or taxation majors, which does not prepare them adequately to fill vacancies on auditing teams. It’s no wonder that a PWC report found that the number one challenge facing auditing teams is finding qualified candidates and managers for existing employees.

New graduates entering the accounting profession who have majored in taxation or general accounting are more likely to obtain positions in the accounting department of an organization rather than in the auditing area. If they do land an entry-level position in the auditing area, it will be years before they’re able to lead teams. And during that time, senior level people may retire or move to other positions, leaving vacancies that are difficult to fill.

Leaders Needed

Companies seeking experienced nonprofit auditors may find it even harder to fill open vacancies. The hardest task is to find people with 5 to 10 years of experience in the field. People with experience in the industry are in great demand and may be courted by larger firms, drawing talent out of smaller nonprofits just when it’s needed the most.

More Training Needed

Even among those who work in the internal audit department, more training is needed. Auditing professionals need more training, especially in areas of risk management such as cybersecurity. All professionals need advanced training to keep their skills fresh, but for nonprofit auditing professionals, it’s critical that they keep abreast of the latest changes in the field. A mistake in this area could be costly.

Opportunities for Professional Development

Keep your eyes open for professional development opportunities for your team so that they can obtain the skills needed to help with audits. You may need to send them to conferences, seminars, or other events where such classes are offered. By investing in your team’s professional development, you’re demonstrating to them that they are valued, which goes a long way towards employee retention.

Nonprofit Accounting Audit Services

For companies struggling to fill vacancies, outsourcing nonprofit accounting audit services may be the answer. Firms such as Beck & Company are Washington DC area nonprofit accounting auditors and CPAs that provide services nationwide to nonprofits. Services include auditing, of course, but also consulting on a wide range of accounting areas that impact nonprofits.

For more information, please contact us at 703-834-0776 x 8001.