Nonprofit Accounting Blog – Page 19

Preventing Nonprofit Fraudulent Activity within the Board of Directors

Implementing systems and actions meant to help your nonprofit organization prevent and eliminate fraud are essential to its ongoing financial and organizational health. Last week, we took a look at six important facts you should know about fraud that will help you take actions against it and implement effective financial reporting in the process. Click here to learn more. Beck and Company’s Certified Public Accountants and Business Advisors have also shared some tips and steps for preventing fraud in the past that are an important starting point in fraud prevention. Today, we will look at some additional actions you can take to further reduce fraud risks to your organization through actions needed within the board of directors. View the other prevention tips as a starting point, and then keep reading for additional tips and help.

Beck and Company CPAs offer auditing services to carry out nonprofit financial audits at your organization that can provide you with an extensive examination of financial information. These audits will give you a closer look at possible areas of fraud within your organization so that you can be intentional in dealing with them. We would be more than happy to help your organization in this way so you can help your organization maintain its wellbeing and prevent abuse.

Four Conditions that Promote Fraud:

Before we look at additional tips for preventing fraud, it is important to note the four factors or conditions that, when present in your organization, lead to fraud occurring. Be sure you are aware of the existence of these conditions so you can stop them both within the organization and the board of directors. They are:

Incentive (personal, professional, and financial gains)
Opportunity (ineffective financial reporting or lack of reports that allow for easy access and actions with little or no knowledge being able to be tracked by others)
Rationalization (justification of need or ability to commit abusive or fraudulent act)
Capability (in a position of trust and access to funds that make it easy to commit fraud)

Tips for Preventing Fraud within the Board of Directors at Nonprofits

Board members are not exempt from having the potential to commit fraud. In fact, they often have more access to information and funds in addition to being the most trusted within an organization. They can use this power and the above four conditions that are often most true of the board in order to take advantage of the nonprofit organization. Here are some tips to help ensure the board, too, is upholding financial transparency and acting with integrity even with more power and access available to them.

Institute a board member code of conduct and ethics policy
Create and use a conflict of interest policy and require all board members and senior staff alike to sign this disclosure statement on an annual basis
Require staff and board member background checks including for those in existing roles (especially finance staff and those in the most sensitive positions)
Establish a formal audit committee with a charter laying out specific duties and tasks. Beck and Company CPAs would be pleased to help you in this process and as the auditors.
Enforce a formulated gift acceptance policy for all gifts
Monitor performance throughout the year of internal control policies and procedures by requiring finance staff to report results of reviews of internal control processes and use effective financial reporting
Engage an independent accounting firm (such as Beck and Company CPAs) to evaluate controls as an agreed-upon procedure that occurs regularly

These board fraud prevention tips are only one area that needs fraud prevention. Stay tuned next week for tips that span across the financial domain of the organization. Beck and Company CPAs can help with nonprofit financial audits that will give you the financial transparency you need as an organization to prevent abuse within the board and nonprofit. Please contact us for assistance.

Implementing Effective Financial Reporting: Know the Facts about Fraud

Fraud is, in essence, criminal deception or wrongful action intentionally intended to result in personal and most often financial gain. Unfortunately, even nonprofit organizations are susceptible to fraudulent activity, and this can even occur within the organization internally through staff actions of finances that manipulate the truth of the financial reality or use it for personal instead of organizational use. Last week, we took a look at ways to prevent fraud, the many types of financial fraud that exist, and how financial transparency can help. To learn more about all of these important facets to understand in terms of fraud, visit here.

Beck and Company’s Certified Public Accountants and Business Advisors know how important it is for your organization to truly thrive and accomplish its mission. Fraudulent activity can be both damaging and ultimately destructive to organizations and their important work. That’s why we offer nonprofit financial audits to help you help your organization be very knowledgeable about the financial practices that are occurring within your nonprofit and so you can be educated and actively involved in upholding and maintaining effective financial reporting to prevent fraud. We can conduct internal financial audits and provide you with the facts you need to keep up on financial dealings and not allow fraud to creep into areas that are not being monitored but should be. Learn more about our auditing services here.

Facts about Fraud that Your Nonprofit Organization Needs to Keep in Mind:

Let’s take a closer look at some important facts about fraud that you need to know.

It likely already exists. Like it or not, there is a very high probability that fraud or financial abuse already exists somewhere within your organization. Accepting this but being active in not letting it spread farther is essential.
The cost of fraud goes far beyond dollars lost. The true and real cost of reported instances of organizational fraud or abuse cannot be measured in terms of just dollars lost. They must also be measured in terms of lost public and internal trust in the organization.
Changes to personnel and circumstances increase fraud risk. No organization is completely stagnant. As situations change and staff turnover or expansion takes place, new people and systems are involved all the time. These changes can increase the risk of internal fraud and abuse.
Internal controls alone are not enough to prevent fraud. Certainly internal controls play a key role in deterring fraud and abuse, but they only represent one facet of the many, including effective financial reporting and financial transparency, that are needed for fraud prevention and detection.
Everyone involved in the nonprofit must also be involved in fraud prevention. All constituents, staff, and board members have a role to play in preventing and detecting fraud and abuse. Everyone within an organization has a responsibility and duty to be active in noticing, reporting, and responding to fraud. No one should think they are exempt from this role.
Fraud’s intensity increases with the level of the organization. Typically, fraud from the top of the organization is much more major and far more costly. Even still, minor fraud can still occur and impact an organization at the lower levels of an organization even if they are less severe.

Keep these facts about fraud in mind, and share them with those in your organization. Use them as a starting point through which you create your action steps in preventing fraud. Beck and Company CPAs are here to help you by carrying out nonprofit financial audits and taking other steps needed to help your nonprofit increase financial transparency and decrease fraud. Please contact us for assistance.

Fraud Types and Financial Transparency’s Reduction of Them

Is your nonprofit at risk? Do you know if fraudulent activity is taking place within your organization? None of us want to become a statistic, but with the rampant and varied means by which fraud occurs, it can be easier than you realize to be susceptible to fraud. In today’s society, fraud is like a mask that covers up the truth and takes on many different forms and identities which makes it harder to identify and eliminate. No matter what, fraud is a destruction of trust, and it is so important to be aware of what is truly going on within your organization in order to prevent it. Because nonprofits are considered trustworthy by nature of the public good they intend to do, the damage in violating trust is even more severe for not-for-profit organizations.

Reducing Fraud’s Risk:

We all know and understand that abusing trust can be costly for nonprofits. Ultimately, it could be more than just costly for fraudulent activities to take place at an organization. It can actually completely destroy and terminate organizations that are not careful and vigilant in protecting their organization and doing all of the necessary steps to prevent fraud. Fraud can be prevented by using internal controls and internal audits in order to be detecting it quickly. It can also be stopped by educating the organization’s staff on the forms of fraud and actions that would constitute it in addition to its impact and how to report it if it is being noticed. Finally, fraud can be prevented through the board of director’s vigilance, policies, and financial supervision. To learn more about these three ways to prevent fraud, visit here.

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 through a nonprofit financial audit so that you can be intentional in establishing and maintaining trust in those areas instead of harming it. These nonprofit financial audits are truly essential to maintaining the organization’s health, but they are not the sole means through which fraudulent activity can be discovered. Ongoing effective financial reporting and the use of these reports to continuously be sharing this information with constituents and board members to ensure financial transparency is essential.

The Types of Fraud and How Financial Transparency can Help:

Let’s take a closer look at the forms and faces fraud can take and how to unmask these fraudulent activities and prevent them with financial transparency and effective financial reporting. Nonprofit organizational fraud can take the form of:

Payroll or billing schemes
Check tampering
Unrecorded or understated funds
Mischaracterized or fictitious expenses
Undisclosed conflict of interest transactions
And many other forms as well

Clearly, many of the types of fraud stem directly to finances and financial practices within a nonprofit organization. Both intentional errors in use of funds and intentional errors in recording funds lead to fraud and trouble for nonprofits. Falsifying funds and financial records is so costly and damaging to organizations that it is important to be consistent, vigilant, responsible, and in tune to financial actions and transactions on an ongoing basis in order to uphold financial transparency. Effective financial reporting is key, and active involvement in financial dealings is essential to knowing what is going on within the financial side of the organization to prevent dishonest activities from having a chance to even occur let alone expand.

Beck and Company CPAs are passionate about helping nonprofits get their financial reporting in order so they reduce the risk of fraud. Learn more about all of the nonprofit services we offer 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 “unmasked” to prevent fraud.

Managing Talent can Make or Break your Nonprofit

So many internal, external, and societal factors influence the success and failure of nonprofit organizations. It can be complicated to figure it all out and truly determine what will aid in the success of your organization and what can also hinder or harm it. Over the past month, we have taken a close look at four indicators that positively influence success when managed and carried out well. These “4 Ts” of organizational success are transformation, technology, transparency, and talent. Transformation is focused on making changes and staying active in improving the organization. Technology assists in transformation through implementing updated systems that help in keeping pace with modern, business world trends and needed processes. Transparency helps organizations to collaborate better, increase trust amongst stakeholders, improve engagement and service offerings, and enhance efficiency. To learn more about transparency, visit here. For our final post in this series, let’s get a deeper glimpse into how talent and its management is yet another performance indicator vital to nonprofit success.

As Beck and Company’s Certified Public Accountants and Business Advisors, we understand that being successful in transformational practices, technological advancement, transparent practices, and talent management in addition to all the other tasks that need attention as an organization can present challenges to time and money. We are here to help with the financial pieces of these undertakings so you can focus on your areas of expertise in furthering your organization’s mission and success. Learn more about our accounting, controllership, and CFO services for nonprofits here. We can assist you with these important aspects of success so you can focus on the four performance indicators that need your attention and other important tasks.

Why is talent management a top consideration for success?

The reality is that initiatives in transformation, technology, and transparency will all fail without the help of the people that make them possible. Skilled workforces must be developed and maintained. Without the right people in the right positions, achieving success is nearly impossible. Managing talent has the power to make or break an organization. This revolves around the importance of recruiting the best employees, developing them and the talents they bring to the organization (in addition to utilizing those talents well), and retaining them over the long term. An organization must have a good hold on what their current skill shortages are, must be actively seeking this out, and must be constantly in tune to potential skill needs.

What factors should be involved?

When managing talent, it is necessary to explore a variety of factors involved in the process. These include incentives, rewards, and compensation structures. This is complicated by the fact that budgets are always limited. These budget constraints are reality, but they cannot be the sole indicators of decisions related to talent acquisition. As an organization, you must believe in the power of people and that they offer the biggest benefit of all to the organization and do what is necessary to find the needed talent and skills to succeed in the digital age, reward their successes, and retain them over the long term.

The process of talent acquisition starts by taking a look at critical capability gaps that exist in your organization. It also necessitates taking a good look at existing skills within the organization and how to best use those. What should you look for in acquiring leaders and skilled laborers for your organization, both current employees and future additions to the team?

Team building, coaching, and mentoring skills
Foresight and adaptability skills
Operational knowledge of the organization as a whole

Remember that having technical skills alone is not sufficient. Talent must reach beyond skills to attitudes, overall organizational buy in, leadership and people skills, ethics, integrity, and professionalism. Develop internal talent, train staff well, use talent wisely, and create a culture and environment that is positive and has incentives in order to be successful in using and finding the best talent for your organization’s sake.

Contact Beck and Company CPAs to learn more about the performance indicators discussed this month and to find out how we can help in your overall nonprofit success.

Transparency’s Potential for Positive Impact on your Nonprofit

When you think of all of the factors that influence your nonprofit’s success, does transparency come to mind? This may be a more subtle performance indicator than the others we have looked at over the last two weeks, but it is so important. The third “T” in our series about the “Four Ts” or four performance indicators that deserve a closer look as a nonprofit is transparency. Transparency is just one of the four indicators that has the potential to increase and produce greater success while positively impacting nonprofits. To learn more about the other “Ts” we have discussed, visit here to learn about technology and to take a closer look at how it impacts another indicator, transformation.

Is your organization accountable to its stakeholders and providing them with insight into how money is being spent, how decisions are being made, etc.? Does your organization allow its stakeholders and constituents to make informed decisions about the services provided and their quality? Many organizations fail to even view transparency as something that will better decision making. The reality is that this can be achieved if care is taken to present information in relevant and engaging ways instead of by simply replicating internal paperwork.

Beck and Company’s Certified Public Accountants and Business Advisors understand that having the relevant data and accurate information needed to be transparent can be tricky and difficult, especially in small organizations who may not have expertise in accounting and financial practices and are best skilled to focus on the important mission-related work of the nonprofit. Our expertise is in the financial area, and we can help you with your accounting and financial practices through our nonprofit services designed to meet the financial accounting needs of organizations. We also offer audit services to help you with yet another financial aspect of your organization that is essential to its health and transparency—nonprofit audits. Let’s take a closer look at what transparency is all about and how it is beneficial.

What is transparency, and why is it important to nonprofit success?

Transparency is so much more than sharing the latest budget or minutes from meetings. It involves identifying the right sets of data, identifying the appropriate financial and non-financial key performance indicators (KPIs), and acting upon that information to demonstrate how effective a nonprofit organization is at meeting the needs of those it serves. Metrics and measurements must also be clearly communicated to achieve transparency, and this information must be consistent and timely.

The beauty of transparency is the opportunity it creates for true openness. It has many benefits including helping in fostering a culture of collaboration and sharing within an organization and to its stakeholders. At the same time, transparency can increase trust and engagement through true accountability.

Here are five essential benefits of being transparent:

1. Increased engagement- conversations, decision making improvements, dialogue, etc.

2. Enhanced internal collaboration and true openness as a nonprofit staff

3. Improved trust in the organization on the part of its stakeholders

4. Enriched quality of delivered services

5. Heightened operational efficiency within the organization

Beck and Company CPAs can help you in the process of continually increasing transparency, particularly financial transparency, through a myriad of service offerings including accounting services, nonprofit services, audit services, and technology consultation services. Please contact us to let us know what your needs are and to find out how we can assist you in meeting those needs. Stay tuned for the conclusion of our series on indicators that can determine organizational success next week as we look at the last of the four “Ts” that can be strong indicators of nonprofit success—talent.

Leveraging Technological Opportunity as a Nonprofit

There is an ongoing struggle in our world to prioritize. So many factors demand our attention and focus that it can be overwhelming and challenging to know where to put our focus, what can wait, and what is worth consideration or not. This is true just as much in our work lives as in our personal lives, and nonprofits are not exempt from this either.

With a continuous stream of challenges facing nonprofits, your organization must address, face, and find solutions to such challenges that include, but are not limited to, financial, environmental, and demographic constraints. Maximizing potential with financial constraints considering all of the factors involved can be daunting. Getting the desired performance out of your nonprofit is not easy, but it is possible. One such performance indicator that we looked at last week is transformation. Being open to change, embracing and allowing it, and carefully using finances to help is important to nonprofit success. Let’s take a look at the second performance indicator, technology, this week that is a huge part of assisting in an organization’s transformation.

Beck and Company’s Certified Public Accountants and Business Advisors know that managing all aspects of a nonprofit is a huge task. Because it is impossible to be an expert in all realms at once, we are here to help with the financial and accounting piece in addition to the technological piece of your organization that might merit outside help. We are passionate about helping nonprofit organizations to be successful and would be happy to assist in the areas of our expertise so you can focus on your areas of expertise. Learn more about our nonprofit financial service offerings here. In addition, learn more about the technology consulting service offerings we provide that will help with keeping your financial and business processes in order.

Opportunity Awaits: Leveraging Technology to Enhance your Nonprofit Organization’s Success

There is no denying that technology in today’s world is a necessity. Keeping up with technology translates into keeping up as an organization overall. Technology is critical, but nonprofits often fail to leverage the opportunities it provides. Often times even the true need for technology can be overlooked by nonprofits or justified as not necessary due to financial constraints or lack of buy in from stakeholders. Unfortunately, this may seem okay for organizations to limit their technology use or not stay up-to-date, but this will ultimately be costly.

Part of the transformation and constant development your organization needs is an ongoing process of enhancing technological processes that can automate processes, help with managing data, and create more efficiency at your nonprofit. Making the right investment choices in technology that will support your organization’s efforts and enable further transformation is key in this area. From a financial perspective, this involves gathering and providing the right information that will be used by nonprofit stakeholders to support investment decisions and calculate cost and value benefits. This includes acting on the information and research of technology options and using this data to make decisions with regards to technological advancements that will truly benefit the organization. Then, successful and methodical implementation of the decided upon technologies is important.

What forms of technology are especially worth consideration in our current, modern age?

Social technology
Mobile technology
Analytics technology
Accounting and financial system technology
Cloud technology

Knowing which technology options to invest in that will result in the best return on investment and knowing how to execute a strategy to roll out new systems can be challenging. It is important to prioritize what is needed and what will be most beneficial, understand costs and outcomes, and communicate clearly to stakeholders as to what decisions are being made and how users will be assisted in the implementation process.

Contact us to learn more about our technology consultation services to help you in the process of finding and implementing the best technology solutions that will further transform and assist your nonprofit organization in its success. Be sure to read next week’s blog as we look at yet another key performance indicator for your organization—transparency.

Embracing the Need for Ongoing Transformation as a Nonprofit

Nonprofit organizations are encountering new complications and intricacies all the time, and monitoring performance, success, and failure is more important than ever to ensure that your organization has what it takes to not just survive but thrive. Being successful and thriving as an organization requires planning, executing those plans in a methodical way, monitoring activities, and analyzing the results of those carefully thought out plans. The overall performance of your nonprofit is essential to its current and future success.

In addition to this performance piece, strong financial practices are also needed. Beck and Company’s Certified Public Accountants and Business Advisors know that doing all of this is no easy task. That is why we are here to help your organization with the financial end of being a nonprofit so you can focus on carrying out plans and acting on your organization’s mission. Contact our CPAs today to get the nonprofit accounting and controllership services you need to further your mission from a financial perspective. By allowing us to take care of some of the financial pieces, you can focus on your organization’s ongoing performance. In focusing on performance, we will take a closer look at performance indicators over the course of this month and will discuss what they mean for your organization. The “4 Ts” are four performance indicators that deserve strong consideration and ongoing analysis, not to mention action, too. The first of those four indicators is transformation.

Transformation: Adapting and Changing as a Nonprofit is Essential

It is hard to deny that businesses and organizations alike are always in the process of change. But, do you view the ongoing transformation of your organization as something that adds value to it? Or worse, do you not allow your organization to transform while forcing it to stay as it has always been? Do you see that there are benefits to transformation including financial benefits? There is value to transformation, and transformation is all about effectively managing changes made to the organization or services delivered by it.

Transformation must be viewed as an ongoing activity rather than a single event. An effective performance management system will aid in this process, bringing a clear, consistent, and constant focus on organizational strategy, planning, execution, and review. Being onboard with allowing your organization to transform with the times and helping it along in this process are not easy, and it can be challenging to see the financial benefits—at least initially.

Here are five challenges your organization will likely face in the process of transformation. Recognizing these but not letting them stop your organization from making changes is key.

Challenges associated with organizational transformation:

1. Getting people to adapt to changes

2. Securing the necessary budget to support transformation and make the needed changes

3. Determining the cost benefit of making the changes

4. Finding the right skills and people to help in the transformation

5. Making the decisions in knowing where, exactly, to put the focus in the process of transformation

Transformation requires supporting significant change in approach to your organization’s operations, technology, processes, and service delivery wherever and however it may be needed in order to improve efficiency and deliver better outcomes. Beck and Company CPAs can help you help your organization in this process by sorting through and identifying the right financial information you will need to provide to stakeholders within the organization. This financial data will support decisions around the delivery of services and will provide all involved with the best access to the relevant financial information needed to make the needed changes.

Being open to transformation and being well prepared for it with the financial data you need are great places to start in truly responding to needs and making ongoing changes as an organization. Please contact us to learn more about how we can assist you in this process of continual improvement through organizational transformation. Stay tuned next week as we take a look at another performance indicator worth consideration—technology—that is closely tied to transformation.

Making Sense of Nonprofit Audit Conclusions and Results

The nonprofit financial audit process is not complete with the preparation and actual audit alone. The conclusions that result from a nonprofit financial audit are some of the most important parts of the process for nonprofits and should not be overlooked. The auditor’s conclusions may be confusing, so let’s take a closer look at what they mean. It is important to note that understanding what the auditor was looking for and communicating well with the auditor can help in understanding the audit conclusions. To learn more about effectively communicating with your auditor and what the auditor will need from you to complete the audit, visit here.

Beck and Company’s Certified Public Accountants and Business Advisors are auditors themselves and can help you with the entire process. Learn more about our audit services by visiting here. We would consider it a privilege to be the auditor for your nonprofit audit. We are happy to give you some insight into what the auditor’s conclusions mean and what is necessitated by the government, and the information below should do just that.

During the Audit:

The process leading to the audit conclusions starts during the audit process. This is when you issue your financial statements, and the auditor tests them to determine whether the statements are materially correct. The auditor also looks at the systems and procedures used to generate the financial information to determine if they are free from obvious design deficiencies. After sufficient evidence has been gathered that your financial statements have been fairly stated, the auditor gives an opinion on those statements.

Auditor Unqualified and Qualified Opinions upon Conclusion of the Audit:

Ideally, auditors will provide an unqualified, or “clean,” opinion on the organization’s financial statements. An unqualified opinion will contain language such as “the financial statements present fairly in all material respects” and “in conformity with accounting principles generally accepted (GAAP) in the United States.” If an auditor is unable to render an unqualified opinion, a qualified opinion may be issued. The reason might be a departure from generally accepted accounting principles or a scope limitation. A scope limitation means that, except for the matter to which the qualification relates, the financial statements present the nonprofit’s financial position fairly in all material respects.

When an auditor issues a qualified opinion, the auditor believes the financial statements are fairly stated in all respects except for a material departure from GAAP, and the auditor has decided not to express an adverse opinion. If the scope limitation is severe enough, the auditor may disclaim an opinion on the overall financial statements.

If the auditor decides that the departures from GAAP are so significant that the financial statements as a whole are not fairly stated, an adverse opinion must be issued. An adverse opinion will include language describing what the auditor believes is materially misstated in the financial statements, and the effects of the misstatements. If the effects are not reasonably determinable, the auditors will state that.

In Conclusion:

Your nonprofit staff and the outside auditor should work together to ensure that financial statements are usable, accurate, and timely. Meeting these goals gives users greater confidence in the statements and helps you recognize opportunities for improvement. Stay in contact with the auditor throughout the year about matters such as changes in entity, personnel, industry, debt, ownership, direction of the nonprofit, and chart of accounts. Even though auditors must remain independent and objective, they are still a trusted advisor and resource throughout the process.

All of what goes into and results from an audit can be confusing. Contact Beck and Company CPAs to learn more and to find an auditor that is the right fit for you and your organization.

Nonprofit Financial Audit: Successfully Communicating with your Auditor

Like it or not, your organization will be audited from time to time. This can be an intimidating process, but it doesn’t have to be so bad depending on who you choose and how you communicate with your auditor. Beck and Company’s Certified Public Accountants and Business Advisors are trained to help with nonprofit audits and would be happy to assist you with yours as auditors. Learn more about our audit services here.

As auditors, we know firsthand what makes audits run smoothly for both the nonprofit and the auditor. Let’s take a look at some tips for communicating effectively with your auditor so you know what is needed and expected. In addition, let’s dig deeper into what an auditor will be asking for from you as an organization.

How should you communicate with the auditor during the audit?

Because of the pressure brought on by audits and their results, auditors understand that you may be feeling overwhelmed and nervous. The auditor wants the best for your organization just like you do, but this person can only help if you are open and candid with them. You may be asked about questionable accounting practices or pressures, fraud risk factors, and known deficiencies in accounting systems. Your honesty and genuineness can help the auditor gain a better understanding of what is truly going on with the hopes that they can help you get things resolved. Therefore, you’ll need to be real so everyone can get to the real heart of the matter and work to find solutions. Be open with the auditor about difficult areas you’ve encountered, concerns, questions, and recommendations you may have.

The auditor needs as much information as possible, and the audit process is made easier if this information is shared directly instead of an auditor needing to infer this information from documents. Alert the auditor to any outside consultants, regulatory agency inquiries or future plans, and provide related reports and correspondence. The auditor may ask you to explain significant actual-to-budget and prior-year variances. Be prepared to discuss the results of the year based on your expectations going into the year.

Don’t be afraid to ask the auditor questions. In fact, asking questions is encouraged because it helps you to truly understand the process and be better prepared for future audits. Ask why a particular schedule is requested if you don’t know. You may have a better source for that information, it may already exist in an alternative format, or you may learn a better way to organize your routine tasks as a result.

What information will an auditor ask for that you’ll need to supply?

Ultimately, auditors express an opinion on the broad financial statements. Because of this, most of the detailed schedules they request are merely items your company should have as part of its normal accounting procedures.

The auditor systematically obtains and evaluates evidence about the basic financial statement assertions contained in your numbers including:

Existence or occurrence
Completeness
Rights
Obligations
Valuation
Allocation
Presentation
Disclosure

In addition, you may be asked about any changes in the following and will need evidence. These changes include:

Governance, management, and ownership information
Operations
Technology
Personnel relations
Economic/industry developments and their impact

In summary, your nonprofit financial audit will involve interactions with an auditor. To be successful in communicating with the auditor, you’ll need to be honest and open. You will also need to disclose as much information and as many explanations as possible to what they ask you about. Don’t be afraid to also ask questions of them to truly understand the process. In addition, be ready to supply a variety of financial statements and to address any changes that have occurred since the last audit. These tips for communication and what to supply your auditor will make the audit process more successful and smooth. To find the right auditor for your organization and to use the many audit services Beck and Company CPAs provide, contact us.

Form 990: What Nonprofit Key Constituents Need to Know

As a key constituent at your nonprofit, protecting yourself and your organization is no easy task, and inaccurate tax preparation and filings on forms such as the Form 990 are one way that your organization can easily be in trouble. The good news is that you don’t have to figure it all out alone. Beck and Company’s Certified Public Accountants and Business Advisors are trained in these areas and are here to help. Our tax services are designed to help you file all of your nonprofit-related forms with peace of mind.

Last week, we took a look at how Form 990s are often misunderstood or not sufficiently understood, what risks these misunderstandings could create, the importance of seeking professional help in filing Form 990s, and what Form 990s include. To learn more about the Form 990 and what you need to know on general terms, visit here.

By now, it should be clear that protecting yourself and others from penalties is important, but how do you ensure that this happens (in addition to the help you receive from a professional CPA)? How do you actually know what must be filed on Form 990 returns? The following information will help you to be informed when it comes to filing Form 990s and all of their nuances. The questions below are meant to assist you with any future tax compliance filings and the process of informing and education boards and management teams alike. All key constituents (officers, directors, trustees, key employees, management, presidents, board members, etc.) should be sufficiently informed to be able to answer these questions.

Do all members of the governing body of your organization have a complete copy of the Form 990 that is supplied prior to filing?
Did your organization become aware of or engage in any excess benefit transactions in the past tax year?
Did your organization have any receivables from or payables to key constituents recorded on its financial statements?
Was any grant or assistance given to any of these key constituents or their families by the organization?
Was your organization a party to a business transaction with any of these current or past key constituents, employees, or their family members?
Do any donor-advised funds, where the right to advice on distribution or use of funds/accounts was granted, exist?
Did your organization hold assets in endowments of any kind?
Has your organization had any international financial accounts?
Did any key constituent have a relationship (familial or business) with any other key constituent?
Have substantial and significant changes been made during the tax year to governing documents?
Is a written conflict of interest policy in place that requires annual interest disclosure that could give rise to conflicts? If so, was this monitored and enforced regularly and with compliance?
Does your organization have written policies for: whistleblowing, document retention, and document destruction?
Does compensation determination follow a review and approval procedure with sufficient data and deliberation before a decision is reached? (A review of Form 990, Part VII is highly recommended.)
Does your organization have an audit, review, and compilation committee responsible for oversight of financial statements and independent accountant selection?
Is a gift acceptance policy used for non-standard contributions?

If key constituents can answer these questions, they will be on the right track to completing the Form 990 or reviewing it with sufficient information to avoid penalties and give accurate reporting information. With some education, information, and review, you can save your organization from lots of headaches and potential disaster in the eyes of the public, press, and IRS. Don’t leave your key constituents uninformed.

Beck and Company CPAs would like to assist any key constituent with filing the Form 990. Contact us to get the nonprofit tax assistance you need to be successful at tax time.