kathy-beck – Page 5 – Beck & Company

Nonprofit Financial Management Challenges: New Boss, New Day, New Communications Needed

Change can be unnerving, and nothing can be as unnerving as finding out you have a new boss coming into work with you. But part of nonprofit financial management is forming teams, alliances, and working partnerships with everyone in your organization, including your boss. Even if you will miss your old supervisor greatly, it’s important to welcome a new one to the team and to set the right tone from day one so that your working relationship will be one of mutual trust, support, and productivity.

Tips for Building a Great Rapport with a New Supervisor

Do you remember your first day in your new role in nonprofit financial management? You were probably quite nervous, wondering if you would fit in with the team and wanting to do a great job for the organization.

The same goes for your new manager. New managers want to be successful but may need help learning the organization’s politics, goals, and structure

You can be a great help to the success of your new manager. These tips will help you get started.

Support success: Make it your primary goal to support your new manager’s success. What do they need to succeed in their role?
Communicate openly: Communicate openly and honestly with your new supervisor. While you may not want to harp on the negative, certainly let the new boss know of the challenges and problems in the department that they may face. Clear and honest communications build trust and rapport quickly.
Ask for what you need: Ask for what you need to complete a project or get a job done. Don’t be afraid to make reasonable requests of your new supervisor. Your success reflects on their success, and they want to help you do a great job for the organization.
Offer help (but don’t be offended when it’s turned down): Your new supervisor is juggling the stress of a new job, a new organization, and challenges you might not be aware of, so be kind and offer help when you can. But don’t be offended or upset if it is turned down. Be available but not overpowering as you offer to help.
Be a team: Work with your new supervisor, not against him. Be a team. Even if you were turned down for the promotion, your job should be a supporting player, not fighting for the lead role.

Avoid These Common Mistakes

In addition to what you can do to create and build a supportive, mutually beneficial relationship with your new supervisor, there are also things you should avoid.

For example, common communications mistakes made with new supervisors include:

Divulging too much personal information right away: In an attempt to build rapport, some people tell all their secrets. Some personal information may be fine but too many details can be intrusive.
Expecting the new person to manage like the old: Every person is unique. Some managers delegate while others have a more hands-on management style. Never assume that a new supervisor is identical to an old one. Each will have their own way of working, communicating, and managing.
Assuming your new boss has the same knowledge: It’s also important not to assume that your new boss has the same level of knowledge and information as your former boss. They may lack invaluable institutional knowledge that you have.
Scoffing at new ideas: The reason managers are brought into an organization is to bring new ideas with them. Be open and receptive to new concepts and ideas. Demonstrate your willingness to try them!

Change is difficult, and getting a new supervisor, especially when you had a great working relationship with the former one, can be especially difficult. But if you use these tips, you can start off on the right tone and keep the relationship humming along for many years to come.

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 Project Management Systems for Better Nonprofit Financial Management

What do project managers and accountants have in common? Both professions seek to minimize and manage risk. Although the two at first do not seem to have much in common, it is this commonality that makes project management a great field to study for hints on how to improve nonprofit financial management. Accounting for nonprofits can be improved by using the terminology, processes, and systems developed by the world of project management.

Partnering with Project Management

Good project managers know that every project begins with fact-finding and the creation of a project document, called the project charter, that provides the scope of the project with goals, milestones, and action steps. Accountants can take this concept even further.

Accountants understand the scope and flow of information within a company. Although they may not create the project charter, they can review it when created by other team members to ensure that nothing is missed. By collaborating with the project management team, they can act as support for the project rather than gatekeepers to the budget. It’s a subtle shift in roles that can make them more of a partner than an adversary within an organization

Managing Project Risk

Every project carries with it some risk. Accountants dislike risk even more than project managers! To mitigate project risk, you can take several steps.

Remain involved in the project. Although you may feel as if you can delegate the project to others and provide only cursory feedback, it is best to remain actively involved in any projects. Watching and monitoring the work as it unfolds and progresses allows you to step in with advice and guidance as needed. As the project unfolds, your assistance may be invaluable.
Ask questions like an auditor. Auditors look at each area and ask probing questions to uncover gaps that need to be fixed. You can work with stakeholders to uncover gaps, problem areas, and untapped resources within a project. Think like an auditor and ask insightful questions.
Adjust for pressure points. Like a load bearing wall, there are going to be some people in the project management team who bear most of the load, especially around delivery time. Adjust around their schedules to free time for the project needs. Work with the project management team to apportion resources and prioritize around major tasks.

By staying close to the project from start to finish, you’ll have your finger on the pulse of the work and can offer advice and make adjustments to the project schedule as needed.

What About Scope Creep?

Nearly every project suffers from scope creep, that uncomfortable feeling that more tasks than originally anticipated are being piled onto the original scope of work. Some level of scope creep is inevitable, if undesirable. Changes may occur because new information comes to light, vendors have altered requirements, and other unexpected problems arise.

But other types of scope creep include the human element, or stakeholders piling work onto the project. If that’s the case, then accounting can act as the team member who validates and allows the request to go forward or pushes it to another project. As the person in charge of nonprofit financial management, you have a good sense of whether tasks might be requirements for the project or whether someone is padding it to help get work done. In that case, you know what to do…

Risk Assessment Post-Project

After the project is complete, an accountant’s job isn’t finished. Assessing post-project risk is another area where accountants can use their unique skills to contribute to the project.

Management may require a report on the project’s completion, budget, and open items. Nonprofit financial managers can lead and guide this effort to help uncover any areas left to complete and how these are best delegated.

The world of nonprofit financial management continues to grow and evolve. No longer limited to spreadsheets, audits, and taxes, the nonprofit accountant is an integral part of the leadership team. Project management skills can be learned and shared with groups to add value from an accountant’s perspective.

Nonprofit Accounting with Beck & Company

The Urgency of Preventing Cyberattacks Hits Nonprofit Financial Management

The urgency of preventing cyberattacks is being felt at nonprofit financial management meetings nationwide. Since the latest string of viruses including Wanna Cry, which hit government agencies and nonprofits in the U.K. and to a lesser extent in the United States, causing millions of dollars in damages and lost work, nonprofits are taking another look at their cybersecurity preparedness.

It’s not a question anymore of “if” an attack will happen, but “when” – and to some extent, what kind. If you think we’re being alarmist, consider this. In 2014, approximately 40% of corporate directors discussed cyberattacks at their board meetings. Today, that figure jumped to 90%. Closing loopholes that keep your organization open to cyber attacks and taking measures now to prevent them is an important step in nonprofit financial management. And that discussion starts at the top of the organization with executive stakeholders, nonprofit boards, and others leading the nonprofit financial management teams.

Risks of Cyberattack: What Is at Stake?

If you haven’t dealt with a bad virus or attack you may not be aware of how much disruption it can cause throughout the organization. Some examples of the ramifications of a cyberattack include:

Extortion: Extortion is an ugly word but it accurately describes the FBI or Wanna Cry viruses that infected nonprofit organizations, for-profit organizations and to some extent with the FBI virus personal computers as well. These viruses encrypt data on infected machines so that users cannot move beyond the equivalent of a digital ransom note. Either pay up or face locked and useless data. While some systems can be cleaned after infection, computers may never fully recover.
Expenses: The expenses of a cyberattack can be astronomical. Consider how many consultants, freelancers, and temps you may need to hire to clean out an infected network. Data backups may need to be restored and everything cleaned, checked, and checked again. The average cost of recover from a cyberattack is $4 million – regardless of organization size.
Lost productivity: While the network and hardware are being restored, valuable time is wasted. Cyberattacks account for a great deal of lost productivity annually and nonprofit organizations are not immune.
Loss of intellectual property: Thefts can take up to 100 days or more to be noticed. If hackers make off with confidential data, plans, and financial information, your organization could face significant damages from loss of intellectual property.
Public relations nightmare: News of a cyberattack can be a public relations nightmare. You will have to conduct damage control PR and counteracts negative publicity. This is the time that could be better spent promoting your organization’s mission and more.
Lost trust: Unfortunately, when news of a cyberattack breaks, there is a sense of lost trust in the affected organization even if they did everything right and nothing wrong. People may be afraid to visit your website, make donations online, or share information with you if it is stolen.

Nonprofit financial management includes making your Board of Directors aware of the potential risks of a cyberattack. Only after understanding such risks can they review the information presented to them to prevent such problems and make sound decisions.

Steps to Take

Nonprofit financial management leaders should take every precaution when dealing with potential cyberattacks. By learning all you can about the dangers and the steps to take to prevent them, you can then share this information with your Board and other leaders to take preventative measures.

Steps you can take to prepare for discussions around potential cyberattacks include:

Taking an inventory of all software and systems, along with associated risks factors for each system such as access levels, password protection, etc.
Formulate a response plan now so that team members know what to do in the event of a cyberattack.
Purchase cyberattack While not preventing an attack per se, it can cover damages and losses so that your organization doesn’t suffer serious financial hardships from a cyberattack.
Hire a good consultant in the event you need extra help with an attack. A nonprofit financial management firm such as Beck & Company can be your backup plan to help you cope with potential attacks, conduct risk inventories, and create response plans.

Just as you cannot prevent every virus (like the common cold) from infecting you personally, you may not be able to prevent every instance of a computer virus from affecting your nonprofit organization. But just as you can wash your hands, get plenty of rest and avoid contagion from people already sick with the cold or the flu, you can also take important steps to prevent infection of your computers from occurring. Make cyberattack awareness, prevention, and recovery a priority this year.

Nonprofit Financial Management and Consulting from Beck & Company

If you need help planning, preventing, and formulating a response to cyberattacks, 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.

Thoughts from Beck & Company Nonprofit Accounting Services – Fixing the Internal Audit Problem

Internal audits are integral for accounting for nonprofits, but the state of the internal audit profession is shaky. According to a Deloitte study, only 13 percent of Chief Audit Executives (CAEs) are “very satisfied” that their functions have the skills to meet stakeholder expectations. Only 28 percent believe that their internal audit functions have a strong impact and influence on their organizations.

There are many challenges in nonprofit accounting audit services, specifically in the realm of internal audits. The dissatisfaction with the internal audit function stems, in part, from a lack of qualified candidates for internal audit positions.

Major colleges and universities rarely, if ever, offer majors in internal auditing, with new graduates entering the internal auditing field with degrees in general auditing or taxation. While both are valuable degrees, neither is an exact fit for the needs of internal auditing. Students must learn on the job and work their way up the ranks of the internal auditing team. But if senior internal auditors have too much on their plates, or retire before new entrants are hired, knowledge and skills aren’t passed along.

Internal Audit at the Crossroads

It’s no surprise, then, that Deloitte’s report entitled Internal Audit at the Crossroads indicates that the entire Internal Audit function stands at the crossroads between past and future, historical functions and evolving needs. Once seen as the guardians and interpreters of past history, CAEs know that the demand for their services is now in the realm of predictors of the future, not people who look back. The trick lies in how to transition to the past and future of internal audits.

The Evolving World of Internal Audits

Key stakeholders such as the audit committee and the executive team must support the Internal Audit’s desire for change. The world of Internal Audits is changing to keep pace with stakeholder demand, but stakeholders must also be open to the new role that Internal Audit can play within a nonprofit.

Most CAEs surveyed by Deloitte know they need to change. About 85% know that their organization is likely to undergo moderate to a significant change in the next three to five years. Around 77% anticipate that Internal Audit must change to meet that demand. But how do you move to the next step?

Key Findings and Action Steps

The Deloitte report is, of course, only one among many to peer into the mind of CAEs and examine the role of Internal Audit. Among the key findings of this report are:

Internal Audit needs and desires more impact and influence within their organizations.
Skills and educational gaps must be addressed. This may be done at the organizational level or within regional groups that can influence higher education organizations, industry groups, and others who provide education and professional development.
Demand for dynamic reporting will increase.
Use of alternative resource models will expand.

Alternative resource models include working with nonprofit accounting audit services, outsourcing nonprofit accounting services, flexible working arrangements to add skilled Internal Audit specialists to teams, and working with independent consultants to fill specific needs within projects. Outsourcing internal audit functions to a specialized nonprofit accounting firm such as Beck & Company makes excellent sense in light of the challenges presented in the Deloitte report.

Change is inevitable, and smart nonprofit organizations embrace, rather than fight, change. The role of Internal Audits is ever-changing and is expected to undergo major changes in the next three to five years. Will you be ready?

Nonprofit Accounting Audit Services from Beck & Company

Nonprofit accounting audit services are available from Beck & Company. If you need to fill gaps within Internal Audit teams, need support for CAEs, or seek experienced nonprofit accounting specialists, Beck & Company can help. Beck & Company are Washington DC nonprofit advisors. We also 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: Mastering Nonprofit Payroll

An important aspect of accounting for nonprofits is mastering the rules and regulations of nonprofit employee payroll. Even though nonprofit organizations may be tax-exempt, you must still contribute payroll and other taxes at the federal and state level. It’s time to master nonprofit payroll accounting, so get your pencils sharpened or your tablet ready and take notes. This is something you really don’t want to make a mistake with when you’re handling payroll.

But We Are Tax Exempt!

A tax-exempt organization is one that has been granted tax-exempt status by the federal government. Your organization does not have to pay federal corporate taxes, but your employees are still responsible for filing and paying state and federal income tax. Both you and your employees are also required to file and pay the appropriate federal, state, and local Medicare and social security taxes. Tax exempt does not mean you are forever free from paying all taxes – just exempt from certain ones.

Exemptions

If you must file Medicare, social security, and other payroll taxes, are any exempt? Yes, some organizations may be exempt from paying specific payroll taxes. These include:

Some churches and church-controlled organizations may take an elective exemption from paying FICA (social security and Medicare) taxes.
Some services performed by ministers or members of religious orders may be exempt from FICA.
Compensation paid to students may be exempt from FICA.

FUTA Taxes

The IRS has stated that “Religious, educational, scientific, charitable and other organizations described in section 501(c)(3) and exempt from tax under section 501(a) are not subject to FUTA tax and do not have to file form 940.”

But before you celebrate, keep in mind that you must receive a favorable determination letter from the IRS to qualify for this exemption. State and local laws may also disregard the exemption, so you should check with your local government offices to ensure you are in full compliance with local tax laws.

What About Volunteer Compensation?

Volunteer compensation falls into a bit of a gray area. Thank-you gifts to volunteers that hold little cash value, such as a goody bag for helping out with a charity event or a plaque to honor volunteers isn’t taxed. Gift cards, cash awards, and other types of remuneration may be taxable. When in doubt, speak with an experienced firm that specializes in accounting for nonprofits.

What If I Don’t File Payroll Taxes?

Ignorance may be bliss for many people, but not when you’re running a nonprofit organization. Don’t remain ignorant of your duties to file and pay taxes on your employees’ payroll.

If you do neglect to file and pay important taxes, the responsibility ultimately lies on the shoulders of your board of directors. Voluntary board members can be held liable for unpaid taxes and the resulting consequences, so if you serve on a nonprofit board, it’s wise to pay attention to accounting for nonprofits and to pay attention to how payroll taxes are determined and filed.

Keeping Payroll on the Right Track

To keep your nonprofit payroll running smoothly, consider investing in accounting for nonprofits software, payroll software, or a combination software product that provides you with both accounting and payroll functions. Such software can be customized with local, state, and federal tax information so that if your nonprofit operates across multiple states, you can manage local laws easier.

Accounting for nonprofits can be complex, but fortunately, with the right diligence and research, you can ensure that your organization’s payroll is handled correctly.

Beck & Company

Beck & Company are Washington DC nonprofit advisors. We also 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 x8001.

Smart Nonprofit Financial Management: Job Flexibility as a Retention Tool

Improving retention rates and lowering turnover is a necessary consideration as part of nonprofit financial management. The biggest issue for a nonprofit human resources manager is employee turnover. According to a survey from Nonprofit HR, total turnover percent is around 19%. This is high compared to the national average of 11%.

The hiring process takes time and costs, on average, $4,129 per employee. Consider all the good work that your nonprofit organization does; how much could it do with that $4,129 back in its operating budget?

There are several things that your organization can do to reduce turnover and improve retention. Some of these actions do not cost much in terms of cash outlay but offer high value to your employees. They can help you both attract and retain top talent. Among the things you can do is offer job flexibility to your employees.

The Attractiveness of Job Flexibility

The average worker today has more responsibilities than ever before. Both men and women may share childcare responsibilities while juggling elder care needs for aging parents. They may be pursuing advanced degrees or completing college degrees after hours, juggling co-parenting duties with former spouses, and maintaining a household for their children and current spouse. Lifestyles have changed, and with these changes comes ever-increasing demands on workers’ time.

That’s why flex-time is so appealing. Job flexibility offers a benefit that, to some, may be even more attractive than money. It’s difficult for families today to work around school and employment schedules. Having options already worked out in advance with an employer gives workers peace of mind. They know that if the school nurse calls and says that a child is running a fever and needs to leave school they can leave without a fuss and take care of their family first. Such arrangements boost loyalty to your nonprofit organization and help keep employees long-term.

Job Flexibility Options

There are many ways in which an organization can offer job flexibility. These include:

Flex-time: Let workers adjust their hours to meet family needs, medical appointments, or other obligations. Approximately 96% of the largest for-profit firms in the nation offer flex-time, and it’s a growing trend. If you compete with for-profit entities for talent, this may be a simple way to make your benefits package as attractive as theirs to potential employees.
Reduced hours: If your nonprofit organization has seasonal peaks and valleys in its work, consider allowing reduced hours during the ‘valley’ demand periods. When demand for services drops, consider allowing people more time off, shorter working hours, or other perks.
Telecommuting: With the amount of free technology and cloud-based systems available today, it’s surprising that more nonprofits aren’t embracing telecommuting as a job flexibility option. Telecommuting is a very attractive job option for some nonprofit organizations. While not every job can be a telecommuting job, positions in the operations, accounting, finance, membership services and other departments may be able to accommodate telecommuting.

Cloud Technology and Job Flexibility

It’s worth mentioning again how cloud technology facilitates job flexibility. Cloud technology is accessed via the internet, so any device – tablet, desktop, smartphone, laptop – can be used to access important software needed for work.

Communication services that include messenger apps, email, instant messaging, video and audio conferences can make it easy to telecommute. Employees can attend meetings, share files, and ask quick questions via their computers. Virtual offices are becoming more the norm, so people outside of your organization will likely take the dog barking, doorbell ringing, or other ambient noises during calls in stride.

New Recruiting Tools Boost Nonprofit Financial Management

These and other recruiting tools can help your nonprofit financial management by reducing the high cost of employee turnover. When employees leave, you lose more than the $4,129 previously mentioned. You lose precious time – time spent posting job notices, reviewing resumes, and interviewing candidates. You also lose a great deal of organizational knowledge and momentum as new employees must learn the organization’s culture and methodology as well as their job requirements. Embracing job flexibility can be of enormous help to the problem of nonprofit turnover.

Beck & Company

Mentoring Helps Executives with Nonprofit Financial Management

Executives and managers in the field of nonprofit financial management can benefit from mentoring just as much, if not more so, than entry-level staffers.

We often think of mentoring as the process of helping a novice or junior-level employee gain the confidence, experience, and seasoning needed for promotion or increasing responsibilities. The name itself, mentoring, conjures images of an old, wise counselor and a young person shadowing the mentor to learn through experience.

Learning isn’t just a young person’s purview anymore. Nonprofit financial management offers many challenges that can be difficult for executives and managers to navigate on their own. Through a mentoring relationship, managers and executives have the opportunity to seek guidance, insight, and feedback from someone with equal or greater experience.

It’s Lonely at the Top

You’ve heard the expression “It’s lonely at the top.” Senior-level leaders often struggle to find someone to share ideas and solicit feedback from because there are few, if any, people with the same amount of experience as they have within the organization.

Mentors can help you with these issues. A mentor who works for another organization can act as a sounding board and confidante for problems you need to talk out with an experienced person. Asking for guidance, ideas, suggestions, and solutions and working on them with your mentor can also broaden your leadership skills.

By forging professional relationships with other nonprofit leaders, you’ll have a ready-made network of people to tap into when you need to consult with others.

Making the Mentorship Relationship Work

To make the mentor-mentee relationship work to its fullest potential, start with an action plan. Mentors should work with their mentees to form a written plan. Identify the skills you wish to work on together. Then, identify projects, opportunities, and areas where you can build those skills in the next several months.

Choose an area to work on that will make the biggest impact on your own needs. Time management and delegation are two areas that leaders often struggle with and that a mentor can be helpful to resolve. The more time you free up through delegation, the more time you will have to work on projects that will benefit your nonprofit.

Regular face-to-face meetings are also an essential component of the mentoring process. Regular meetings ensure accountability, clear feedback, and trust-building that is essential to successful mentoring.

Finding a Mentor

All of this may sound terrific, but how do you find a mentor? Check with professional associations first. You may find someone willing to become a mentor or an active mentorship program. If they do not have one, suggest one. You may be surprised by the interest in such a program.

Consider becoming a mentor to others too. Skilled executives are teachers, leaders, and cheerleaders. By sharing what you have learned along the way, you’ll help improve nonprofit financial management skills for others as well.

Mentoring others also brings with it several positives. If you take the time to mentor others within your own organization, you’ll help people improve their skills so that when the opportunity for promotion and advancement arises, you will have leaders ready to step into new roles. It’s a win-win for all when you embrace a culture of mentoring and begin the mentoring process yourself.

Beck & Company

Accounting for Nonprofits: The Challenge of Revenue Recognition

Let’s face it – accounting for nonprofits can be complicated. Revenue recognition is one area, for a nonprofit organization, that can be especially complex.

Revenue recognition for many organizations is straightforward. But if your organization’s revenues arrive through multiple, separate channels, you may need to develop a procedure for categorizing revenues so that their recognition is consistent.

Added to these challenges, of course, is the new FASB revenue recognition rules for nonprofits and the new reporting standards. Taken together, it may seem like an unwieldy group of challenges. If, however, you begin to sort through each point separately, you can make sense of it all and put into place a streamlined, standardized method of accounting for nonprofits that make sense.

Accounting for Nonprofits: Revenue Categories

Revenue may fall into the following general categories:

Contributions
Exchange transactions
Promise to give

Within the “promise to give” category, you must also determine whether the gift is conditional or unconditional and whether the promise is legally enforceable. For example, a will is a legally enforceable promise to give if the deceased specifies an amount to be given to your nonprofit upon their death; a verbal promise is not legally enforceable.

Such as the general categories. Let’s delve into each one and explore how revenue recognition fits into each category.

Contributions or Exchange Transactions

Most your revenues are likely to be contributions or exchange transactions. Contributions, as the name implies, are generally resources donated to a nonprofit for its use. Monetary contributions, donations of equipment, automobiles or building supplies, and other items are generally accepted as contributions. The donor gives them to the organization without receiving any monetary or tangible property in return.

Exchange transactions, on the other hand, usually occur when a nonprofit indicates that it is seeking resources in exchange for unspecified benefits. Payment by the resource provider equals the value of the assets, or the value plus a markup. The nonprofit may be penalized for nonperformance, or some other expectation may be affixed to the transaction.

An example of an exchange transaction is when a nonprofit contracts lectures, seminars, or professional development activities to their members. There is a fee given to the nonprofit in anticipation and expectation of specific services to be performed. There may be a penalty for failing to provide these services.

It can be challenging to distinguish between these two types of revenues in certain circumstances. Accounting for nonprofits has its share of gray areas, and this may be one of them. Accountants preparing the financial statements for a nonprofit organization may wish to consult with auditors before preparing the financial statements to discuss how to recognize tricky revenues. Then, guidelines can be put into place to categorize similar revenues in the future.

Conditional and Unconditional Gifts

FASB Accounting Standards Codification (ASC) Section 958-605-25 states that nonprofits wait to recognize revenues from gifts until they are reasonably sure that they will receive the gift; in other words, that there is a low likelihood that the conditions surrounding the gift will not be met.

An example is a donor who decides to give an organization $100,000 on the condition that matching revenues are raised. The donation isn’t recognized until the conditions are met.

On the other hand, that same donor may give the organization $100,000 with very easy conditions attached to it. They may require an annual report demonstrating how the finances are to be used or a personal tour of the organization each year. In such a case, the revenues may be recognized immediately since the conditions are so easy to meet.

If you aren’t sure what to do, you have several options. Speak with your accountant and discuss the matter together to determine the appropriate method to recognize revenues for gifts. If the conditions surrounding the gift seem murky, then a call to the donor may be in order to ensure that you are adequately meeting their conditions for the gift. It doesn’t hurt to ask.

Help with Accounting for Nonprofits

As you can see, there are many challenges with revenue recognition for nonprofits. Some items may be quite easy to categorize, while others may be difficult. When in doubt, contact a professional accounting firm that works exclusively with nonprofit organizations. Beck & Company is one such firm with the experience and insight into the world of nonprofits to help you with these and other issues pertaining to accounting for nonprofits.

Beck & Company

Mentoring for Senior Level Accountants

Accounting for nonprofits includes both the people and the skills they bring to the world of nonprofit financial management. Skills can be acquired through formal studies, such as a college degree and CPA program, or through additional professional development. One often overlooked method of improving professional skills is through mentoring. And while we often think of mentoring programs as programs for people just entering their careers, senior-level accountants can benefit from mentoring just as much, if not more so, than junior level accountants.

Newcomers to the professional world of accounting benefit from mentorship in many ways. A mentor can help you navigate new territories, such as office politics, ethical issues, and career decisions. They can help you choose the best school to finish your CPA or listen to you and provide advice as you juggle work, family, school, and career issues.

But senior accountants working at nonprofits face these and even more challenges. Challenges, issues, and problems don’t go away the higher you rise in the company’s ranks. Instead, they grow increasingly complex. The opportunity to network with and be mentored by other senior accountants offers priceless opportunities for professional growth.

Issues for Senior-Level Accountants: It’s About the People

For senior-level accountants, the issues they bring to mentors aren’t about the work itself, but about the people they manage. Management takes practice and training and often improves the most from mentoring. Most people aren’t natural-born leaders and managers and need good managers to emulate. That’s where mentoring comes into the picture.

Through mentoring and modeling better management and communication skills, those working at accounting for nonprofits can learn and grow.

The Trickle-Down Effect

If you think you can’t take the time out of your busy schedule to find and work with a mentor, consider the many positive benefits that mentoring brings not just to your personal and work life, but to your entire organization. Mentoring builds management skills, and better management skills improve morale and productivity in an office. The result is a trickle-down effect that can improve the entire company.

An important aspect of being an executive is being able to help nurture the talents and skills in others. When you improve your skills, you can now share that with others below you in the organization.

How to Find and Work with a Mentor

Many people seeking mentors work with life coaches, business coaches, or other professionals to find a matching mentor who complements their skills. Other avenues to find a mentor may be local networking group, business meetings and groups, and professional networks. You may also find someone you admire and ask if they would mentor you.

If you’re considering entering into a mentoring relationship with another senior level accountant, have a plan of action in mind. Approach the relationship with a goal and be open to the other person. Explain the reason why you are looking for a mentor and how you can mutually benefit from the relationship.

Other tips to find and work with mentors include:

Identify specific skills to work on and communicate this to your mentor.
Establish set time periods for the work and schedule appointments to review progress.
Be receptive to constructive feedback. This isn’t about stroking your ego, but about learning and growing. It can be painful to hear some criticism, but it will help you grow.
Ask your mentor for homework. Assignments can help bring structure to the relationship and give you concrete tasks to work on for your personal development plan.
Track and measure progress. Don’t leave it open-ended. Write down in a personal journal or notebook what you are learning and review it frequently so that you can get the most benefit from the mentoring relationship.
Consider giving back what you have learned through a mentoring relationship with others.

Mentoring takes time, and it’s important to find someone who has the skills required as well as earns your respect. But once you do find a mentor, the relationship can yield many valuable insights that can make you a better manager.

Beck & Company

Issues in Accounting for Nonprofits: Handling Revenue Recognition

Among the topics addressed with accounting for nonprofits, revenue recognition has been in the spotlight recently. With the recent FASB updates changing revenue recognition guidelines and standards for nonprofits, it’s more important than ever to be clear on how your organization recognizes revenue.

One area in which many nonprofits struggle is whether revenue should be recognized as contributions or exchange transactions. The determination between exchange transactions and contributions can be made by examining the differences between the two groups.

Exchange Transactions:

Resource provider states that it is providing a resource in exchange for benefits.
Payment by the resource provider equals the value of the assets to be provided by the recipient, not for profit (NFP) organization, or the asset cost plus a markup.
NFP is penalized for nonperformance or for not completing the project.
Assets are delivered by a provider to individuals or organizations closely related to the nonprofit.

Contributions:

The not for profit solicits for a contribution. It’s clear they are seeking contributions.
NFP is not penalized for nonperformance.
Resource provider states or insists that it is making a contribution.

As you can see between the two groups there can be some gray areas. That’s why many nonprofit accountants ask clients to bring in anything they aren’t certain of to ensure it’s recorded correctly. It helps to get a second opinion on many of these issues.

Difficult Judgment Calls

Sometimes, the judgment call between a contribution and exchange transactions can be difficult. Some accountants suggest having a consultation between auditors and preparers to ensure the information is clearly defined.

Conditional or Unconditional?

FASB Accounting Standards Codification (ASC) Section 958-605-25 asks that nonprofits wait to recognize contributions unless they are sure that all of the conditions around contributions are met. For example, if you’re running a matching donation program, wait to record the donations until the conditions of the match are met. Otherwise, you run the risk of having to correct numerous entries.

There are some examples when conditions can be so easily met that it is acceptable practice to report the contributions immediately. If the conditions of a donation are simple, such as a thank you letter or public acknowledgment, this can be made quickly and easily. It may be a simple matter to report the contribution immediately.

Another gray area may be the difference between promises to give and intentions to give. What’s the difference? Let’s say that someone calls a nonprofit organization and claims they will give it $10,000 in their will. That’s merely an intention to give. There is no binding, legal information holding that person to their claim. On the other hand, an actual will, filed in a court jurisdiction, that includes a legally binding statement of the gift of $10,000 may be accepted as a promise to give. In that case, it is now an obligation of a creditor. The estate is held to account and must complete the transaction, so the amount can be recorded by the nonprofit.

As you can see, there are many areas where professional judgment and discernment must be used to determine when, how, and why to record items in specific ways. Accounting may be viewed as a very black and white profession, and while it is true that $1 is $1 no matter how you look at it, the type and category under which that amount may be recorded may be subject to an accountant’s scrutiny and judgment.

That’s why it is so important with accounting for nonprofits to find a professional services firm that you can trust. Your accountant will make many judgment calls and help guide you through the many state and federal laws and guidelines to handle your nonprofit finances. With a good accounting firm by your side, you can rest easy, knowing that your finances are handled to the benefit of your organization and its constituents.

Beck & Company

Beck & Company works 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 x8001.