Nonprofit – Page 8 – Beck & Company

Do I Need to Have Special Insurance Coverage for My Fund Raising Event?

As we discussed last month, it’s important to hold fund raising events throughout the year to increase donor support and contributions. These events are often large-scale and require extensive planning to pull off effectively. While they certainly have the potential to bring in a substantial amount of funds, these events are also a significant risk for nonprofits. In order to help alleviate the risk that comes with planning large-scale fund raising events, nonprofits need to invest in the proper amount of insurance coverage.

What is a Special Event?
Before we discuss the intricacies of special event insurance, you need to know what a special event is. A special event, by definition, is an event that falls outside of a nonprofits core function (think large-scale fund raising events). Because these events are not the “norm”, nonprofit organizations are limited in their experience and knowledge regarding the requirements surrounding these types of functions. Risks at these types of events can range from personal injury and accidents to fraud and theft, cancellation due to unforeseen events, and nonappearances by featured performers or hosts. Additional coverage can ensure that your organization is protected from all of the associated risks.

What Coverage Do I Need?
Now that we’ve established what a special event is and why it’s important to have special insurance coverage for your fund raising events, we need to explain the type of coverage you’ll need. Special event insurance does exist, and it offers nonprofits great protection from lawsuits and claims brought by a third party; however, this insurance is generally expensive and is not practical if you a planning a single event. Depending on the type of fund raising event you’re hosting and your current insurance coverage, it might be more beneficial (not to mention cost-effective) to extend one of the following types of insurance policies rather than investing in special events insurance coverage. Any of the below insurance policies can be extending to cover your fund raising event:

Comprehensive/General Liability: CGL insurance will cover claims that allege property damage or bodily injury. In the case of a special event, this coverage can be extended to include volunteers, members, temporary workers, outside sponsors, board members, and landlords.
Fidelity: Fidelity bonds protect your organization against the loss of money or property due to dishonesty among staff or volunteers.
Product liability: This insurance offers protection against claims resulting from injury or loss as a result of product malfunction from products sold or distributed at the event.
Weather: This type of insurance covers the losses resulting from the cancellation of an event due to weather reasons. While it is particularly important to outdoor fund raising events, it is not restricted to outdoor events.
Directors and officers liability: D&O insurance protects an organization from claims arising from managing directors or governing officials of the organizations. It includes coverage for both high-ranking staff and the members of the board.
Nonowned/hired automobile liability: If your volunteers or staff are using their own vehicles during the event (or if you are renting cars or hiring drivers), you may need this type of insurance coverage.
Nonappearance/cancellation: If your event is structured around the appearance of a celebrity or performer, this type of coverage could come in handy should he or she cancel. It protects your organization against all losses when your guest of honor fails to appear.

Your current insurance policy most likely covers some of the areas listed above; however, to be sure, you need to contact your insurance provider and see if your event has adequate coverage. If not, ask if you can pay a one-time premium for additional coverage during your fund raising event. While it may not seem crucial or necessary pay for additional coverage, you will wish you had the protection should someone file a claim with your organization after the event.

Make sure you include event insurance coverage in your event planning tasks and solidify any insurance changes or adjustments prior to the event. With the proper amount of planning and foresight, you can ensure that your fund raising events occur without a hitch.

Are you looking for more information on event planning? Stay tuned to our blog for more tips on planning a flawless fund raising event.

Is it Time to Hire an Accountant for My Business or Nonprofit Organization?

Running a business or not-for-profit organization is hard work. Not only do you have to effectively manage the day-to-day operation, but you also have to effectively manage and maintain your business and organization’s finances (which is no small feat). Many businesses and not-for-profits choose to handle their finances on their own in an effort to save money; however, the stress of managing these financial responsibilities on their own often leads to frustration and unintentional errors.

Businesses and not-for-profit organizations are not always aware of federal regulations and changing laws, and managing their finances on their own can become cumbersome as they have to commit more time to researching ever-evolving accounting regulations to maintain full compliance. Hiring an accountant or CPA would be beneficial in this aspect, as they have full knowledge of business and not-for-profit accounting regulations. Whether you decide to hire someone full-time or part-time, the help of a CPA can ease your business stress (at least where your accounting and finances are concerned).

If you are unable to keep up with the financial demands required of running your business or not-for-profit, it may be time to hire an accountant. If your answer to any of the following questions is “yes”, it’s time to actively look for a CPA or accountant to handle your finances:

Are you deciding on a business entity or trying to determine 501(c)(3) status?
Do you need help with your taxes?
Could you use some help with your financial reporting?
Are you being audited?
Do you need help differentiating between business and personal expenses for tax purposes?
Are you having a hard time comprehending your financial statements?
Do you need help determining which expenses are tax deductible?
Do you need advice about large purchases, such as buying or leasing a property for business use?

An accountant or CPA is qualified to help in the areas listed above. Whether you need help filing your taxes, determining an entity or not-for-profit status, or creating financial reports, an accountant is a wise investment. If your business or not-for-profit organization is searching for a CPA, give us a call today at (703) 834-0776. Our team of accountants and CPAs are more than qualified to help you with both your small and large accounting tasks.

Want to learn more about our client accounting services? Visit our Accounting Services page to learn how our experienced CPA’s can help you make sense of your company’s or nonprofit’s financials.

Not-for-Profit Fund Raising Tips for the New Year

The beginning of the year translates into a fresh start for not-for-profit organizations. If your organization did not meet your year-end giving goals, now is the time to refocus your efforts and start planning for the year ahead. Many not-for-profits are reluctant to start planning their fund raising efforts this early in the year, especially if they just completed their year-end giving campaigns. While the beginning of the year may seem like the perfect time to put your fund raising efforts to rest, it is actually the most ideal time to start planning your fund raising strategies and goals.

By now you should have a good idea of where your organization stands in terms of financial support and stability, making it the perfect time to formulate a new fund raising plan. Every not-for-profit organization knows that fund raising changes year to year, and – in order to effectively meet your fund raising goals – you need to have a detailed plan in place that addresses the challenges your organization encountered last year. We’ve created several tips designed to help you spur on your fund raising plans for the New Year so you can focus your efforts on more mission-related activities in the months to come:

Set specific fund raising goals. Before you can even begin creating a fund raising plan, you need to have some goals in mind. Determine how much money you need to raise, when you need to raise it by, and estimate the costs for your fund raising initiatives. Write down these goals and share it with everyone in your organization.
Brainstorm fund raising ideas. Before you start analyzing what worked and what didn’t work last year, brainstorm some new fund raising ideas to use in upcoming campaigns. There are many possibilities where fundraisers are concerned – walk-a-thon events, galas, online charity auctions, and charity golf tournaments to name a few. Choose ones that work well for your organization and with your mission. Engage your staff and encourage their input from the start so they feel involved in the planning process.
Solidify a plan for your fund raising event. Once you’ve decided upon the type of fund raising event your organization is going to hold, it’s time to begin planning the details of the event. Create a written project plan detailing everything, from goals, timelines, roles, and responsibilities. Assign key staff and volunteers specific tasks and equip them with the tools they need to get the job done. Set a tentative date for your fund raising event, and create a detailed timeline and checklist outlining everything you need in preparation for the event.
Identify prospective donors and sponsors for each event. For each fund raising event, you will need to create a list of prospective donors and sponsors. The donors and sponsors you choose will vary depending on the type of event and audience. Be sure to include local businesses, coworkers, friends, and family in your list of prospects and ask your staff to do the same.
Spread the word about your fund raising event. You need to have a plan when it comes to marketing your event. Create a fund raising page on your website where you can collect online donations and generate interest for your fund raising events. Send out emails detailing your current fundraiser, publish press releases, and post listings on local event calendars. Spread the word on social media so all of your followers are aware of your organization’s effort.

How is your not-for-profit planning on gaining support this year? Do you have a strategic fund raising plan in place? Keep the above fund raising tips in mind as you continue into the New Year, and – if you have any further questions – give us a call today. We offer a variety of nonprofit services to help you meet all of your nonprofit management needs.

Is Your NonProfit Following These Financial Management Best Practices?

NonProfit organizations are under increased scrutiny where financial reporting is concerned. As government and donor requirements continue to become more and more stringent, nonprofits are challenged with creating effective financial reports for their donors and grantors in addition to juggling the everyday challenges involved with running a nonprofit organization. Accounting solutions, such as Quickbooks, Abila MIP Fund Accounting (formerly Sage MIP Fund Accounting), Blackbaud, Microsoft Dynamics, Peachtree or Intacct, can help nonprofits effectively manage their daily accounting tasks as well as meet donor demands. No matter which accounting solution you use to manage your accounting processes, accounting software can help you create effective financial reports to answer your donors’ most important questions.

Accounting software can help nonprofit organizations develop good financial practices for years to come, as well as provide them with a clear view into their financial records so they can make better decisions for the organization. Nonprofits rely on accounting software to meet growing government and donor requirements, but in order to create effective reports they need to know how to use the software effectively. We’ve created a list of financial management best practices to help your nonprofit maintain effective financial reports:

Cash flow should be a priority.
Managing cash flow and contributing to cash flow projections needs to be a priority for nonprofit leaders. Accounting departments often lack the insight needed to create accurate cash flow projections, so nonprofit leadership needs to have a part in developing these projections. It’s important to anticipate cash flow issues and form a plan to solve any potential cash flow problems. Remember that timing problems can often be prevented by improving internal accounting systems, properly managing the timing of payments and receipts, and arranging for a line of credit.Many financial reports document spending trends from the past so nonprofits can easily review and analyze their financial habits. It’s important to run these reports regularly so you know how the organization’s cash flows and can address issues where it does not.
Create an annual operating budget.
Budgeting is an essential financial best practice for nonprofits and businesses alike. It’s important to compare your organization’s expenses to your annual income (this includes donations, grants, etc.). Your budget should include both guaranteed and as-yet-to-be-identified income; however, the Board and leaders need to be aware of the amount of unidentified income in the budget as well as the plan to raise funds during the year.
Don’t avoid “restricted” grants.
Restricted grants certainly require more reporting than regular grants and because of this, nonprofits often rule out these types of grants. Restricted grants, however, can be beneficial to nonprofits if you know how to handle them. Rather than looking at the restriction as a whole, you should consider what the grant is restricted to. If the grant is funding a program essential to your organization’s mission, accepting the grant would be in your best interest. If, however, the grant pulls you in a different direction than you’d like to go (or goes against your mission), you’re better off avoiding it.
Hire an accountant to handle your nonprofit’s finances.
Hiring an accountant is essential to your organization’s success. A professional accountant will not only ensure that your records are in order come tax season, but he or she can also help you manage your financial records in your accounting software and develop the reports you need to meet federal and donor requirements.

Are you looking for nonprofit accounting services? We offer our clients a variety of accounting and nonprofit services. Click here to learn more about our services.

If your nonprofit organization is in need of an accountant to help you better manage your finances and create more effective financial reports, give us a call today at (703) 834-0776.

How Can I Prepare for My Upcoming Nonprofit Financial Audit?

While it’s always a good idea to ensure your organization’s financial accountability through an audit, not all nonprofit organizations are required to undergo extensive audits on a yearly basis. As of now, if your nonprofit organization expends more than $500,000 or more in direct or indirect government grants and awards, you are required to undergo a single audit in accordance with the Office of Management and Budget (OMB) Circular A-133. You can determine if your organization is required to undergo this audit by reading our blog, “How the Proposed A-133 Changes Could Affect Nonprofit Organizations”. This single audit is similar to that of a traditional audit prepared by a CPA; however, it is conducted according to government accounting standards (also known as “Generally Accepted Government Auditing Standards”). Like a traditional audit, the auditor is required to determine whether the organization’s financial statements comply with the standards set apart in the government accounting standards.

Preparing your organization for a nonprofit financial audit can be stressful, to say the least. It requires you to stay on top of your organization’s financial processes throughout the year so you aren’t scrambling right before the scheduled audit. Over the years, we have audited several nonprofit organizations and have helped numerous nonprofits prepare for the dreaded annual audit. From our experience, we’ve compiled a list of tips designed to help you successfully prepare for your upcoming nonprofit financial audit:

Make sure key staff are available on the days you’ve scheduled your audit to occur (this includes both preliminary and fieldwork). The auditor will need full access to your staff in case any questions or concerns arise during the audit, so make sure key staff members are aware of the upcoming audit and present.
Review your client assistance letter and prepare the requested documents beforehand. This document is designed to help nonprofit organizations gather the right information for the audit, including details of internal controls, government contracts and summaries, and major program compliance. Your letter should include a timeline to help you prepare all of the necessary information before the auditor arrives to complete the final fieldwork. Make sure you review this letter with your staff as soon as you receive it, and relay any questions or concerns to the auditor as soon as possible.
Make sure you have a thorough understanding of the compliance requirements for each of your government grants. Read over your grant agreement before your audit, and ensure that program staff are made aware of compliance areas that will need attention. This agreement will become a compliance roadmap for both you and the auditor, so make sure you know it well.
Review the current OMB A-133 Compliance Supplement for an idea of additional compliance requirements.
In order to determine whether a federal expenditure is an allowable cost, you need to have a thorough understanding of the cost principles applicable to your organization. This information can be found in OMB Circular A-133 – Cost Principles for Nonprofit Organizations. Once you are familiar with these principles, hold a meeting to discuss what is allowable under each federal grant and what is not. Determine if any unallowable costs can be identified and segregated in your current accounting records.

Preparing for a nonprofit financial audit takes time as you still have to continue managing the day-to-day tasks of running your organization. Auditors understand that you need time to prepare, and they are willing to work with your organization to answer any questions or concerns you have before the final fieldwork. For a detailed checklist designed to help your organization prepare for your upcoming nonprofit financial audit, click here.

Did you know Beck & Company can help you with your auditing needs as well as your accounting needs? Learn more about our accounting and auditing services for nonprofit and government organization.

Checklist for a Financial Audit of a NonProfit Organization

The term “audit” usually sparks fear and apprehension in businesses and nonprofit alike. An audit can refer to any internal review, contract review, or external review by the nonprofit Board or other managing body; however, many people immediately think of a visit from the IRS.

This is not the most common type of audit for nonprofit organizations. A financial audit typically refers to an independent review of a nonprofit organization’s books and accounts. This is usually done annually as a way to ensure that the nonprofit is in compliance with federal regulations and private donor requirements.

If your organization is getting ready to undergo a financial audit, you need to be prepared. In order to ensure a smooth auditing process for all parties involved, we’ve compiled a checklist for a financial audit of a nonprofit organization. The following checklist is designed to help you prepare for your financial audit and know what to expect from your auditor.

Before the Audit

Before you even begin to compile documents and reports for your financial audit, you need to select a CPA or auditing firm. When it’s time to find a CPA or audit firm for your nonprofit’s financial audit, keep the following in mind:

Ask other nonprofit organizations for recommendations on CPAs or auditing firms in your area
Check each professional’s references and request a copy of their Peer Review
Prepare a Request for Proposal (RFP) once you have narrowed your selection down to a few CPAs or audit firms
Involve your board members in the selection process
Interview all potential CPAs and audit firms
Ask for the references or resumes of CPAs in larger firms
Make sure the CPA or audit firm has experience in nonprofit financial audits
Research their memberships and associations in the accounting profession
Review each firms costs and fees

Preparing for the Audit

There is a lot your nonprofit organization can do to successfully prepare for a financial audit. The following checklist will help you save time (and frustration) during a nonprofit financial audit:

Ask the auditor for a list of documents you will need during the audit and compile these documents before the auditor arrives
Make sure the documents are in the proper format suggested by the auditor
Make sure your accounting records are organized, accurate, and up-to-date
Create an electronic folder on your computer for all of the documents and records you will be needing for the audit
Make sure that you have the proper documentation for every financial transaction made throughout the fiscal year
Create an audit committee or oversight group
Plan a pre-audit meeting to get further guidance on what your organization will be needing for the audit

After the Audit

Once the audit is complete, the audit committee meets with the auditor to ask the following questions:
- Was our team cooperative and forthcoming with the requested information and documentation?
- How do our accounting procedures and policies compare to similar nonprofits?
- Are there any “at-risk” items that could be disputed by the IRS? If so, what documentation do we need to prepare in order to support these items?
- Did the team follow suggestions recommended by past auditors to improve our internal accounting system?
- Do you have any suggestions for improvement in reporting, accounting, or other procedures?
- The audit committee, financial directors, and executive director reviews the draft of the audit report
- The above group asks questions about the auditor’s discoveries
- The group evaluates any recommendations prior to presenting the final audit report to the board
- The final audit report (signed and dated by the auditor) is delivered to the board of directors
- The final audit report is presented to the board of directors

As you can see, the audit process is a lengthy one. However, it does not have to be a scary one. With the right amount of information and preparation, you can come out of a nonprofit financial audit successfully.

If you’d like to learn more about the auditing process or would like to connect with a CPA, contact us today. Our CPAs are experienced in nonprofit financial audits and have the tools and information you need to prepare you for a smooth auditing process.

Help! I Need to Prepare an Event Budget for My Not-for-Profit

Is your not-for-profit organization getting ready to host a special event? Do you have everything you need to ensure that your event goes off without a hitch? Many not-for-profit organizations hold special events throughout the year to raise support and awareness for a particular cause. Whether it’s a charity dinner to raise funds or a yearly celebration to foster community among your supporters, not-for-profit events require extensive forethought and preparation. Not-for-profits need to have a plan in place far in advance and need to develop – and stick to – what is called an event budget.

An event budget is designed to help not-for-profits better plan and prepare for their upcoming event. Most not-for-profit organizations have a set amount of money they can spend on special events; however, if there is no plan in place, many organizations run the risk of coming out over budget. Developing an event budget is about more than coming out under budget; it’s about working smarter by planning ahead and saving time, money, and resources.

While similar to the general not-for-profit budgeting, event budgeting requires organizations to follow a specific process and format. The following steps in the event budgeting process will help you develop an effective event budget and help ensure a successful event.

Step One: Review Your Past Events

Before you even begin developing your budget for an upcoming event, you need to review your past event budgets (if you have them). Examine your budgeting processes for past events and determine what worked and what didn’t. Make sure you adjust your current budgeting process to encompass what you’ve learned. You will also need to review historic trends in your industry (or similar nonprofit organizations) and past events to gain a realistic expectation for your upcoming event. While you cannot predict everything, reviewing your past events will give you a basic understanding of what you need to plan for your upcoming event.

Step Two: Anticipate Your Expenses

In order to create an effective event budget, you need to have a general idea of your expenses. Write down your projected expenses, including venue costs, advertising and promotion, event program design and printing, catering, guest speaker/performer costs (including travel), equipment, and staff and administration costs. Make sure to leave room for unplanned or last-minute expenses as events always seem to incur surprises.

Step Three: Factor in Projected Income from the Event into Your Budget

More often than not, nonprofits include the anticipated income for an event in the event budget. Because many not-for-profits do not have the funds to pull off an event from start to finish, they have to rely on the income generated from the event to offset the expenses. Determine how much income you plan on receiving from the event, whether that be from ticket sales, sponsors, or merchandise sales, and how much income you plan on incorporating in your event budget.

Step Four: Create Your Working Budget

Now it’s time to create your working event budget. Include your anticipated expenses, as well as the funds you have to work with for the event. The actual budgeting process is lengthy and requires the following:

Determine “hot areas” that need more dollars or attention
Review your event attendance goals and “fall out” trends to determine your projected attendance
Negotiate and streamline supplier contracts to minimize event costs
Develop a system to track your expenses daily
Prepare your team for unplanned or surprise expenses and train them to determine worthiness
Keep an eye on on-site expenses and cut costs where you can (i.e. venue, event staffing, food, audio/visual, etc.)

Step Five: Have a Post-Event Meeting

Meet with your event staff following the event and review the budget and planning process. What areas could you have improved upon? Did you come out under or over budget? Review all supplier bills and dispute any unapproved expenses directly after the event. Once you have thoroughly reviewed all pending expenses, pay your suppliers on-time. Compare your event budget to the event actuals and discuss any discrepancies among your team. While you cannot go back and change time, you can ensure that you are sufficiently prepared for your next event.

How Nonprofits Can Improve Transparency and Maintain 501 (c) (3) Status

Your status as a tax exempt “public charity” provides you with significant benefits. In addition to paying no federal, state, or local income taxes, the designation from the IRS allows you to accept private donations and receive government funding in the form of grants. Your 501 (c) (3) status also entitles you to reduced rates for services, such as mail delivery. Overall, the status allows your organization to focus more of your financial resources toward your mission and goals.

Keeping your 501 (c) (3) status is never guaranteed. With that in mind, how can nonprofits improve transparency and maintain their 501 (c) (3) status? In order to maintain your status, you will need to do the following:

Comply with nonprofit reporting requirements. Nonprofit organizations face different reporting regulations than their for-profit counterparts. You are required to file Form 990 (either Form 990, Form 990-EZ, or Form 990-N) depending on the amounts of your total annual receipts and assets. If you fail to file this form for three years in a row, your tax-exempt status will be revoked.If you do not need to file the full Form 990 (based on your annual receipts and assets), you will need to complete Schedule A, Part 1 (“Reason for Public Charity Status”) annually. You are also required to file payroll tax returns for your employees and 1099 forms for all public contractors. Make sure you are aware of any additional federal or private donor reporting requirements. Some donor require additional financial reporting, so make sure that you are maintaining those reports.
Pay employment taxes and properly withhold from employee paychecks. Even though your organization does not pay income taxes, your employees do. Make sure that you are paying applicable employment taxes, such as each employee’s Social Security and Medicare taxes. You must also withhold the employee portion of employment taxes from your employees’ paychecks, as well as federal, state, and local income taxes where they apply, and report the withheld amounts to the appropriate governmental agencies.
Use a formal process to approve employee compensation. The salaries and benefits you pay your directors and key employees must be available to the public on your Form 990. The process you use to determine each director’s compensation is just as important as their compensation. Make sure that the process is reasonable and that your compensation packages are comparable to the amounts paid by similar organizations in size and activity. The IRS determines this review and approval process as the responsibility of your board of directors and committees.
Maintain the required level of public support. If your nonprofit organization is primarily supported by a government unit or the general public or is a community trust, you will need to complete and pass the public support test on Part II of Schedule A. If your nonprofit is exempt because it receives more than one-third of its funds from private donations or contributions, you will need to pass the public support test on Part III of Schedule A every year.

In summary, it is your responsibility to make sure that you maintain your 501 (c) (3) status. In addition to the following the do’s, we have created three don’ts that are necessary to maintaining your status: don’t operate for the benefit of private interests; don’t generate excessive unrelated business income; and don’t pay more than market rates for goods and services.

The above tips will help you maintain your tax-exempt status so you can continue serving your local community for years to come. If you have any additional questions regarding your tax-exempt status, contact us today. Our nonprofit accounting experts can help you determine which tools to use to demonstrate the proper transparency and accountability necessary to maintaining your 501 (c) (3) status.

How to Prepare for a Nonprofit Financial Audit in Five Easy Steps

Nonprofit financial audits are unfortunately a common occurrence. Because nonprofit organizations rely solely on donated funds from the government and private donors, they are more susceptible to financial audits than businesses in the for-profit sector. In addition to ensuring that your organization complies with the various nonprofit financial reporting requirements, nonprofit financial audits can be used as an accountability tool and best practice for nonprofit success.

A nonprofit financial audit – though unwelcome – can highlight your organization’s weaknesses so you can focus on areas to improve over the next year. Keep the following tips in mind as you prepare for your upcoming audit. While it may seem unappealing and stressful now, your nonprofit financial audit can provide significant value to your organization. With the right amount of preparation, you can successfully survive and conquer any nonprofit financial audit thrown your way.

Choose your auditor carefully.
Just as you would choose any financial service provider, choosing the right auditor is crucial to making the audit process less painful. You need to select a nonprofit financial auditor that you and your team feel comfortable with. Make sure that your auditor understands your organization and can provide valuable recommendations and insight. If they are not familiar with your organization or industry, look for somebody else. Remember that choosing an auditor is essentially choosing a partner for your organization, so choose wisely!
Prepare ahead of time.
Your auditor will send you a list of items to prepare prior to his or her team’s arrival. Make sure that you have all of the items on the list and are fully prepared when the auditors arrive. Preparing these documents ahead of time will allow you to relax and focus on the actual audit, rather than scrambling around trying to find certain documents or information.You should also be prepared for the auditor of your nonprofit financial audit to request additional reports and information based off of the documents you supply. Make a note of any of the items requested during the audit so you can have them prepared in advance for the next nonprofit financial audit. Maintaining your reports and documents throughout the year can also help you come audit time.
Set clear deadlines – and follow them!
Be sure to communicate any deadlines to your audit team early on in the process. These deadlines could include bank submission deadlines, audit committee deadlines, board deadlines, or grant deadlines. If you begin the nonprofit financial audit process communicating clearly, you will be less likely to experience surprises or delays further on in the process.
Set a timeframe for completion.
Your nonprofit financial audit should be completed onsite as much as possible. Talk to your auditor and agree on a set completion goal before you even begin the process. If there are outstanding items after your auditor leaves, agree upon a deadline for open items before they leave your office. The more you know what to expect, the less you will stress over the unknowns.
Incorporate the auditor’s suggestions into your organizational plan.
Nonprofit financial audits are invaluable to nonprofit organizations. At the end of an audit, you should receive a management comment letter. In this letter, your auditor will highlight any areas of deficiency and concern, as well as provide suggestions for improvement. Don’t let your audit (and audit stress) go to waste. Implement the auditor’s suggestions wherever they are appropriate. This will not only improve your organization, but it will also prepare you for future audits.

If you are looking for an accounting firm who specializes in nonprofit financial audits, contact us today. In addition to our accounting services, we also provide nonprofit financial auditing services. Give us a call at (703) 834-0776 extension 8001 to learn more about our auditing and accounting services.

Avoid Devastating Mistakes in Your Nonprofit Startup – Follow These 7 Tips for a Smooth Beginning

Starting a nonprofit organization can be an exciting time. As you gather support for your new nonprofit startup in your community, you’re probably imagining all the ways your nonprofit organization will impact the surrounding community for years to come. Your dream of building a nonprofit organization from the ground up and finally coming true, and you couldn’t be more excited to begin the journey.

Over the years, we’ve seen too many nonprofits fail due to lack of planning and/or insufficient tools. These devastating mistakes can cause many nonprofit organizations to fail before they even begin. With so many governmental and private donor regulations, it can be difficult to navigate the many requirements expected of nonprofit organizations in addition to the complicated steps required of setting up a nonprofit. We’ve advised nonprofit startups for several years and have witnessed firsthand the many challenges involved in starting a nonprofit organization from the ground up. In response, we have developed 7 crucial steps to help nonprofits achieve a smooth startup.

Make sure there is a need for your organization in your area
Ultimately, your nonprofit organization is a business. In order for your nonprofit to be successful, there needs to be a demand for the services and programs your organization will offer. Research the community you are planning your startup and see if there is a need for your organization. Is there another organization in the area that offers similar services and programs? If so, is there a way to team up with the existing organization? Research the area and your options before you set up your organization. If there is an existing organization already offering the same services to the community, there may not be a need for your organization.
Create a “Business Plan”
As we said before, a nonprofit organization is essentially a business. While there are stark differences in the way nonprofits and businesses are run, there are many similarities. Like a business, your organization needs to have a healthy cash flow in order to survive (meaning there needs to be more money – or “funds” – coming into the organization than going out of the organization).Your business plan does not have to be complicated, and you can always change it as your nonprofit grows and progresses. A business plan is a like a roadmap; it brings focus to your goals for the organization and details plans you have for future growth. For more information about what your business plan should include, click here (link to July Article # 1).
Make sure your organizations qualifies for nonprofit status
While your idea for a nonprofit organization may seem substantial, are you sure it qualifies as a charitable cause? There are many types of nonprofit organizations, and it is crucial to know what kind of organization you will operate as. Research the types of nonprofit organizations and determine which type of organization you will be running. If you need help determining your status, contact your CPA. They will be able to help guide you through the nonprofit qualification process and answer any questions you have about achieving nonprofit status for your organization.
Meet all legal requirements
Many nonprofit owners are shocked at the number of legal requirements organizations are faced with. Nonprofit organizations are heavily regulated on a government, state and private funder level. Research all of the requirements you will have to meet, and enlist the help of your CPA or accountant. They can help you navigate the seemingly endless list of legal requirements and set you up for success.
Maintain accurate records
Keeping good records (financial, organizational, etc.) is key to the success of your organization. As we mentioned above, nonprofits are subject to many legal requirements, and accurate records will alleviate the stress related to meeting those requirements. Many funders have special reporting expectations, and a good set of records will help your organization effectively meet those expectations. If you maintain good records from the beginning, you will be less likely to run into problems in the future.
Create a fundraising plan for your organization
Fundraising is crucial to your nonprofit’s success. Without funds, you will not be able to provide the services and programs your community needs. It is important to have a strategic plan in place when it comes to fundraising for your organization. Brainstorm how you wish to obtain the majority of your funds. Do you want to apply for government grants? Would you rather receive funds from private donors? Determine what is best for your organization, and develop a plan. Without proper planning, your fundraising efforts will most likely fail.
Choose your board members wisely
Your board is crucial to the success of your nonprofit organization. The board is legally responsible for keeping your nonprofit on track with its mission, providing you with the expertise you need, and helping you raise the necessary funds to keep your organization running effectively. Make sure you choose the right people with the right expertise to serve on your board. The wrong board members can cause serious – and potentially costly – issues in the long run.

As you can see, starting a nonprofit organization involves more than simply providing a few cool programs and services in the community. It is a business venture and requires proper planning to be successful. If you have any questions regarding your nonprofit startup, contact us today. We’d be more than happy to help guide you through the legal and financial requirements involved in starting your organization and prevent these devastating mistakes from occurring.