Nonprofit Accounting Blog – Page 5

Technology to Enhance Nonprofit Financial Management, Now and in the Future

Among the trends affecting nonprofit financial management, technology, and its resultant impact are top of mind as organizations work toward their goals. Technology is changing rapidly, with new advances from the for-profit world pushed into the nonprofit world almost as soon as they arrive. It is these advances that are changing operations, accounting, and yes, nonprofit financial management. Here’s a look at several major trends that will enhance nonprofit financial management now and in the future.

Artificial Intelligence (AI)

It’s not the rise of the machines exactly, but close. AI, or artificial intelligence, is making inroads into nearly every aspect of life today. You may not even be aware of the AI all around you. The chatbots that answer your questions on a favorite website or the phone tree at the bank may both be powered by AI bots that combine machine learning with language sensitivity to perform amazingly complex tasks.

Nonprofit financial management may soon include AI in some capacity. Although bots won’t take the place of a smart CFO or director of finance, they can be used for all sorts of clever things, including common accounting tasks.

AI isn’t good with gray areas, so skilled financial managers will still be needed, but it is rapidly becoming an indispensable technology and one that will soon be part of the nonprofit world.

Cybersecurity

If your nonprofit hasn’t been affected by a cyber-attack, phishing scandal, virus, or another cyber crime, consider yourself lucky. Most aren’t so lucky. The Nonprofit Quarterly reports that cyber-attacks are on the rise. In just one example, a small nonprofit was hacked and had their data held for ransom—to the tune of $43,000. The same article previously cited reported that in Los Angeles, a hospital had their data held for $14,000 ransom. If that doesn’t alarm you, it should. When criminals go after hospitals and small nonprofits, you know they will stop at nothing.

Data contained on your nonprofit’s computers can be corrupted, stolen, or held for ransom. It’s not just customer or donor data that’s at risk. Vendor data from your accounting systems can also be stolen and resold.

Many nonprofits do not have someone on staff who specializes in cybersecurity. They can’t afford it. In that case, finding someone trustworthy to outsource cyber security is essential for your security, growth, and peace of mind.

Cloud Computing

Dovetailing on the topic of cyber security is cloud computing. Cloud computing offers greater security for the average company or nonprofit. They also offer shared storage space, shared costs for software, and greater access to software than most companies can afford on their own.

Cloud software includes both nonprofit accounting and nonprofit financial management software, as well as software to help you track and manage grants, donations, donor relations, membership groups, and more. Cloud offers mobile interfaces, so it goes with you, and it offers more access to better software. It’s worth taking a close look at cloud computing for your nonprofit organization.

Technology Now and Later

Technology changes rapidly, and it can feel overwhelming when you must keep up with it. If you aren’t sure what to add to your tech slate now or if you should wait for later, speak with the experts at Beck & Company.

We are a certified public accounting firm that serves the nonprofit world. We keep our finger on the pulse of software related to nonprofit services, so we can guide our clients into wise choices for now and the future.

Trends come and go, but technology is here to stay. Choose the right technology to support your organization’s growth and fulfillment of its mission.

Beck & Company

Beck & Company is a certified public accounting firm serving the greater Washington D.C. area and the Eastern seaboard. We offer consulting services, auditing, and software selection to help nonprofits with their accounting needs. Contact us today for more information or assistance.

Nonprofit Financial Management: Finding CFO Leader

Part of having strong nonprofit financial management at your organization is having the right leader in place. Hiring a great CFO can take a good deal of weight off your CEO’s shoulders. The CFO manages, plans, allocates, and develops budgets and financial materials to responsibly manage an organization’s finances. With a strong CFO in place, you have the right nonprofit financial management to build a strong organization.

When to Hire a CFO

Some organizations may not have a current CFO. Instead, the director, president, or other general manager wears the CFO hat. At some point, the budget of nonprofit financial management becomes too great, and you may feel that hiring a CFO is in order.

It’s time to hire a CFO when …

The Executive Director, CEO or President is bogged down with too much work and cannot handle critical financial tasks in time. Finances are too important to be left for a free moment. Instead, you need someone who can devote time to the tasks needed to guide the financial management of the organization.
The organization’s finances have grown to be complex, requiring someone in the leadership chair who understands nonprofit accounting. Nonprofit financial management is its own discipline, requiring someone with the knowledge, skills and experience to adequately manage the task.
The Board of Directors feels a layer of oversight and leadership is needed to manage the accounting needs of the organization. They may see the problems listed above or conclude independently that the organization needs a CFO.

A CFO can bring unique expertise to the organization. With the right CFO in place, he or she can:

Provide strategic, high-level perspective to the organization’s finance and accounting needs.
Expand the organization’s capacity to manage its finances as it grows in size and complexity.
Reduce excessive workloads in the areas of finance, administration, real estate, technology, or legal for the Executive Director (ED) and/or the Chief Operating Officer (COO).
Supplement the skills of the controller or other finance team members.
Coordinate with the ED and COO to make decisions that benefit the organization from a financial perspective.

Finding CFO “Right”

Finding the right CFO takes time. As with any hiring decision, rushing into hiring the wrong person for the right reasons can be disastrous. Leave yourself plenty of time—weeks or even months—to build the job description and begin the search process.

The first task is to create a job description outlining the desired characteristics of the CFO. Focus on the necessary core capabilities, strengths, and experiences. It’s imperative that a non-profit CFO has experience with nonprofit financial management.

Look for the following skills and attributes in a potential CFO:

Deep, rich understanding of non-profit budget models, contracts, and regulatory requirements
Demonstrates passion about the organization’s mission
Produces detailed and precise work
Exemplifies strong listening and perspective-assessment skills
Communicates well, in a transparent fashion
Exercises good judgment in the midst of ambiguity

The right CFO must also get along well with the CEO and other leaders. Because the two will work closely together, if they don’t get along or don’t feel entirely comfortable with one another, the tension will eventually turn into a nonworking relationship. A good partnership and chemistry between the two means a solid working relationship.

Options to Find the Great CFO

While hiring a full-time CFO is a great solution for many mid-sized and all large non-profit organizations, many are too small to afford or need a full-time CFO. If your organization falls into that category, there are several things you can do to afford to hire a CFO.

One idea is to hire an interim or temporary CFO. No one earns the title of CFO without building an extensive body of knowledge and experience. Bringing someone into the role on an interim or fractional basis gives the Executive Director and the organization immediate access to the many lessons learned over the course of their career, at significant cost savings.

Lastly, have you considered hiring a specialized nonprofit accounting firm? Nonprofit accounting firms may be a great substitute for a full time CFO, either temporarily or permanently. Beck & Company offers nonprofit accounting, auditing, and consulting, along with nonprofit financial management services, to help your nonprofit thrive.

Even if you cannot find a terrific CFO right away, having a company like Beck by your side means you will have the best support for nonprofit financial management. It can be hard to find a great full time CFO. Finding a strong consulting firm and nonprofit auditing firm isn’t difficult. Contact Beck & Company.

Beck & Company

The Skills Needed for Nonprofit Financial Management in 2018

Nonprofit financial management requires skills that include attributes of finance, accounting, operations, and technology. To be a good nonprofit financial manager, you need to understand all aspects of nonprofit finance as well as the technology supporting it.

It’s no surprise the teams you manage need these skills, too. Be on the lookout for chances to add these skills to your teams and to acquire them yourself.

The Skills Needed for 2018 and Beyond

Cloud and Distributed Computing: The cloud is rapidly taking over almost all software businesses need. This includes nonprofit software, too. It’s more secure, less expensive, and easier to access on the go. Not only can you save money on your software, hosting, and security, but it also enables better data sharing, storage, and updates. If you don’t have someone on your staff knowledgeable about cloud computing, consider adding it to an IT job description or finding a consulting firm to assist with cloud migration.
Search engine optimization: Visibility is the key to success in any online endeavor, and nonprofits must be keenly aware of the need for their work to stay visible. Search engine optimization helps people find your site by using techniques to make your site appear near the top of search engine results. When your site is near the top, it gets more clicks, hits, and visits. This means more interaction, awareness, and potential donors. Although nonprofit financial management may not include SEO, it may include helping departments budget for SEO tactics. It’s definitely a skill your nonprofit can benefit from, moving forward.
BI and Data analytics: Business intelligence takes data from numerous systems and generates usable reports. Having BI as well as data analytics skills at your nonprofit organization is essential for nonprofit financial management, accounting, operations, and more. Understanding what information comes from where, and how to use it adequately, can help you build a more responsive, focused organization.
Network and Information Security: Strong cyber security is essential for all businesses today. Many nonprofits, however, cannot afford dedicated cyber security staff or resources. While many security breaches are preventable, you still need someone in your organization to advise your teams while troubleshooting and fixing your systems. If you think your organization is immune to attack, think again. Criminals often target nonprofits, knowing they don’t have the resources to fight back. Hiring people with cyber security skills may be one of the most important choices you can make in 2018.
Corporate and Nonprofit Law and Governance: Corporate laws, including laws that apply to nonprofit organizations, continually change. It’s important to have someone in your organization who understands their application to the nonprofit world and who can help you adhere to all laws pertaining to corporate management and governance. It’s also helpful to have an accounting team member who understands the nuances of pending FASB changes as they pertain to financial reporting, such as FASB 606 changes, which will impact grants and contracts.

Finding the Skills You Need

It might be hard for you to find people with these skills or you might not have the budget to hire additional people. In that case, consider outsourcing or working with consultants to fill gaps in your staff.

At Beck & Company, we offer nonprofit accounting services, nonprofit auditing services, and more to help nonprofit organizations meet the challenges of their environment. We can help you plan, budget, and prepare for the new year through our slate of services.

If you do not need accounting services but instead need cloud computing, business intelligence, or other services, you have several options. You can find independent contractors to fill these needs. Consulting firms may offer the services or may be able to put you in touch with those that do. Additionally, there are interim and temporary staffing agencies and that can help you find people to fill these gaps if you do not wish to budget for them full time.

While the new year holds many opportunities, to meet these opportunities you need to have the right skills in place for your nonprofit organization. Cloud computing, BI, SEO, and many other skills are all part of a thriving nonprofit organization.

Beck & Company

Nonprofit Financial Management Update: Revenue and Grant Recognition Reporting

For those responsible for nonprofit financial management and accounting services, here is a brief update from the Financial Accounting Standards Board (FASB). FASB is in the process of improving, clarifying, and enhancing recognition standards for grants and contracts by nonprofits. While the comment period is now closed, it bears noting that the recommendations made to FASB will be taken into consideration with other feedback as they prepare enhanced guidelines.

Nonprofits Seek Clarity on Grant and Contract Revenue Recognition

Government grants and contracts tend to cause confusion among nonprofit financial management when it comes to revenue recognition. Many nonprofit leaders aren’t sure when to recognize such revenue, or revenue recognition is inconsistently recognized and recorded.

To provide further clarity, FASB is hoping to provide an update on the proposed Accounting Standards Update (ASU), titled Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made. The commenting period ended November 1. New guidelines are forthcoming.

Proposed ASU Changes

The biggest proposed change is differentiating between contributions (nonreciprocal transactions) and exchange (reciprocal) transactions. Under the new guidelines, it is likely more grants will fall into the contributions category.

The proposed framework indicates that if a grant is an exchange transaction, revenues should be recorded in accordance with Revenue from Contracts with Customers. Details on this may be found in Topic 606 or other applicable topics.

Grants, on the other hand, are determined to be contributions and should be recognized as revenue for not for profit entities under Revenue Recognition Subtopic 958-605.

All grants must be evaluated individually, and a designation made for each. Grants can be considered exchanges if the value received is commensurate with the services rendered. Then, it is categorized as an exchange or reciprocal transactions.

The good news is that the ASU includes plenty of examples to help nonprofits determine whether grants are nonreciprocal or reciprocal transactions.

Handling Conditional Contributions

A conditional contribution is a grant that comes with strings attached—conditions that must be met for the grant to be considered fully received. Grants without barriers or considerations may be unconditional.

Typical considerations or conditions include:

Goals that can be measured, such as matching grants, levels of service, or other items that can be measured or quantified;
A stipulation that specific conditions must be met for the grant;
Something limiting how the funds can be spent;
Additional actions that would be required to be taken by the recipient organization in addition to the activities that it would normally pursue.

Where there are gray areas, FASB recommends treating them consistently in the manner that makes the most sense for your nonprofit. As with many nonprofit financial management topics, common sense often takes precedence when situations do not easily fit standard guidelines.

If a grant can be considered a contract with a customer, then the specifications in Topic 606 should be followed.

New Guidelines Deadline: 2019

The good news is the changes do not affect prior quarters in any way, so you don’t need to change anything prior to 2019. For more details, please visit FASB.

The new recommendations will go into effect on or around December 31, 2019, for the fiscal year ending in 2020. That may seem like a long way off, but for nonprofits dealing with a lot of grants that fit these categories and descriptions, it may be prudent to take steps now to conform to the new guidelines. Of course, changes may be made to the recommendations based on feedback received by FASB.

If you are unsure of how to adhere to the new guidelines, how to categorize grants or funds, or just need help with your nonprofit financial management and accounting needs, contact Beck & Company. We offer an array of accounting services for nonprofits to help you manage your resources so, by improving your margin, you fulfill your mission.

Nonprofit Financial Management at Beck & Company

Mythbusters for Nonprofit Budgets and Policies

Does a nonprofit’s budget have to break even?

Board members and staff who are new to the charitable nonprofit context may wonder, “Does a nonprofit’s budget have to break-even?” “Can there be a profit?”

In this article, Nonprofit Budgets Have to Balance: False! (Blue Avocado) covers all things budget, including: surplus budgets, break-even budgets, deficit budgets, and the misconception that a nonprofit’s budget has to balance at the end of the year.

Find out how easy it can be to set up your budget while increasing the value delivered by your accounting functions. Schedule a free consultation with the accounting experts when you contact Beck & Company CPAS online, or call us directly at (703) 834-0776.

Among the many nonprofit budget best practices discussed in trade magazines and industry circles, budgeting is often relegated to the back pages or as an afterthought. Sound budgeting is the fuel that runs the nonprofit engine, ensuring that every program has enough support to run for the year and that funds are allocated fairly throughout the organization. It’s an important aspect of the annual accounting cycle and an activity that touches on every department within a nonprofit organization.

How your nonprofit derives its annual budget and how frequently it checks and updates it is a good gauge of its financial health. A healthy organization tackles the budgeting process early in the cycle, leaving adequate time for zero-based or increase-based budgeting. It also sets aside regular periods to examine and adjust existing budgets. Let’s look at nonprofit best practices in budgeting and how you can apply these best practices to your organization.

Budgets as Guides

Budgets are guides that help your organization plan for the future and determine its present course of action. They should be thought of as guidelines for spending and saving rather than rigid, fixed numbers to reach.

Budgets are also external-facing documents for many nonprofits. Department leaders and staff refer to them to establish programs and monitor costs, but they may also be shared with the Board of Directors, donors, and members to establish how funds are being spent and to develop a sense of transparency about activities, expenditures, and how donations are used.

Cash vs. Accrual Method

Another aspect of nonprofit best practices is deciding which accounting method a nonprofit will follow: cash or accrual basis. Cash basis records transactions as cash is received or spent. The accrual basis means recording revenues when they are earned and expenses when they are accrued. Either method is fine, if kept consistently. Smaller nonprofits often choose cash-based accounting methods and budgeting, while nonprofits receiving multi-year funding may find accrual methods work best.

Budget Checklist

As you begin your annual budget cycle, the following checklist of nonprofit best practices for budgeting may be helpful.

Set and follow a timeline: To complete your annual budget in a timely manner, it’s important to create a reasonable timeline with deadlines, milestones, and checkpoints for your staff. Make sure you allow adequate time for budget reviews and feedback.
Agree on goals: Plans for each department, which include stated goals and how they relate to the nonprofit mission, should be included in the budgets. Gain agreement on which programs and activities will proceed before you start the budgeting process.
Review current year budgets and actuals: Check your current budget and actual against the budget. This will help you set the new budget.
Assign roles and responsibilities: Each group should determine who will build the budget, who will review, and how the money will be allocated. The accounting department should also establish procedures for budget review and approval.
Draft income and expense budgets: Build out your drafts and share them for feedback.
Review process and approval: Leave plenty of time to share the drafts with the appropriate organizational leaders for review and approval.
Document approved budgets: Document the approved final budgets. Implement the final versions and assign people to monitor them.

Free Resources

Did you know that the National Council of Nonprofits has an abundance of articles, white papers, checklists, and a downloadable guide to assist with nonprofit budgeting? Take a look at their complete list on the National Council of Nonprofits website.

Beck & Company

Overview of Internal Controls for Nonprofits

Nonprofit organizations aren’t immune to fraud. The Washington Post found that among approximately 1,000 nonprofits, losses due to fraud, theft, and embezzlement amounted to close to half a billion dollars in total.[1]

The report, based on tax returns from over five years in which nonprofits indicated losses due to fraud, is just the tip of the iceberg. The Association of Certified Fraud Examiners report in 2005 linked 12% of the fraud cases they had studied to nonprofit organizations.[2] No organization is immune to theft.

Among nonprofits, taking funds for personal use is perhaps the most commonly reported theft. And it’s the easiest to prevent. Unlike larger for-profit companies who report intentional errors made on financial reports as their biggest problem, nonprofits face a problem with a clear solution: internal controls.

Among other benefits, internal controls are the safeguard against temptation for your employees and volunteers. While simple in concept and execution, they can prevent many instances of fraud and theft.

A publication by the Virginia Society of Certified Public Accountants explains that good internal controls are essential to:

Prevent loss through errors, misappropriation of funds, or theft
Prevent an “honest” employee from making a mistake that can ruin his or her life
Document the responsibility of the board as it safeguards the assets of the NPO
Assure that all transactions are properly authorized and recorded

While seemingly time consuming, the simple act of having two people present during the petty cash audit protects both employees and assets—a distinct advantage of using adequate internal controls.

A Clear Definition of Internal Controls

The National Council of Nonprofits defines internal controls as financial management practices systematically used to prevent misuse and misappropriation of assets, such as occurs through theft or embezzlement. Internal controls protect not just assets but reputations, as well. That nonprofit organizations maintain the highest integrity and ethical standards is critical to attract funders.

The objective of internal controls is to put “checks and balances” in place to protect the assets of the organization.

Potential Pitfalls

Once at a holiday party hosted by a University of Texas accounting professor, I found myself standing next to auditing professor Steven Kachelmeier. Using my Dale Carnegie powers of conversation, I engaged Professor Kachelmeier in a discussion of top 10 internal controls for nonprofits. He responded by saying, “Just consider what can go wrong.”

I scoured the internet to find examples of what can go wrong with weak or non-existent internal controls. The following stories are true and could happen to you.

Situation: Cash goes missing.

Suppose checks are merely kept in the bottom drawer of a file cabinet. An enterprising employee might take a few checks from the bottom of the stack, forge a signature, and cash them, stealing thousands of dollars before being caught.

Internal Control Solution: Secure the checks with keys held by two different financial managers. Ensure that bank reconciliations are performed by staff with no access to deposits or withdrawals. Bank reconciliation should be prepared monthly, at minimum.

Situation: Employees add overtime.

A clever payroll employee adds overtime hours to pay himself or herself at time and-a-half.

Internal Control Solution: Timecards should be signed by managers. A second person compares the payroll totals to signed timecards.

Situation: Fundraising for the wrong pocketbook.

During a fundraiser, a volunteer handled all aspects of the cash ticket sales, including depositing funds and reconciling the bank statement. Occasionally short on cash, she would borrow funds and then pay them back. Until she didn’t pay them back. This well-meaning volunteer “borrowed” around $10,000. The event intended to be financed by the fundraiser was cancelled.

Internal Control Solution: Anytime cash is involved, the responsibilities should be divided among several people. At least two people should be present when cash is counted. Separate people should make the deposits and reconcile bank statements.

Internal controls should be clearly documented.

Your policies need to be documented in a procedural manual and authorized by the board or governing authority of the organization. Discovery of theft or an embezzlement and the resulting investigation is hard on the organization internally, and the external damage to the organization’s reputation can cause loss of funding. Additionally, bonding insurance premiums could skyrocket in the event of utilizing the policy due to employee fraud, especially if it could have been prevented by using good internal controls.

Establishing internal controls protects both the organization and the board members, officers, and staff. For more comprehensive reading, request a copy of our whitepaper, A Guide to Internal Controls for Non-Profit Organizations.

Beck & Company

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

[1] https://www.washingtonpost.com/investigations/inside-the-hidden-world-of-thefts-scams-and-phantom-purchases-at-the-nations-nonprofits/2013/10/26/825a82ca-0c26-11e3-9941-6711ed662e71_story.html?utm_term=.6bf50202dc92

[2] https://nonprofitquarterly.org/2007/12/21/how-to-steal-from-a-nonprofit-who-does-it-and-how-to-prevent-it/

FASB Changes Impact how Grant Revenues are Categorized

The comments period may have ended, but changes are still coming to Accounting Standards Update (ASU), titled Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made. FASB issued a call for comments, which ended November 1. The proposed changes would clarify revenue recognition for contributions received and made and help nonprofits account more clearly for certain types of funds.

What Is the Proposed Change and Framework?

The changes are intended to help nonprofits distinguish between contributions (nonreciprocal transactions) and exchange (reciprocal) transactions. The changes also hope to add clarity to conditional and unconditional contributions. The results of the proposed framework changes may, in fact, push more grants into the category of contributions.

Under the new framework, if grants are deemed to be exchange transactions, then the revenues should be recorded as per the guidelines under Revenue from Contracts with Customers (Topic 606) or other applicable topics.

Grants determined to be contributions should be recognized instead as revenues in accordance with Subtopic 958-605, Not-for-Profit Entities–Revenue Recognition.

Nonprofits Still Have a Say

Nonprofits still have a majority say in how grants are categorized. Their first step is to determine whether a particular grant is a revenue or exchange transaction. If the grantor receives services of comparable value, it is usually safe to say that a transaction is an exchange.

The good part of the proposed guidelines is that the FASB includes numerous examples to help nonprofits understand the proposed framework and determine for themselves how the revenues will be categorized. Nonprofit still have a great deal of latitude in how and why they categorize particular revenues. They must, however, adhere to their own internal logic and establish guidelines based on the overarching, generally accepted accounting standards.

When Will the Changes Take Effect?

If the proposed changes do take effect, they won’t impact nonprofit reports until 2019 or 2020. They may impact organizations with the calendar year ending in 2019 or the fiscal year ending in 2020. Accounting actions completed before these dates may follow the old guidelines, which gives organizations plenty of time to update their accounting methods. If significant changes are made between the previous books and the new books, under the changed guidelines, the reason for the change should be noted in the financials next to each line that is affected by the change.

Accounting for Nonprofits Is Always Changing

Although it may seem as if accounting for nonprofits should be straightforward, grants represent an area with the potential for considerable gray areas. Nonprofit financial managers should look at the intention of the grant, whether any reciprocal action or stipulation is required, or how the grant must be satisfied.

Straight grants with no conditions attached are the easiest to recognize in revenues. Others, that come with conditions need careful, thoughtful attention. Developing your own set of revenue recognition rules that are in line with the FASB recommendations may be helpful to keep your organization consistent in how it manages its grant funds.

Beck & Company

Technology Enhances Internal Controls for Nonprofits

Nonprofit accounting audit service company Beck & Company Shares tips for better internal controls

Have you heard the term integrated audit technique? As a nonprofit accounting audit service, we keep our eye on the latest terms and technology available to our clients. Something new that has entered the world of nonprofit audits is the integrated audit technique. We’ll share a little about what that means and what it might mean to you.

Integrated Audit Technique

What is an “integrated audit technique?” It involves the integration of an organization’s manual internal controls with the use of technology to enhance and facilitate controls. Financial and operational areas are typically included in an integrated audit technique.

The idea is to use technology to make the auditing process easier and to help you maintain better oversight and control of your operational and financial budget. Technology cannot replace human oversight when it comes to internal controls, but it can help you flag unusual account activity and other signs that something is amiss.

How Technology Can Enhance Financial Controls

Most new accounting and financial technology offers some level of internal control. Controls currently in place can help you detect misstatements and misdirection used to mask fraud. Some of these actions can cause financial statements to be materially mistaken. At their most basic level, many financial and accounting systems have, for instance, coding built in that alerts you when an account reconciliation is unbalanced or when receivables and bank deposits do not match.

Technology controls are often split between general and application controls. General controls are, as the name suggests, broader and more sweeping in scope. They encompass the organization’s infrastructure and elements such as IT governance, network access, disaster recovery plans, and the like.

Application controls are more specific to the technology in use. When you understand all the application controls built into your system and how they work, you can use them to your advantage.

Areas of Concern

As you review both general and application controls, what should you be aware of? As a firm that provides nonprofit accounting audit services, we’ve seen some instances where an early detection of problems could have prevented many headaches later.

Some items to watch as part of your general financial controls:

Accounts payable
Inventory
Payroll
General ledger entries
Reporting
“Slush funds” or cash boxes (manual control needed rather than technology)

Areas of concern include duplicate entries, unauthorized access, and plain old common mistakes. One or two mistakes are easy to understand, but multiple mistakes made by the same person are cause for concern. This requires investigation, follow up, and potentially re-training and/or monitoring the person to help them correct their mistake.

IT Controls

Information technology is another area where having a solid control process in place is important. The technology behind your organization can help it run efficiently and effectively. The IT department must safeguard that technology. Part of the control process over the IT department includes:

Understanding who has access (and why)
Careful monitoring of system users
Written rules, regulations, and guidelines for technology use
Change management processes
Identification and routine updates of cybersecurity technology
Training for all employees on how to counteract and prevent cyber attacks.

Like financial controls, these are a few areas that nonprofits must manage carefully.

Financial and Technology Controls Need People to Manage It

Both financial and technology controls are important and can be used to help your organization avoid many problems. But the internal control process doesn’t end there. Before a nonprofit accounting audit service works with you, go over all your controls. Make sure that you are actively managing and monitoring controls.

The controls built into financial and accounting software, as well as the overall controls and management systems you put in place over your IT department, must work together to build the security of your organization. With active management and oversight, you can make technology your partner when it comes to audits and internal controls.

Beck & Company

Nonprofit Accounting Services to Help You Manage Executive Transitions

Executive transition is never easy, and it offers both challenges and opportunities for nonprofits. You may need the help of a nonprofit accounting service to help you fill a gap left by an outgoing CFO, for example. Beck & Company would like to invite you to download the free whitepaper, A Nonprofit’s Guide to Working Smarter with Outsourced Accounting, to provide valuable information during times of transition.

Challenges and Opportunities During an Executive’s Transition

When a beloved leader decides to retire or leave an organization, it offers both challenges and opportunities.

Challenges abound, of course. It’s hard to fill the shoes of a great CEO or CFO, someone who genuinely cared about their team and believed in the nonprofit’s mission. It also leads to uncertainty. Staff may wonder if they’ll like the new leaders or if they can work with them as easily and happily as they could with the outbound executive.

Changes also offer opportunities, and it is on this we’d like to focus. Opportunities include the ability to chart new directions with a new leader. New executives bring fresh ideas to an organization and may have experience from other posts that can help you grow. They bring new perspective and vision as well as energy into a nonprofit.

Bridging the Leadership Gap: Nonprofit Accounting Services

If you believe it will take a while to fill an open position, as it often does when trying to fill top slots, Beck & Company offers nonprofit accounting services that can fill interim gaps. Our team of CPAs has extensive experience in the nonprofit world and can serve as interim CFOs or other leadership positions until you are ready to hire a full-time executive.

Tips for Finding Your Next Leader

After the initial shock wears off, when you learn that a current leader plans to leave, it’s time to get working. Here are tips and best practices to help you find your next great CEO, CFO, or other nonprofit leader.

Create a succession plan: Nonprofit boards can do themselves and their organizations a great favor by developing a succession plan to guide the organization through leadership changes. Identify the qualities you seek in a leader and utilize groups or other resources to help you find the right candidates.

Ease into the transition: If possible (for example, if someone plans to retire), ease into the transition by leaving plenty of time to find the new leader. It can take a year or more to find a leader for a large nonprofit organization. With more time available, you have the benefit of being quite choosy about who will lead the organization to success.

Consider organizational culture: Take the pulse of your organization. Know its culture so you can find someone who will either continue the tradition or effect the changes you seek. Without a good understanding of the corporate culture, you run the risk of putting a leader into position who will find roadblocks and create more turmoil than necessary in the first year of leadership.

Support onboarding: Put into place an onboarding process that includes plenty of time for new leaders to meet key staff, understand the organization’s mission and principles, and broker relationships with donors and members. Don’t expect big changes right away; give the new leader time to ease into the organization.

Hire interim help: Interim leadership, such as nonprofit accounting services or CPAs to fill CFO spots, can be a great help. They can maintain continuity and ensure that operations run smoothly until you hire a new leader.

Change is never easy, but if you can use the opportunities it brings to your advantage, you can grow through it. Nonprofit boards can do a great deal to ease the stress of a leadership transition to ensure their organizations continue to benefit others.

Beck & Company offers experienced CPAs for nonprofit accounting services, interim financial management and consulting, and nonprofit audit services. We invite you to download our free white paper A Nonprofit’s Guide to Working Smarter with Outsourced Accounting and explore our services to help your nonprofit organization grow and thrive.

Beck & Company

How Membership Organizations Create Winning Experiences: Lessons from Amazon, Google and Apple

There is so much to learn from companies who have taken extra steps to build a great experience for their customers. Recent studies indicate that many membership organizations struggle to retain and attract new members. Marketing General reports that among the associates it surveyed, membership is down six percent overall. Sixty-eight percent report that retention remains stagnant.

Why is membership going down?

The truth is that members no longer feel their ‘user experience’ or membership experience, if you will, is providing them with the emotional satisfaction or experiential satisfaction they once had. Membership, in other words, isn’t providing the same value today that it once did. They are taking their money and memberships elsewhere, or foregoing memberships altogether to find other ways of enhancing professional value, education, and interactions.

Some of the issue stems from the rise of new technologies, such as social media, which make it easier than ever before to interact and network with people who share similar interests, professional background, and experience. This important function was once held solely by membership organizations, which provided meetings, forums, newsletters, and other tools that enabled people with a similar profession or interest to find common ground, share industry information, and support one another in their careers.

But we can’t lay all the blame at the feet of social media. Members always had a choice to join or not, even if it was a choice between local networking groups versus national membership, or organization A versus organization B.

A closer look at how big brands such as Amazon enhance user experience may help nonprofits learn how to enhance member experience and turn the tide on flagging interest in membership organizations.

What Membership Organizations Can Learn from User Experience

Several online brands offer lessons in user experience that we can translate into daily member experience.

Amazon: People love shopping on Amazon’s site because it provides seemingly limitless choices. The retailer began with books, added music, and now boasts almost every category of product under the sun. The site’s search engine is excellent and makes it easy to find what you are looking for. Site members also rank and comment on their purchases, adding quality assurance for ‘real people’ just like you to each listing.
Google: Over 60 percent of the world turns to Google to find what they need online. It’s fast, intuitive, and easy to use.
Apple: Apple’s products were originally created for graphic designers. Microsoft’s PCs were introduced for office and home computing, so Apple staked out a niche as the computer for graphic design. Today, its sleek design and powerful, virus-resistant computing power appeal to many.

What can we learn from the user experiences listed above?

Amazon – comprehensive selection, something for everyone, easy to find what customers need
Google – easy to use, fast, understands its customer base
Apple – innovative, cutting-edge, new, fresh

These concepts are important over-arching concepts for membership organizations. Taking a cue from the popular brands, member organizations can infuse “member experience” into their missions, values, and offerings so that potential members see and experience greater value from their membership.

To enhance your member experience, think of ways that you can:

Add comprehensive offerings to your member benefits, making it a ‘one stop shop’ for your members.
Enhance your membership so that it is as easy to use as a Google search.
Refresh your educational opportunities so that they are cutting-edge and different from what members may find at their local colleges, universities, or other professional development providers.

With a little planning and a lot of creativity, you can come up with member experiences that rival that of the big brands. Membership organizations need to evolve, grow, and change to keep pace with consumer demand. Make member experience part of your organization starting today.

Nonprofit Financial Management Help from Beck & Company

Beck & Company is a Washington D.C. area nonprofit accounting firm with a team of expert auditors, accountants, and advisors available to help nonprofits of all sizes. We provide a variety of consulting, auditing, and accounting services to help nonprofits outsource audit and nonprofit accounting tasks, improve operations and efficiency, so your team can be freed up to focus on your cause. For more information, please contact us at 703-834-0776 x 8001.