Nonprofit – Page 4 – Beck & Company

Hints and Questions to Consider when Choosing a Tax Advisor

Finding the right tax advisor can have a significant impact on your organization. Working with the wrong advisor can lead to a litany of issues and hassles, resulting in additional work and unnecessary headache for your board of directors. However, finding a tax advisor that is the right fit for your organization can save you time, and ultimately – money.

Here at Beck and Company Certified Public Accountants and Business Advisors we are experienced and qualified to help your organization with their tax preparation and can offer further advice on securing a tax advisor as well. Learn more about our tax service offerings here.

Whether you choose a Beck and Company CPA or someone else to serve as your tax advisor, keep the following hints in mind when choosing the right tax preparer or advisor to do your taxes. Finding an advisor who is truly committed to your business success is absolutely paramount. Selecting the right advisor should be a process not unlike selecting a full-time employee who’s the right fit for your organization. These hints are intended to help you to secure the right person with the right intentions which will ultimately save you from major headaches down the road. With that in mind, consider the following:

Helpful Hints When Choosing a Tax Preparer/ Advisor

Use a reputable tax professional who signs the tax return and provides a copy.
Consider whether the individual or firm will be around to answer questions about the preparation of the tax return months, or even years, after the return has been filed.
Check the person’s credentials. Only attorneys, CPAs, and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collection, and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.
Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources that also holds them to a code of ethics.
Be cautious of tax preparers who claim they can obtain larger refunds than other preparers.

Don’t rely on these hints alone, you will also want to be sure to interact with and communicate with three or four options in tax advisors before making a final decision. When you interview, consider the following questions to ask. Their answers will offer guidance and insight into your ultimate tax advisor selection. In addition to these guiding questions that are found below, a few key qualities you should discuss during an interview are availability, qualifications and experience, client longevity, and price.

Questions to Ask when Choosing a Tax Advisor

What is the candidate’s educational background? Do they have an advanced degree?
What qualifications does the candidate have?
Do they have expertise in areas relevant to your organization?
How long has the candidate been doing tax advising?
Do they have any licenses? If so, which licenses do they have?
Will he or she provide at least three references of current clients?
Have they been cited by any professional or regulatory body for disciplinary reasons?
How and what do they charge? What fees will they charge?
Do they provide ongoing reviews and planning strategies for you?
Will they represent you if you are audited?
Are you comfortable with your prospective accountant/ tax advisor?

There is not a one-size fits all answer to the above questions. Rather, there will be a right answer for your unique situation and needs. The best advice we can offer is to be diligent about doing your research. This will provide you with the information you need to make an educated decision when it comes to choosing a tax advisor. For more information about the process or to find a tax advisor for your organization, contact us here at Beck and Company CPAs.

Preparing Your Nonprofit for Tax Season

The onset of Tax Season often creates stress and worry, particularly for nonprofit board members and responsible parties. The gathering of documentation, sorting through expenses and receipts, understanding tax laws and changes, etc. are reason enough for this anxiety. Particularly if there is disorganization or lackluster record keeping.

We understand that filing and preparing to file taxes can be challenging; that is why we’ve provided several tips to ease the burden of tax preparation and ensure that you make the April 15th deadline. Keep the following in mind as you prepare for tax season (and remember to practice your deep breathing):

Always separate personal and organizational expenses.
The Internal Revenue Service (IRS) keeps a close eye on personal expenses that could be claimed as organization expenses (such as using a vehicle for personal reasons). Protect yourself by maintaining separate bank accounts and credit cards for your expenses. Maintain good records to back up your claims. If the IRS does inquire about a particular expense, you will have the information you need to substantiate your claims.

Maintain good financial records year-round and research available deductions.
Proper record-keeping is crucial to ensuring that your taxes are filed accurately. Be diligent about maintaining your records all year so when it comes tax time, you have everything you need to file confidently. Make sure to save all essential paperwork that may be needed to back up deduction claims in the event of an audit. Remember that tax credits and deductions change each year, so be sure to stay up to date on the latest information.

Take advantage of the tax credits within the Affordable Care Act.
According to the Council of Nonprofits, your nonprofit organizations may be able to take advantage of the same tax credits as small business. This credit will cover up to 50% of the health premiums you pay to cover your employees.

Avoid common audit traps.
It’s important to know the red flags that may capture the IRS’ attention. The IRS commonly targets certain types of nonprofits for special scrutiny. In the past, these have included:

nonprofits that conduct gambling fundraisers
nonprofits engaged in joint ventures with for-profit companies
nonprofits that sponsor travel tours
credit counseling agencies
donor advised funds
hospitals
colleges and universities
community foundations
nonprofits engaging in political activities
student loan organizations, and
nonprofits that fail to file required IRS returns.

If your organization falls under one of these categories you will want to make sure that you have the evidence to back up your claims.

Here at Beck & Co. we understand that preparing your taxes can be daunting and overwhelming. In fact At Beck & Company we specialize in nonprofit accounting and auditing. If your organization could use some guidance in this area, let us help. We have a team of experienced accountants and CPA’s that can assist you in making sense of tax regulations and avoid common mistakes and audit traps. Contact us to learn more about these services and how we might be able to help.

Anti-fraud Measures for Nonprofits

Unfortunately, no company, regardless of their mission is completely immune from the possibility of fraudulent activities. Fraud can take on a vast variety of shapes and sizes and is particularly rampant in today’s society. When fraud occurs, trust is compromised, and a timely and costly process of restoration is necessary. This is why it is so very important to have complete financial transparency along with a processes of accountability in place to reduce your risk.

Reducing Fraud’s Risk:

There are steps that you can take to reduce your companies risk for fraud. Implementing internal controls is a great first step to safeguarding your organization against fraudulent activities. It is important for management to first understand that the responsibility for identifying gaps that are putting you at risk for fraud lies first with them. This means that management should avoid becoming too complacent, relying on auditors to “catch” fraud if it occurs. This does not negate the need for an annual audit, it is still an important step for catching fraudulent activity that may have occurred. However, in most cases, an audit will be too late to prevent loss.

There are some important principles to keep in mind as you work to develop anti-fraud internal controls and policies for your organization:

Create and empower an audit team or committee who works independently of management. Empower them to bring in outside experts as they see fit in order to assist and advise them in their tasks. Aim to form a team with three to five members with at least one of them a financial expert. The other members can be comprised of individuals with financial and other skills that will help to provide the necessary perspective.
Create both internal and cultural controls that will ultimately become the core of your anti-fraud measures. These internal controls will act as a deterrent for most opportunities to hide fraud trails and will discourage most fraudsters. Tools such as access controls, segregation of duties, dual authorizations, cash policies, and security. Such controls will significantly decrease occupational fraud schemes.
Top down compliance. Ensure that management is modeling adherence to internal control policies and projects enthusiasm for them. This step can set the tone and create a culture of integrity. Such a culture will create ethics and empower employees to step in should they see fraudulent activities happening.
Provide a way for employees to report suspicious behaviors. Global fraud studies have shown that the most effective means of detecting fraudulent behavior is through tips. Tips have proven to be more effective than other means such as audits or surveillance. Consider a third-party hotline service.
Develop a response plan in case deterrence fails. In spite of everyone’s best efforts, fraud still can occur.

Although it is important is to respond quickly to fraud, the better plan is to avoid the situation in the first place. Of course it may be unrealistic to completely eliminate the risk of fraud. The executive team and management of your organization can take steps to minimize the risk by establishing an environment with strong cultural and internal controls, and developing a proactive fraud identification and response program.

Beck and Company’s Certified Public Accountants and Business Advisors offer auditing services that can provide you with an extensive examination of financial statements to give you a closer look at possible areas of fraud within your organization. We are passionate about helping nonprofits get their financial reporting in order so they can reduce their risk of fraud. Learn more about all of our nonprofit services in addition to the auditing services mentioned earlier. Contact us to let us know how we can help your organization with the financial services, internal audits, and other services to keep your finances in check and your organization to prevent fraud.

How Nonprofits Can Diversify Their Funds

Today, nonprofit organizations are looking at the future of their funding strategy and realizing that they may need to look beyond traditional types of funding. No longer can they rely solely on philanthropy to fund their organizations. The time has come to develop a sustainable funding strategy that will prepare them to thrive financially in the future using diversified funding methods.

Most likely your nonprofit will seek to expand its services in order to meet the current and expected demand. In order to successfully expand and maintain required funding you will need to remain credible and visible to the community, constituents, and potential funders. One way to maintain financial relevance is to diversify your funding streams. By doing so you will not only strengthen your financial viability but you will also expand your influence through new partnerships you may not have considered in the past.

Social finance is an approach to managing money which delivers a social dividend and an economic return, creating opportunities for new investors who want to support your initiatives because they feel they benefit society in some way.

Another financial strategy is Impact Investments. Impact investing refers to investments made into companies, organizations, and funds with the intention to generate a measurable, beneficial, social or environmental impact alongside a financial return. It is a form of socially responsible investing that serves as a guide for various investment strategies. Impact investing has great potential to tap into sums of private investment capital in conjunction with meeting felt needs that are considered global challenges.

Program Related Investments. The IRS defines those in which:

The primary purpose is to accomplish one or more of the foundation’s exempt purposes,
Production of income or appreciation of property is not a significant purpose, and
Influencing legislation or taking part in political campaigns on behalf of candidates is not a purpose.

Social Enterprise. Social enterprises are businesses that aim to tackle social problems, improve communities, people’s life chances, or the environment. They make their money from selling goods and services in the open market, but they reinvest their profits back into the business or the local community. Nonprofit organizations will take advantage of this strategy to earn income which is then reinvested to further their mission. In addition to raising funds through social enterprises this is a great way to raise awareness and support for your organization or mission. Social enterprising may look like selling goods and or services for which profits are reinvested back into the organization.

The world of fundraising for nonprofits is expanding and changing at a rapid pace. Consider these fundraising opportunities as you prepare and plan your financial strategy for the future.

As Beck and Company’s Certified Public Accountants and Business Advisors, we understand that you want to do all that you can to remain financially healthy in order to carry out the vision and mission of your nonprofit organization. To learn more about our accounting services to help you navigate through these processes, visit here.

Contact us here at Beck and Company CPAs so we can help you with your unique needs as small business owners navigating healthcare and the Affordable Care Act.

Tax Planning & Preparation Services

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

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

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

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

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

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

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

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

Benefitting with Outsourced Nonprofit Services

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

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

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

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

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

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

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

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

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

Beck & Company CPA’s Client Accounting Services

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

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

Client Accounting Services

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

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

Reducing Costs through Business Process Optimization (BPO)

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

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

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

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

Is My Nonprofit Organization Susceptible to Fraud?

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

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

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

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

• Bank Statements including all cash balances

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

• A report showing credit lines with the amounts borrowed.

• Accounts receivables reports.

• A list of fixed expenses.

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

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

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

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

2. Conduct employee background checks.

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

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

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

6. Ensure compliance to internal controls.

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

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

Internal Control Best Practices for Nonprofits

Internal controls are the accounting and financial business processes and procedures that help to protect your organization’s assets. Regardless of the size or mission of a nonprofit, it is necessary to establish policies and procedures that prevent misuse and misappropriation of assets. These internal controls will ensure that all staff or volunteers, who have access to spending or collecting monies, understand their fiduciary responsibilities, all assets are properly managed, and the primary purposes of the nonprofit are carried out. When these criterion are not met, it results in a breach of fiduciary duty and financial liabilities.

The most effective procedures are those that have the greatest segregation of duties. This is the concept of having more than one person required to complete a task. The separation by sharing of more than one individual in one single task is an internal control intended to prevent fraud and errors. The more people involved in the process, the less likely it is that an error will occur. For example, the person who writes checks should not be the person signing them. The person who orders the service or product should approve the invoice. The person with budget responsibility should also approve the expenditure and code the invoice.

Typically, internal controls are written policies that detail agreed-upon procedures that the nonprofit will adhere to, as well as outlining who the responsible parties are. The goal of internal controls is to create business practices that serve as “checks and balances” on staff or outside vendors in order to reduce the risk of misappropriation of funds.

The following are examples of some basic internal controls:

Requiring two signatures on a check.
Establishing safety protocol ensuring all doors are locked when no one is monitoring the entrance.
Preapproving spending, as a prerequisite to guaranteed reimbursements.
Requiring multiple persons to be present when collecting and counting cash donations.
Regularly reviewing vendors who are receiving money from the nonprofit for services or supplies.
Ensuring that the same person isn’t authorized to write and sign a check.
When opening mail, endorsing or stamping checks “For Deposit Only,” listing checks on a log before turning them over to the person responsible for depositing receipts, and periodically reconciling the incoming check log against deposits.
Requiring that cash be stored in a locked drawer or safe.
Requiring background checks for employees or volunteers who handle money.

Another facet to consider is the actions of executive staff and leadership to adhere to internal controls. Leading by example is the best way to ensure compliance of rules by the rest of your staff and volunteers. Additionally, acknowledge that these controls are being implemented as a measure to protect the staff and organization and not due to mistrust. If you are wondering where to begin establishing internal controls for your nonprofit, a good place to start is with:

Any person who has access to your bank accounts or
Any person with permission to spend money on your organization’s behalf.

Without establishing these procedures, your nonprofit is vulnerable to misuse and misappropriation of assets. At Beck and Company Certified Public Accountants and Business Advisors, we are an accounting and consulting firm delivering specialized expertise, creative thinking, and unsurpassed service to ensure that our clients’ financial endeavors flourish.

Serving small and mid-sized organizations and individuals, we provide audit, tax, accounting, and consulting service that address all aspects of your business with one goal in mind – exceeding your expectations. We are able to do this by drawing on our combined business backgrounds and experience in public accounting to help you in virtually any area of your business. Contact us for more information on our accounting and consulting services that can help you.

What to Look for When Preparing Financial Statements for a Nonprofit Audit

There are a number of steps your nonprofit can take to ensure you are prepared for a smooth audit. One of those things is collecting necessary documentation and getting them ready for the auditors. Unfortunately, this can take days, weeks, even months. Creating an audit process can ease the burden of preparing for an audit and buy back valuable staff hours. With time saved, you can spend your time on what’s most important to your nonprofit organization.

It is a risky effort to attempt to gather information from a variety of disparate sources and systems. Working with data stored in too many different systems typically creates inconsistencies in reporting and makes it very difficult (if not impossible) for an auditor to follow audit trails and replicate reports on a consistent basis.

In the long run, disjointed and inconsistent reporting and data can cost your organization money, extend audit time, increase risk for mistakes, and raise possible compliance issues for your organization. Worst of all, a troubling or failed audit can put an organization at further risk of losing important board and donor trust.

It is possible to avoid this nightmare by being proactive. Better non-profit financial management, tracking, and reporting across the entire organization that ensures you’re always audit-ready is just a few steps away. Take a good, hard look at your accounting software to ensure it’s built to meet the needs of your nonprofit organization and offers true fund accounting capabilities.

Ask yourself:

• Does my current system provide the flexibility needed in the chart of accounts?

• Am I able to track and report out on spending and revenues associated with each of our programs? How much time am I spending in my current system to do so?

• Could my auditor easily review the creation and approval process of any requisition in my system?

• Does my current system allow me to track and allocate revenues and expenses to the right funds?

• Can I be sure that I have maintained financial data that allows me to easily prepare recurring or ad-hoc reports for internal audits, external audits, or board member reviews?

• Do I seek to show accountability and transparency through reliable data and consistent reporting?

When dealing with public funds, accountability and transparency are critical. Organizations have to be able to account for every dollar or risk losing trust from donors and constituents. But, if your reports aren’t consistent, at best it may show an apparent lack of oversight. At worst, your auditor may determine the financial health of your organization is at risk.

An organization’s inability to accurately and consistently produce financial statements and reports that are the same EVERY time is problematic. If you and your team cannot consistently duplicate reports, neither can your auditors.

The risk for exposure is tremendous and can lead to a lack of apparent oversight for the handling of finances, increased potential for mistakes that can cost time and money, misrepresentation or inaccurate portrayal of the organization’s financial health, and greater exposure to potential fraud.

Follow these steps for better nonprofit financial management, tracking, and reporting across the entire organization.

• Take an honest assessment of your current accounting software:

Does my software offer true fund accounting capabilities?

Does my accounting solution offer access to a custom report writer and standard reports that are designed for nonprofits?

Can I produce reports consistently and accurately each and every time with little to no fuss?

Can my auditor easily recreate reporting to ensure accuracy in our organization’s financial statements?

Ensure you can produce financial reports that are accurate, timely, in context, and readily available on a monthly or quarterly basis. They should include a configurable chart of account, year-end donor summaries, and other standard reports.

Evaluate your ability to create reports that match the purpose. Most boards look at financial reports for these reasons:

• To comply with financial standards

• To evaluate effectiveness

• For forward planning

These tips for preparing for an audit will make the audit process more successful and smooth. To find the right auditor for your organization and take advantage of the many audit services Beck and Company Certified Public Accountants and Business Advisors provide, contact us.