Nonprofit Financial Management – Page 4

Accounting for Nonprofits: The Hallmarks of Top Staff Accountants

Among all the topics surrounding accounting for nonprofits, the characteristics or hallmarks of top staff accountants are things rarely discussed. Of course, it takes accuracy to be an accountant, as well as a logical mind, strong attention to detail, and good communication skills.

But going beyond these requirements is a list of highly specific skills that all top-level staff accountants share. If you’d like to be numbered among the best accountants in your field, then make these skills a priority for your own personal development.

The Characteristics of Top Accountants

The best nonprofit financial managers and top accountants share the following characteristics.

Accuracy: All accountants must be accurate, but top accountants leave no stone unturned in their quest for all the details that matter. Good accountants must regularly review their own performance and look for mistakes in their own work before sending material on to others.
The big picture: Top accountants have the ability to step back and take in the big picture. They’re good at what they do, but they also have the ability to see how their work fits into the larger mission of the organization and, as such, they understand how to be helpful to others.
Deadlines: Many professions are deadline-driven, but accountants are always exceptionally deadline-oriented people. Top accountants set personal deadlines and try to achieve their goals early. They allow extra time in a project for those “just in case” moments when someone calls in sick or competing deadlines take people’s focus away from their project. Good accountants plan; great accountants plan for deadlines along with contingency plans.
Excellent communication skills: Accountants aren’t often thought of as communicators, but strong communication skills are a must for top accountants. Not only are you called upon to share facts and figures with others in your department, but you must be able to translate that information into language everyone within your organization can understand. There’s also the important matter of communicating with subordinates and managers. Keeping everyone informed, and understanding how and when to share information, is a hallmark of an exceptional accountant.
Integrity: We want everyone working with us to have integrity. Accountants must have exceptional integrity. Because they are charged with nonprofit financial management, they must be rigorously honest in everything they do. They must also be responsive to questions, complaints, and problems brought to their attention. Integrity, honesty, and ethics are part of the package that makes a great accountant.
Exceptional computer skills: Conquering spreadsheets, understanding the nuances of your company’s ERP system, and handling all reporting needs with calm assurance are all part of the job for the best accountants. They become the guru that everyone turns to when they need help with the number-crunching aspects of their company’s software. Even if you’re not a technical whiz, becoming fluent with the software package that your company has chosen is one of the ways in which top accountants go the extra mile.

Becoming the Best of the Best: Professional Development

What does it take to become and remain the best of the best? Ongoing professional development is a vital step for nonprofit financial managers and those leading accounting for nonprofits.

Such professional development need not be formal classes, although that can help. Professional development may take the form of attending seminars and online workshops, attending conferences, and networking with others in your profession.

Regardless of the form it takes, top accountants do not remain hunched over their spreadsheets all day. They are a vital and important part of the nonprofit team. Are you a leader among accountants? Set a personal goal for yourself to do all you can to be the best nonprofit accountant your organization has ever met.

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.

The Importance of Project Management Skills for Nonprofit Financial Management

Who do you turn to when you need to get things done within your company? Some people turn to their supervisors, but they may not always have the answer. The surprising fact is that accountants within most companies and nonprofits are the true “get it done” people.

Let’s face it—nonprofit financial management brings accountants into contact with all departments and people within an organization. Accountants know where the money leads, and they know where to find the funds to support new work. When you need to get something done, it is the accountant who can make it happen.

One skill, however, that many accountants lack and is important to nonprofit financial management and beyond, is project management. Accountants who can learn the terminology, skills, and general flow of projects will be better able to interface with all within an organization.

Let’s look at the basics of project management and how accountants can partner with project managers.

Project Flow in Project Management

Projects have a beginning, middle, and end. At the end, each project creates a unique output. There are milestones throughout the middle of a project that serve as checkpoints to the completion.

As part of nonprofit financial management, accountants help project managers handle the potential changes inherent in any project. As projects progress, budget needs may change. Accountants can assist during the project flow with any change requests and help project managers monitor and adjust budgets.

Project Charter

The project charter is the document that outlines the scope of the project. Some organizations call it a project plan or by another name, but the document itself is similar no matter where you work. It is an outline of what the proposed project should accomplish, starting dates, milestone dates, end dates, who will work on it, roles and responsibilities, and budgetary needs.

Accountants do not typically create project charters. Instead, your role as an accountant is to review the project charter from the standpoint of nonprofit financial management. You can review it objectively and offer advice and assistance to make sure it follows a logical train of thought.

Instead of being a gatekeeper or keeper of the purse strings, you’ll become a partner in the work. You can shape, guide, and advise during the process of creating the project charter so that the team won’t feel surprised or off guard if there are questions surrounding the finances for the project. In turn, they may have questions for you, from which your extensive experience as a managerial accountant may add quality and wisdom to the project.

Managing Risk

Every project comes with its own share of risk. There’s the risk of change, of missing deadlines … the list goes on and on.

Accountants working alongside project managers and project teams can help manage risks by:

Remaining close to the project: Be sure that someone from the accounting team continues to attend project meetings. By keeping up to date with what’s going on with the project, you can take steps to mitigate risks or to advise the team on how to avoid them.
Play the auditor’s role: An auditor asks key questions to bring to light things that may not have been recognized. Act like an auditor and ask questions of the team that will help them think through and around issues found within the project. Project managers and department stakeholders can help you understand the pros and cons and ramifications of many changes so you can ask questions that will help them get to the best possible outcome.
Avoid scope creep: When project managers come to you seeking more funds for an ongoing project, it may be time to examine the original project charter to see if scope creep has set in. Scope creep refers to additional outcomes that get added to an open project so that it eventually blows the original scope out of proportion. The result is a bloated project that may not be able to achieve its objectives. By remaining close to the project throughout its development and action steps, you can help project managers avoid potential pitfalls like this.

Projects vary according to the organization and the task. But one thing doesn’t vary: your knowledge, skills, and experience as an accountant provides you with exceptional nonprofit financial management skills. Partner with project teams for the best possible outcomes.

Beck & Company

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

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.

Beck & Company

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.

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.

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.

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.

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