kathy-beck – Page 8 – Beck & Company

Surprising Skills Nonprofit Financial Management Needs – and New Ways to Acquire Them

Nonprofit financial management just took a step in the right direction with the introduction of two new ways in which CPAs will be able to obtain Continuing Professional Education (CPE) credits. The AICPA and the National Association of State Board of Accountancy recently changed the standards for CPE providers as well as NASBA’s Field of Study document. The result? Two new ways in which CPAs can earn valuable professional education credits.

Blended Learning and Nano Learning for CPAs

The two new opportunities for CPEs include blended learning and nano learning.

Blended learning includes a combination of learning methods such as seat-based (classroom) sessions, self-study, and video lessons on demand.
Nano learning consists of short 10-minute modules, usually focused on a specific task. This type of learning is often used to help CPAs acquire specific skills rather than master overarching concepts.

Although not all states accept the new learning methods, many do. CPAs should check with their state chapters of their accrediting body to learn which methods are acceptable for CPEs.

Additional changes are also being made to the Fields of Study document. These changes update categories and descriptions so that they are both current and relevant. The biggest change occurs in the Specialized Knowledge field of study, which now separates computer science application and information technology into its own categories. Specialized knowledge topics can now be specific to industries or categories.

The Importance of Continuing Education for Nonprofit Financial Management

Like any profession, financial management takes knowledge, skill, and practice to do well. The world of nonprofit financial management continues to grow, change, and evolve over time. Consider the new FASB rules of which we’ve written so much. The updated guidelines are the first since 1993, but if you’re not keeping up to date on all the changes in the world of nonprofit accounting, you could miss some of these important elements.

What skills should CPAs in nonprofit organizations master? Here are some you might not have considered:

Presentation and public speaking skills: Nonprofit CPAs may be called upon to address board meetings, present at conferences and in other public spaces. Good speaking skills are critical to represent your organization well.
Interpersonal communications: Interpersonal communications ensure that you can share and listen to knowledge within your organization in an effective manner.
Social media skills: Sure, you might know how to tweet or comment on social media. But nonprofits need social media guidelines for their workplaces just as much as for-profits do, and you may be called upon to assist with and guide social media campaigns for donors and other financial managers.
Management: Learning how to manage a team is both an art and a science. Managers are made, not born, and these are important skills to acquire so you can lead your team successfully.

There are many opportunities for you to learn these skills. Online learning, self-guided learning, professional courses and more provide opportunities for these and more ‘hard’ accounting skills. CPE credits may not necessarily be offered for these skills, but they are equally as important for success as a nonprofit manager today.

New Year, New You: Education and Assistance for Nonprofits

With a new year on the horizon, it’s time to make some much-needed changes. This includes updating your education credentials and staying up to date on the skills you need to make your nonprofit successful.

It may also include working with a nonprofit financial consultant to prepare for audits and more. At Beck & Company, we offer CPA services, nonprofit accounting, and business advisory functions for nonprofit organizations. Contact us today if you would like more information about our services or help with your nonprofit business needs.

Accounting for Nonprofits: Why You MUST Tell a Compelling Story

As a consulting firm that provides accounting for nonprofits, Beck & Company wants to be sure that our clients have accurate and timely information to assist them with their needs. This includes updates on the latest FASB regulations that impact accounting for nonprofits.

By now, you have probably heard of Accounting Standards Update No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. This new update seeks to help nonprofits provide better clarity and transparency in their financial reports. It requires several changes on how information is classified and reported.

Register for this online webinar: Outcome Measures – Metrics That Matter for Nonprofits.

Numbers Tell a Story

People naturally gravitate towards stories. Since earliest childhood, we listen for stories, and we respond to them from an emotional, as well as logical, perspective. So, it’s not surprising that FASB’s new guidelines for nonprofit accounting attempts to help nonprofits tell a story through their numbers. Nonprofits struggling with the new accounting rules should keep in mind the impetus behind the changes. If you keep the reason in mind, it’s easier to understand why FASB has requested the changes it has and how your nonprofit organization can comply with them.

Helping Donors Understand Your Organization

Nonprofit organizations have a responsibility to their donors, patrons, sponsors, and members to tell a complete, comprehensive, and transparent story with their financial reports. People who give money to a nonprofit want to be sure that their money is used responsibly in support of the organization’s mission and activities.

Much has been made in recent years of nonprofits who have spent excessively on activities that donors view as superfluous. Although nonprofits are still free to spend as they wish within the limits of their charter, the new, enhanced transparency in financial reporting will help donors and the public understand how finances were spent.

Telling a compelling, honest and articulate story through your numbers can help donors understand more about your organization. The new FASB requirements, for example, include qualitative information added on how organizations manage liquid available resources and liquidity risks. The updated regulations also require reporting of expenses by both function and nature, two additional areas you can use as an opportunity to share information with your constituents.

Consider the information that goes into these sections. If you are reporting expenses by both function and nature, you can provide additional details that will help donors understand the importance of expense categories. The functional areas can help them understand the areas of your organization. Additional details can be provided to help donors understand the various activities supported by these funds.

Additional Changes in the New Guidelines

There are other changes in the guidelines that will be in effect for fiscal years beginning after December 15, 2017. These include:

Reducing the number of net asset classes from three to two
Continue allowing preparers to choose between the direct and indirect method for presenting operating cash flows
Eliminating the requirement for those who prefer the direct method to perform reconciliation with the indirect method
The reporting by nature and function, as well as reporting on liquidity risks and liquid available resources, as discussed in the ideas shared here.

If you struggle with your accounting for nonprofits, Beck & Company can help. We are a CPA and business advisory firm dedicated to the nonprofit sector. Our many years of experience can help you update your financial compliance, change to follow FASB 958, or handle all types of accounting for nonprofits. Please contact Beck & Company today for further details.

Making Mindful Choices in the World of Nonprofit Accounting

Each day, your nonprofit organization faces many choices. One area where choices are of supreme importance is in the area of nonprofit accounting. Choosing how you classify donations, whether to give a trusted employee a raise, or how to comply with the new FASB 958 regulations are all choices that must be weighed and prioritized based on urgency.

Register for this Webinar Now: Financial Reporting – Is Your Nonprofit Seeing the Full Picture?

When faced with myriad choices, it is easy to feel overwhelmed. As Washington DC nonprofit advisers, we have worked with many nonprofit clients to help them identify and prioritize key elements of their accounting activities for maximum business impact. Here are several tips to help you make mindful choices about your financial and accounting needs.

Three Tips for Nonprofit Accounting to Help You Set Priorities

Focus on strategic clarity: Clarity of purpose, mission and vision is essential for all good business management, but especially for nonprofit accounting. When you clearly identify your organization’s mission and vision, you will find it easier to prioritize the essentials. Activities in direct support of your mission are funded first, with secondary activities funded next, and so on. Developing strategic clarity can be difficult if you are not used to this type of work; a nonprofit business adviser can help.
Diversify income sources: In other words, don’t put all your eggs in one basket. Relying upon one source of funding for the majority of your organization’s support can be catastrophic if something happens to the funding source. Grants may end; donations can dry up if the economy sours. Diversification of your income stream is equally as important as diversifying your investments. Diversification spreads out the potential risk if one stream dries up.
Measure outcomes: Measuring outcomes isn’t just for the for-profit world. Nonprofits should also measure the outcomes of their efforts. Measuring donor campaign results, educational activities, and other projects just makes sense. It is only measuring how well you achieved your objectives that you can prioritize funding in future years. Knowing that one activity achieved its objective while another fell short can help you decide whether additional funding, staffing, or publicity can change the dynamic or not.

Asking the Tough Questions

Asking the tough questions about initiatives can also help you set your goals. It may be difficult to learn that a favorite activity doesn’t meet your revised mission statement, but it is better to learn this now than to continue spending resources unwisely.

Ask yourself:

Are we continuing any activities just because we’ve always done them? Some companies continue with charitable events, marketing campaigns or other activities in the same manner year after year simply because “it’s what we always do.” Always ask if the activity serves the organization’s best interests now.
Are we holding onto “pet” projects? Larger organizations with a strict hierarchy sometimes fall prey to the ‘pet project’ syndrome. It may be the director’s favorite activity, or a cherished idea. It’s done simply because so-and-so asked that it be done. You must have the courage to question even pet projects to prioritize the vital ones from the rest.
Does this serve our constituents? No matter what activity you are considering, asking if it serves your constituents’ best interests helps keep your focus on what you do best. This helps you prioritize your budget and accounting activities around what matters most.

As Washington DC nonprofit advisers, we know how hard it is to ask these questions and to change the status quo. It may be helpful to bring in business advisers to help you sort through these issues dispassionately.

At Beck & Company, we offer CPA services, nonprofit accounting, and business advisory functions for nonprofit organizations. Contact us today if you would like more information about our services or help with your nonprofit business needs.

Accounting for Nonprofits Update: FASB Financial Reporting Standards Changes

If you are in charge of accounting for nonprofits, it is important to keep abreast of the FASB financial reporting standards changes. These changes are the most significant in twenty-three years, and will affect organizations to a large degree.

The New FASB Nonprofit Guidelines

On August 18 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities.

Register for this Webinar Now: Financial Reporting – Is Your Nonprofit Seeing the Full Picture?

Like other accounting for nonprofit tasks, these FASB changes require significant planning and preparation. Failure to begin planning now may mean that your organization is unable to meet the requirements later.

The areas most affected by the changes include:

Net asset classification requirements
Information provided financial statements
Notes about liquidity, financial performance, and cash flows

The Journal of Accountancy states that nonprofits must now report expenses by their nature and function. This is a change; formerly, only nonprofit health and welfare organizations were required to follow this reporting protocol. Now all nonprofits will be required to report expenses in this manner.

In addition, a net presentation of investment expense against return is now required on the face of statement activities. Internal salaries and benefits expenses must also be disclosed as they are netted against investment returns.

Operating cash flows may be presented by either the direct or indirect method, eliminating the need for those who use the direct method to reconcile with the indirect method.

Other highlights of the changes include restructuring the net asset classifications from three to two. Nonprofits are also required to provide qualitative and quantitative information that refers to their liquidity.

The goals of these sweeping changes is to make financial disclosure more transparent for donors, investors and the general public. Many changes also reflect the changing nature of the nonprofit world.

The standard will take effect for annual financial statements issued for fiscal years beginning after Dec. 15, 2017, and for interim periods within fiscal years beginning after Dec. 15, 2018.

Help for Accounting for Nonprofits

Nonprofit Financial Management and the New DOL Overtime Rules

If you are responsible for nonprofit financial management, it is important to understand the new DOL overtime rules. These rules will be in effect starting December 1, 2016, and will impact both for-profit and nonprofit businesses alike.

What Is the New DOL Overtime Rule?

The new DOL overtime rule resets the threshold for who should be paid overtime and when overtime pay takes effect. The revised Fair Labor Standards Act (FLSA) increases the salary threshold for white-collar workers. The threshold for exempt employees has increased from $455 to $913 per week. That is about $23,660 to $47,476 per year, on average.

The only exemptions from paying overtime are for executive, administrative and professional positions making $47,476 or more per year. The annual salary must meet or exceed $47,476 in order to qualify as exempt from overtime pay.

The threshold for so-called highly compensated employees has also been raised. These employees earn between $100,000 and $134,004 per year and perform non-manual labor. They must supervise two or more employees. These employees are now covered under overtime rules as long as their salary does not exceed the upper threshold limit.

Register for this Webinar Now: The Benefits of Integrated Project Accounting and Financial Management.

Both the standard salary and HCE annual compensation limits will be updated again in three years.

Why Does this Matter for Nonprofit Financial Management?

The new DOL rules matter a great deal for nonprofit financial management. You may be required to adhere to it if you conduct business transactions exceeding $500,000 per year (excluding membership fees, grants or gifts).

Individuals may be covered under the revised law if they produce goods or services for interstate commerce and make amounts within the threshold limits. An example may be a nonprofit employee who regularly travels to other states for business purposes. You may need to review each situation on a case-by-case basis and make decisions based on the preponderance of activities that adhere to the rules. Err on the side of caution and compliance with the rules if you are unsure in a given situation.

Consider the implications of overtime on your payroll budget. Depending on how many employees are now covered under the revised DOL guidelines, you may now be required to pay overtime for a considerable number of people.

You may wish to revise schedules and limit overtime, depending on your needs. Weigh the pros and cons of hiring new employees or temps against the need for overtime.

There are several options to navigate these new salary rules. The options include:

Raise salaries: If you have employees who meet the ‘duty qualifications’ and have salaries near the $47,476 threshold, raising their salary would exempt them from the overtime requirement.
Pay overtime: Organizations should pay overtime salary to workers exceeding the 40-hour work week and who meet the requirements.
Redistribute workloads: Examine employee duties and hours, and redistribute tasks if necessary to avoid overtime.
Require overtime approvals: Occasional overtime payment may not be a problem, but you may wish to approve overtime requests to control your budget and employee workloads. Employees may not be aware that you are able to redistribute their workload.

The DOL leaves it up to the discretion of the organization or employer how they wish to address the changes. They neither endorse nor recommend a specific approach, which does give you some flexibility in how you address it within your organization.

Payroll and salaries account for a large portion of any organization’s budget. Nonprofit financial management includes the ability to balance budgets and avoid excess costs. By carefully adhering to the new regulation and understanding its impacts upon your organization, you can maintain a balanced budget that allows you to continue funding your mission.

Financial Advice and Assistance for Nonprofit Organizations

Beck & Company Certified Public Accounts and Business Advisors specializes in nonprofit financial management and issues pertaining to the world of nonprofits. We have extensive experience helping nonprofits of all sizes achieve their mission without sacrificing margin. Contact us for more information.

Accounting for Nonprofits: Close the Book on It!

Preparing Your Books for the End of Year Close

‘Tis the season – the season when nonprofits everywhere start thinking about year-end close. This year, vow that you’ll do all you can to smoothly and efficiently close the books with minimal stress to your accountant. Accountants everywhere thank you.

In all seriousness, there are many reasons why doing a good job preparing your books for the end of year close is important. Without closing your books for the year, you’ll have no idea if your nonprofit was profitable or not. Closing the books and reconciling them means that you’ve tallied up everything for the end of the year, put a period or end point on it, and start with a fresh slate in the new year.

Register for this Webinar Now: The Modern Day General Ledger – Leveraging Cloud Technology for Nonprofit Accounting.

Closing the accounts for the year reset the revenue and expense lines to zero. These ‘temporary’ accounts are now ready for the new year, a clean slate, and a new eye to profitability. Without closing your books, you’ll have a muddle of data to assess, and you won’t get a clear picture on how well your organization achieves its financial goals during the year.

Accounting for Nonprofits: Tips for Success

There are certain steps you can take to successfully close your books for the end of the year. This includes:

Keep your accounts updated: Schedule time monthly to reconcile expenses and income. If you let it all pile up to the end of the year, it will feel overwhelming. There’s also more of a chance to make mistakes and forget items.
Create a checklist: A detailed and thorough checklist that details every step for your year-end close is a helpful resource. Such a process can guide you through the close out each year and save time.
Ask questions during the year: Hopefully, you have a great certified nonprofit accountants to work with, someone who knows your nonprofit and is open to questions. Don’t let questions delay your routine accounting practices. Ask questions throughout the year so that you don’t let mistakes proliferate.
Schedule plenty of time for your audit: Dovetail your end of year close with audit prep, but leave plenty of time for your audit. By doing both at the same time – audit prep and end of year close – you’ll be well-prepared for the new year.

Pay Bills, Lower Receivables

Another useful end of year task to tackle before reconciling and closing your books is to pay off any outstanding invoices so that you carry fewer into the new year. You should also review your accounts receivable file, and attempt to collect any past due invoices. You can certainly carry these over, but it is always a good idea to avoid open receivables. The fewer receivables you have, the more income your nonprofit has at the ready.

While closing out your books may not be top of mind as you celebrate the holidays, tackle the tasks early enough in the month so that you can get them done while people remain in the office. Note when your accounting team may be taking time off to travel or celebrate the holidays, and work around their schedules. You can complete your end of year close with plenty of time to enjoy the festivities of the season.

Beck & Company

Beck & Company provides nonprofit accounting and audit services in Washington, D.C and Virginia. Founded in 1987, we specialize in the world of nonprofit institutions, helping them to navigate the complex world of finance and accounting. Our services are always personalized, and cost-effective for your institution. We welcome your inquiry or call. Contact us today or call 703-834-0776 x 8001.

New Mobile App Helps Nonprofits Reach Potential Donors

If you’re like many nonprofits, your mailing list and email list is bulging with inactive accounts. These are people who, for whatever reason, signed up to receive messages from your organization but who haven’t donated in a while. They may still be interested in your cause or your activities, but you can’t be sure. Yet removing them from your lists seems counter-intuitive. After all, you worked hard to attract them in the first place.

A new mobile app, called LetsAllDoGood, promises to change that dynamic and reach inactive list members via their smartphones. According to the Pew Center for Internet Research and Technology, 68% of all adults own a smartphone, and that number is anticipated to climb until smartphones become as ubiquitous as wristwatches. LetsAllDoGood capitalizes on this phenomenon by offering an app that pushes partner notifications out to people who have downloaded the app.

How It Works

The app works on the same principle as Facebook, Twitter and other social media sites. There’s a constant barrage of communications available, and the average person doesn’t read most of their emails. Instead, they scan headlines and top news to find out what is going on. Sites like Facebook offer messenger apps and alerts that push notifications from the system to a user’s desktop, tablet or phone. LetsAllDoGood works by the same principle.

Users installs the app on their smartphone. LetsAllDoGood signs up nonprofits, who then feed messages out from their organization. The app “pushes” these messages out, which pop up on the screen of the smartphone. It instantly cuts through the clutter.

The app bridges the gap between email, social media, and the users. Each helps communicate important updates with your constituents, but may not reach everyone all the time. It would be wonderful if people opened and clicked on emails to read stories, but they don’t. With the app, messages are pushed right onto the screen, making sure that people see them. This makes it easier to click and read more, click and donate, or share with others.

How the App Can Help You Reach Donors

Some of the people on your current list may be receiving your emails and donation requests, but may not open them. Gmail, for example, pushes what it perceives as advertising or promotional emails into a separate folder, thus hiding them from the average user who scrolls through their list of active emails for important messages. Your email messages may be relegated to this or other folders on many systems.

LetsAllDoGood changes this dynamic by enabling pop up messages on phones. Most people are glued to their smartphones anyway, using them for everything from online banking to finding a restaurant. It’s a simple step to make a donation from their phone using the app. A crisis call for funds, a special event and other triggers can be more successful using the app.

Nonprofits and Tech: The Trend Continues

This mobile app is just another in a long string of technology trends affecting nonprofit organizations. Using email marketing, social media, and other web-based applications and systems to generate interest, enthusiasm and awareness for your mission continues the communication in new and exciting ways.

Until then, learn about LetsAllDoGood on the company’s website. It is free for nonprofits to partner with LetsAllDoGood.

The technology works on Apple products only at the moment. It is expected to be available on Google Play soon.

Beck & Company

Beck & Company is an independent certified public accounting firm located in Washington, D.C. Founded in 1987, we specialize in the world of nonprofit institutions, helping them to navigate the complex world of finance and accounting. Our services are always personalized, and cost-effective for your institution. We welcome your inquiry or call. Contact us today or call 703-834-0776 x 8001.

Add Processes to Improve Nonprofit Operational Efficiencies

Nonprofit Financial Management for Improved Performance by Adding Process Roadmaps

How many times have you started on a project or a task only to have that sense of déjà vu? Perhaps you had to perform that task last year, or a similar task last month. Unless you documented how you went about performing this task, however, it’s unlikely that you’ll remember the exact steps. That leads to duplicate efforts and re-creating the same task over and over again. In other words, you end up reinventing the wheel.

Many nonprofits fall into this trap simply because they are under-staffed. Their current staff is busy completing their assigned task lists, thinking ahead to next month, serving constituents, and doing all of the myriad tasks it takes to keep a healthy nonprofit organization humming along. It can be difficult to carve out time to draft a process roadmap, and still even more difficult to develop a plan to store such roadmaps and transmit them to others during the employee onboarding process. Still, without such roadmaps in place, valuable time is wasted. Nonprofit financial management can improve operational efficiencies by creating a process roadmap.

What Is a Process Roadmap?

Roadmaps are going the way of the telephone book, but they still provide a good analogy for documents around the office. A process roadmap maps out the path from start to finish that you take in order to complete a task. It includes vital information such as who performs which task in the process, what resources may be needed, and when the task should be completed.

Such a document need not be lengthy or cumbersome. In fact, the simpler and easier it is to read and understand, the better. Some companies require process documents to be one page or less to ensure they are as simple as can be.

Once a process is documented, it can then be replicated by anyone in the organization or delegated to someone outside of the organization. It is a great time saver after the initial time is invested into creating the document.

Uses of Process Maps for Nonprofit Financial Management

Let’s take a look at two common tasks nonprofits face and how process roadmaps can help:

Annual charity event: Many nonprofits hold annual fund-raising events such as golf tournaments, sales, open houses, and the like. These events are frequently process-driven and require that multiple people pitch in and ready things for the date of the event. The date is usually set far in advance, so that a timeline can be easily mapped out from the event date back to the first tasks in the process, such as securing the venue. When a process map is in place for an annual event, it can be delegated to multiple staff members, volunteers, or outsourced partners.
Audits: An annual financial audit is another event that can be transformed with a basic process in place and mapped out. You know when the audit will take place, and which documents must be gathered for the auditors. Specific resources may need to be earmarked for the auditing process, such as conference rooms reserved, personnel available, files organized and so on. Once a process is mapped and in place, the audit can go smoothly each year if the process is followed.

Organizing Your Processes

The most efficient way to organize processes is to create a template. The template can include:

Name of the process
Date when the draft was created
A brief explanation of the process
Goals and outcomes
Timeline and deadlines
Materials or other things needed
Step by step instructions, tagged with the role assigned to each step.
List of resources

A shared network drive or cloud-based system such as Google Docs, free to use with a standard (and free) Google account, makes it easy to organize all of your processes and provide access to staff at any given time.

Include Training

Lastly, be sure to include some basic training once the processes are in place. A process can only be used if it’s efficient and if people are aware it exists. Training familiarizes everyone with the steps in the process and provides a valuable opportunity for feedback to adjust the process.

Having your most important projects and events mapped out using a process roadmap saves you a great deal of time and effort. It enables you to transfer knowledge to new employees or volunteers and to smoothly and successfully navigate the path yet again. It is a great tool for organizational efficiency.

Beck & Company

Beck & Company is an independent certified public accounting firm located in Washington, D.C. Founded in 1987, we specialize in the world of nonprofit financial management, helping you to navigate the complex world of finance and accounting. Our services are always personalized, and cost-effective for your institution. We welcome your inquiry or call. Contact us today or call 703-834-0776 x 8001.

Nonprofit Financial Management Tips [Free Webinar]

Why Nonprofits Need to Learn More About ASC 606 and IRFS 15

Nonprofit financial management includes keeping abreast of FASB changes, and examining your accounting methods to ensure they coincide with the latest recommendations. In May 2014, FASB issued Topic 606: Revenue from Contracts with Customers. In it, plans were unveiled to require all entities, both public and private, to change how they accounted for revenues. Revenues were to be recognized when the entity satisfied the performance obligation with the customer. This usually means that when goods or services are transferred to the customer, the revenue can be recognized.

While much of the work of a nonprofit doesn’t fall under the new ruling, some of it might, which is why you should pay attention to the changes and evaluate your revenues accordingly. Activities typical of a nonprofit that might be considered under the new ruling include membership fees, conferences and seminars, subscriptions, tuition, products and services, advertising, licensing, sponsorships, royalty agreements, and federal and state grants and contracts.

Nonprofits seeking to learn more about the law should sign up for the forthcoming seminar from Intacct: The Impacts of ASC 606 on Subscription Businesses. This webinar will take place on Thursday, November 3^rd at 11 a.m. PST/ 2 p.m. EST.

If you are currently using spreadsheets to manage your accounting, it will be almost impossible to comply with this law and IRFS 15 compliance, the effects of which will begin in December 2016.

The webinar is led by Tony Sondhi, a member of FASB’s Emerging Issues Task Force and an expert on revenue recognition. This is a unique opportunity not only to learn first-hand about 606 and IRFS 15 compliance but to learn from a well-known expert and member of the FASB task force.

At this seminar, you will learn more about the changes begun by these rulings, as well as information on how you can interpret and implement them for your organization. You will also learn more about the financial risks for subscription businesses. Many membership organizations rely upon a subscription model, which is directly impacted by these rulings.

According to the FASB document, “The core principle is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.”

The AICPA has put together a good paper that outlines the requirements and delineates the steps to take under each. There are five basic steps to comply with the new regulation:

Identify the contract with the customer.
Identify the performance obligation within the contract.
Determine the transaction price.
Allocate the transaction price.
Recognize the revenue when the entity satisfies the transaction.

Typically, step 5 occurs when goods or services are delivered satisfactorily to the customer.

The goal, of course, is to protect customers and to make it simpler and clearer for entities to recognize revenues. Many organizations are already using similar protocols, and for those organizations, making adjustments to satisfy the requirements should be simply. For others, it may take a deeper look at the way they are recognizing revenues, and shifting some of their processes.

Do You Need to Make Adjustments?

All nonprofits should assess their accounting practices and see how their revenue streams compare to the new rules. Organizations should also consider what, if any, impact this may have on their financial statements. It is a wise move as part of nonprofit financial management.

Keeping Abreast of FASB Changes

We have previously shared details of the proposed FASB changes taking effect in 2016. Any changes that impact your business should be noted and researched as soon as possible. Nonprofits, like other business entities, must comply with all requirements. Failing to do so can put your nonprofit at risk for losing its nonprofit status. You also risk falling behind in compliance issues, an important part of accurate nonprofit financial management.

More seminars are available to provide updates on various issues pertaining to accounting and nonprofit accounting and finance. You may view our complete list online.

Beck & Company

Considering the Cloud?

Here’s What Nonprofit Accountants Need to Know about Cloud Computing

Many nonprofit accountants continue to be reluctant about switching their files and systems to the cloud. Cloud computing uses shared servers and hardware, rather than servers and hardware located in your physical office space, to store files and run programs. Cloud programs are accessed through secure web-based portals, making it appealing for companies with a mobile workforce or who work from client sites frequently.

Concerns about switching to the cloud range from security concerns to cost concerns. Advances and changes in computing often come with some anxiety. Accountants who, in times past, purchased new hardware and upgraded their programs annually, suddenly find themselves considering site licenses, monthly or annual fees, and new business considerations related to cloud computing. It’s definitely a shift in how organizations think about their technology needs and roll out tech changes.

Dispelling the myths surrounding cloud computing can help you feel more confident as you consider the options. Cloud computing is now ubiquitous in many industries, and nonprofit accountants are catching on to its many benefits.

Cloud Computing Concerns

First, let’s address typical concerns shared by nonprofit accountants regarding moving to the cloud.

Security: Many fear that because public clouds, or the typical cloud solution embraced by the average organization, aren’t as secure as paper-based files or networks housed within their physical office. Consider your current security situation for your files. Are valuable files backed up on your server? If so, where are the backups housed? Do you lock your file cabinets, and are they located in rooms with locking doors? Many offices use convenient central files that, while they take up less space and make it easier for workers to access, are by no means as secure as the company assumes. Cloud security, on the other hand, is usually top-notch. Because the companies providing the cloud invest heavily in security, they can afford the best and are constantly updating and upgrading their technology. They may still be breached or hacked, but they are probably more secure than what you are currently using.
Costs: Cloud costs may be confusing at first, but they tend to be less than what you would spend on upgrading your hardware. Many cloud solutions provide a monthly fee with an annual subscription that offers significant savings. If you amortize the cost of hardware and software investments in the past, cloud computing tends to come out ahead in terms of cost savings.
Mobility: Many nonprofit accountants take work home, especially during busy times of year such as end of quarter and the spring run-up to tax season. Cloud computing is mobile, and can be accessed anywhere you have a web connection. This makes it easy to log on from home, complete your work, and access it again from the office the following day. If you travel frequently, or work onsite at a client’s location, you can also access all of your files no matter where you are.

Choosing a Cloud Vendor

As you can see, the cloud offers many advantages for nonprofit accountants. If you are considering a cloud vendor, review several to find the best match for your requirements.

Check references and delve into the vendor’s reputation.
Request data on downtimes. How does the vendor handle outages and problems?
Do they have someone available 24/7 to help you by phone, email or chat, or do they limit communications?
Who owns the data?
Do they own their own server or rent space from another company?
What support and backup do they offer? How frequently is data backed up, and what are their recovery plans if data is lost?
What security do they have in place?
What is the cost and contract terms?

Cloud computing offers exciting opportunities for flexibility, cost-savings and security. Moving to the cloud is usually a smart choice for nonprofit accountants.

Beck & Company

Established in 1987, Beck & Company is a group of Washington DC and Virginia Certified Nonprofit Accountants. Our services are personalized to your organization’s needs. We provide independent auditing, accounting, tax services, and consulting to help keep your organization’s finances running smoothly. Contact us today or call 703-834-0776 x 8001.