accounting for nonprofits – Page 2

Thoughts from Beck & Company Nonprofit Accounting Services – Fixing the Internal Audit Problem

Internal audits are integral for accounting for nonprofits, but the state of the internal audit profession is shaky. According to a Deloitte study, only 13 percent of Chief Audit Executives (CAEs) are “very satisfied” that their functions have the skills to meet stakeholder expectations. Only 28 percent believe that their internal audit functions have a strong impact and influence on their organizations.

There are many challenges in nonprofit accounting audit services, specifically in the realm of internal audits. The dissatisfaction with the internal audit function stems, in part, from a lack of qualified candidates for internal audit positions.

Major colleges and universities rarely, if ever, offer majors in internal auditing, with new graduates entering the internal auditing field with degrees in general auditing or taxation. While both are valuable degrees, neither is an exact fit for the needs of internal auditing. Students must learn on the job and work their way up the ranks of the internal auditing team. But if senior internal auditors have too much on their plates, or retire before new entrants are hired, knowledge and skills aren’t passed along.

Internal Audit at the Crossroads

It’s no surprise, then, that Deloitte’s report entitled Internal Audit at the Crossroads indicates that the entire Internal Audit function stands at the crossroads between past and future, historical functions and evolving needs. Once seen as the guardians and interpreters of past history, CAEs know that the demand for their services is now in the realm of predictors of the future, not people who look back. The trick lies in how to transition to the past and future of internal audits.

The Evolving World of Internal Audits

Key stakeholders such as the audit committee and the executive team must support the Internal Audit’s desire for change. The world of Internal Audits is changing to keep pace with stakeholder demand, but stakeholders must also be open to the new role that Internal Audit can play within a nonprofit.

Most CAEs surveyed by Deloitte know they need to change. About 85% know that their organization is likely to undergo moderate to a significant change in the next three to five years. Around 77% anticipate that Internal Audit must change to meet that demand. But how do you move to the next step?

Key Findings and Action Steps

The Deloitte report is, of course, only one among many to peer into the mind of CAEs and examine the role of Internal Audit. Among the key findings of this report are:

Internal Audit needs and desires more impact and influence within their organizations.
Skills and educational gaps must be addressed. This may be done at the organizational level or within regional groups that can influence higher education organizations, industry groups, and others who provide education and professional development.
Demand for dynamic reporting will increase.
Use of alternative resource models will expand.

Alternative resource models include working with nonprofit accounting audit services, outsourcing nonprofit accounting services, flexible working arrangements to add skilled Internal Audit specialists to teams, and working with independent consultants to fill specific needs within projects. Outsourcing internal audit functions to a specialized nonprofit accounting firm such as Beck & Company makes excellent sense in light of the challenges presented in the Deloitte report.

Change is inevitable, and smart nonprofit organizations embrace, rather than fight, change. The role of Internal Audits is ever-changing and is expected to undergo major changes in the next three to five years. Will you be ready?

Nonprofit Accounting Audit Services from Beck & Company

Nonprofit accounting audit services are available from Beck & Company. If you need to fill gaps within Internal Audit teams, need support for CAEs, or seek experienced nonprofit accounting specialists, Beck & Company can help. Beck & Company are Washington DC nonprofit advisors. We also are Virginia certified nonprofit accountants. We work with nonprofits of all sizes serving many different constituents nationwide, providing a variety of consulting, auditing, and accounting services. For more information, please contact us at 703-834-0776 x 8001.

Accounting for Nonprofits: Mastering Nonprofit Payroll

An important aspect of accounting for nonprofits is mastering the rules and regulations of nonprofit employee payroll. Even though nonprofit organizations may be tax-exempt, you must still contribute payroll and other taxes at the federal and state level. It’s time to master nonprofit payroll accounting, so get your pencils sharpened or your tablet ready and take notes. This is something you really don’t want to make a mistake with when you’re handling payroll.

But We Are Tax Exempt!

A tax-exempt organization is one that has been granted tax-exempt status by the federal government. Your organization does not have to pay federal corporate taxes, but your employees are still responsible for filing and paying state and federal income tax. Both you and your employees are also required to file and pay the appropriate federal, state, and local Medicare and social security taxes. Tax exempt does not mean you are forever free from paying all taxes – just exempt from certain ones.

Exemptions

If you must file Medicare, social security, and other payroll taxes, are any exempt? Yes, some organizations may be exempt from paying specific payroll taxes. These include:

Some churches and church-controlled organizations may take an elective exemption from paying FICA (social security and Medicare) taxes.
Some services performed by ministers or members of religious orders may be exempt from FICA.
Compensation paid to students may be exempt from FICA.

FUTA Taxes

The IRS has stated that “Religious, educational, scientific, charitable and other organizations described in section 501(c)(3) and exempt from tax under section 501(a) are not subject to FUTA tax and do not have to file form 940.”

But before you celebrate, keep in mind that you must receive a favorable determination letter from the IRS to qualify for this exemption. State and local laws may also disregard the exemption, so you should check with your local government offices to ensure you are in full compliance with local tax laws.

What About Volunteer Compensation?

Volunteer compensation falls into a bit of a gray area. Thank-you gifts to volunteers that hold little cash value, such as a goody bag for helping out with a charity event or a plaque to honor volunteers isn’t taxed. Gift cards, cash awards, and other types of remuneration may be taxable. When in doubt, speak with an experienced firm that specializes in accounting for nonprofits.

What If I Don’t File Payroll Taxes?

Ignorance may be bliss for many people, but not when you’re running a nonprofit organization. Don’t remain ignorant of your duties to file and pay taxes on your employees’ payroll.

If you do neglect to file and pay important taxes, the responsibility ultimately lies on the shoulders of your board of directors. Voluntary board members can be held liable for unpaid taxes and the resulting consequences, so if you serve on a nonprofit board, it’s wise to pay attention to accounting for nonprofits and to pay attention to how payroll taxes are determined and filed.

Keeping Payroll on the Right Track

To keep your nonprofit payroll running smoothly, consider investing in accounting for nonprofits software, payroll software, or a combination software product that provides you with both accounting and payroll functions. Such software can be customized with local, state, and federal tax information so that if your nonprofit operates across multiple states, you can manage local laws easier.

Accounting for nonprofits can be complex, but fortunately, with the right diligence and research, you can ensure that your organization’s payroll is handled correctly.

Beck & Company

Beck & Company are Washington DC nonprofit advisors. We also are Virginia certified nonprofit accountants. We work with nonprofits of all sizes serving many different constituents nationwide, providing a variety of consulting, auditing, and accounting services. For more information, please contact us at 703-834-0776 x8001.

Accounting for Nonprofits: The Challenge of Revenue Recognition

Let’s face it – accounting for nonprofits can be complicated. Revenue recognition is one area, for a nonprofit organization, that can be especially complex.

Revenue recognition for many organizations is straightforward. But if your organization’s revenues arrive through multiple, separate channels, you may need to develop a procedure for categorizing revenues so that their recognition is consistent.

Added to these challenges, of course, is the new FASB revenue recognition rules for nonprofits and the new reporting standards. Taken together, it may seem like an unwieldy group of challenges. If, however, you begin to sort through each point separately, you can make sense of it all and put into place a streamlined, standardized method of accounting for nonprofits that make sense.

Accounting for Nonprofits: Revenue Categories

Revenue may fall into the following general categories:

Contributions
Exchange transactions
Promise to give

Within the “promise to give” category, you must also determine whether the gift is conditional or unconditional and whether the promise is legally enforceable. For example, a will is a legally enforceable promise to give if the deceased specifies an amount to be given to your nonprofit upon their death; a verbal promise is not legally enforceable.

Such as the general categories. Let’s delve into each one and explore how revenue recognition fits into each category.

Contributions or Exchange Transactions

Most your revenues are likely to be contributions or exchange transactions. Contributions, as the name implies, are generally resources donated to a nonprofit for its use. Monetary contributions, donations of equipment, automobiles or building supplies, and other items are generally accepted as contributions. The donor gives them to the organization without receiving any monetary or tangible property in return.

Exchange transactions, on the other hand, usually occur when a nonprofit indicates that it is seeking resources in exchange for unspecified benefits. Payment by the resource provider equals the value of the assets, or the value plus a markup. The nonprofit may be penalized for nonperformance, or some other expectation may be affixed to the transaction.

An example of an exchange transaction is when a nonprofit contracts lectures, seminars, or professional development activities to their members. There is a fee given to the nonprofit in anticipation and expectation of specific services to be performed. There may be a penalty for failing to provide these services.

It can be challenging to distinguish between these two types of revenues in certain circumstances. Accounting for nonprofits has its share of gray areas, and this may be one of them. Accountants preparing the financial statements for a nonprofit organization may wish to consult with auditors before preparing the financial statements to discuss how to recognize tricky revenues. Then, guidelines can be put into place to categorize similar revenues in the future.

Conditional and Unconditional Gifts

FASB Accounting Standards Codification (ASC) Section 958-605-25 states that nonprofits wait to recognize revenues from gifts until they are reasonably sure that they will receive the gift; in other words, that there is a low likelihood that the conditions surrounding the gift will not be met.

An example is a donor who decides to give an organization $100,000 on the condition that matching revenues are raised. The donation isn’t recognized until the conditions are met.

On the other hand, that same donor may give the organization $100,000 with very easy conditions attached to it. They may require an annual report demonstrating how the finances are to be used or a personal tour of the organization each year. In such a case, the revenues may be recognized immediately since the conditions are so easy to meet.

If you aren’t sure what to do, you have several options. Speak with your accountant and discuss the matter together to determine the appropriate method to recognize revenues for gifts. If the conditions surrounding the gift seem murky, then a call to the donor may be in order to ensure that you are adequately meeting their conditions for the gift. It doesn’t hurt to ask.

Help with Accounting for Nonprofits

As you can see, there are many challenges with revenue recognition for nonprofits. Some items may be quite easy to categorize, while others may be difficult. When in doubt, contact a professional accounting firm that works exclusively with nonprofit organizations. Beck & Company is one such firm with the experience and insight into the world of nonprofits to help you with these and other issues pertaining to accounting for nonprofits.

Beck & Company

Mentoring for Senior Level Accountants

Accounting for nonprofits includes both the people and the skills they bring to the world of nonprofit financial management. Skills can be acquired through formal studies, such as a college degree and CPA program, or through additional professional development. One often overlooked method of improving professional skills is through mentoring. And while we often think of mentoring programs as programs for people just entering their careers, senior-level accountants can benefit from mentoring just as much, if not more so, than junior level accountants.

Newcomers to the professional world of accounting benefit from mentorship in many ways. A mentor can help you navigate new territories, such as office politics, ethical issues, and career decisions. They can help you choose the best school to finish your CPA or listen to you and provide advice as you juggle work, family, school, and career issues.

But senior accountants working at nonprofits face these and even more challenges. Challenges, issues, and problems don’t go away the higher you rise in the company’s ranks. Instead, they grow increasingly complex. The opportunity to network with and be mentored by other senior accountants offers priceless opportunities for professional growth.

Issues for Senior-Level Accountants: It’s About the People

For senior-level accountants, the issues they bring to mentors aren’t about the work itself, but about the people they manage. Management takes practice and training and often improves the most from mentoring. Most people aren’t natural-born leaders and managers and need good managers to emulate. That’s where mentoring comes into the picture.

Through mentoring and modeling better management and communication skills, those working at accounting for nonprofits can learn and grow.

The Trickle-Down Effect

If you think you can’t take the time out of your busy schedule to find and work with a mentor, consider the many positive benefits that mentoring brings not just to your personal and work life, but to your entire organization. Mentoring builds management skills, and better management skills improve morale and productivity in an office. The result is a trickle-down effect that can improve the entire company.

An important aspect of being an executive is being able to help nurture the talents and skills in others. When you improve your skills, you can now share that with others below you in the organization.

How to Find and Work with a Mentor

Many people seeking mentors work with life coaches, business coaches, or other professionals to find a matching mentor who complements their skills. Other avenues to find a mentor may be local networking group, business meetings and groups, and professional networks. You may also find someone you admire and ask if they would mentor you.

If you’re considering entering into a mentoring relationship with another senior level accountant, have a plan of action in mind. Approach the relationship with a goal and be open to the other person. Explain the reason why you are looking for a mentor and how you can mutually benefit from the relationship.

Other tips to find and work with mentors include:

Identify specific skills to work on and communicate this to your mentor.
Establish set time periods for the work and schedule appointments to review progress.
Be receptive to constructive feedback. This isn’t about stroking your ego, but about learning and growing. It can be painful to hear some criticism, but it will help you grow.
Ask your mentor for homework. Assignments can help bring structure to the relationship and give you concrete tasks to work on for your personal development plan.
Track and measure progress. Don’t leave it open-ended. Write down in a personal journal or notebook what you are learning and review it frequently so that you can get the most benefit from the mentoring relationship.
Consider giving back what you have learned through a mentoring relationship with others.

Mentoring takes time, and it’s important to find someone who has the skills required as well as earns your respect. But once you do find a mentor, the relationship can yield many valuable insights that can make you a better manager.

Beck & Company

Issues in Accounting for Nonprofits: Handling Revenue Recognition

Among the topics addressed with accounting for nonprofits, revenue recognition has been in the spotlight recently. With the recent FASB updates changing revenue recognition guidelines and standards for nonprofits, it’s more important than ever to be clear on how your organization recognizes revenue.

One area in which many nonprofits struggle is whether revenue should be recognized as contributions or exchange transactions. The determination between exchange transactions and contributions can be made by examining the differences between the two groups.

Exchange Transactions:

Resource provider states that it is providing a resource in exchange for benefits.
Payment by the resource provider equals the value of the assets to be provided by the recipient, not for profit (NFP) organization, or the asset cost plus a markup.
NFP is penalized for nonperformance or for not completing the project.
Assets are delivered by a provider to individuals or organizations closely related to the nonprofit.

Contributions:

The not for profit solicits for a contribution. It’s clear they are seeking contributions.
NFP is not penalized for nonperformance.
Resource provider states or insists that it is making a contribution.

As you can see between the two groups there can be some gray areas. That’s why many nonprofit accountants ask clients to bring in anything they aren’t certain of to ensure it’s recorded correctly. It helps to get a second opinion on many of these issues.

Difficult Judgment Calls

Sometimes, the judgment call between a contribution and exchange transactions can be difficult. Some accountants suggest having a consultation between auditors and preparers to ensure the information is clearly defined.

Conditional or Unconditional?

FASB Accounting Standards Codification (ASC) Section 958-605-25 asks that nonprofits wait to recognize contributions unless they are sure that all of the conditions around contributions are met. For example, if you’re running a matching donation program, wait to record the donations until the conditions of the match are met. Otherwise, you run the risk of having to correct numerous entries.

There are some examples when conditions can be so easily met that it is acceptable practice to report the contributions immediately. If the conditions of a donation are simple, such as a thank you letter or public acknowledgment, this can be made quickly and easily. It may be a simple matter to report the contribution immediately.

Another gray area may be the difference between promises to give and intentions to give. What’s the difference? Let’s say that someone calls a nonprofit organization and claims they will give it $10,000 in their will. That’s merely an intention to give. There is no binding, legal information holding that person to their claim. On the other hand, an actual will, filed in a court jurisdiction, that includes a legally binding statement of the gift of $10,000 may be accepted as a promise to give. In that case, it is now an obligation of a creditor. The estate is held to account and must complete the transaction, so the amount can be recorded by the nonprofit.

As you can see, there are many areas where professional judgment and discernment must be used to determine when, how, and why to record items in specific ways. Accounting may be viewed as a very black and white profession, and while it is true that $1 is $1 no matter how you look at it, the type and category under which that amount may be recorded may be subject to an accountant’s scrutiny and judgment.

That’s why it is so important with accounting for nonprofits to find a professional services firm that you can trust. Your accountant will make many judgment calls and help guide you through the many state and federal laws and guidelines to handle your nonprofit finances. With a good accounting firm by your side, you can rest easy, knowing that your finances are handled to the benefit of your organization and its constituents.

Beck & Company

Beck & Company works with nonprofits of all sizes serving many different constituents nationwide, providing a variety of consulting, auditing, and accounting services. For more information, please contact us at 703-834-0776 x8001.

The Truth About Payroll Taxes and Accounting for Nonprofits

There are many myths swirling about the nonprofit world when it comes to payroll taxes and accounting for nonprofits. Taxes are a hot topic for nonprofits because many nonprofit organizations think that ‘tax exempt’ means they pay no taxes on anything. Unfortunately, this myth can get you into some hot water with the IRS if you’re not careful. Even though nonprofits can be tax-exempt, not every item in your budget is exempt. Salaries and wages are one such item.

Accounting for Nonprofits: The Myth of “Tax Exempt Everything”

One of the benefits that nonprofits receive is the designation of being ‘tax exempt.’ This designation is received from the IRS for nonprofits who comply with IRS regulations regarding nonprofit status. The idea behind this rule is that nonprofits, by their very nature, funnel excess margin back into their good works to help their constituents.

However, tax-exempt does NOT mean tax-exempt everything. Certain items are still subject to taxation. One such item is payroll.

Nonprofit Payroll: Employee Taxes

Nonprofits are made up of volunteers, part-time employees, and full-time employees. Compensation paid to each type of worker may be subject to taxes.

Volunteers who are paid in gift cards and gifts may or may not have their compensation taxed It depends on the type, nature, and value of the gifts. Small, low-value gifts may be tax fee; gift cards may be taxed. Speak with a nonprofit accounting expert or CPA to determine whether or not such gifts are subject to taxes.
Part-time and full-time employees must pay social security and Medicare taxes. They must also pay personal federal and state income taxes even if the nonprofit they are working for is a tax-exempt entity.

Who’s on the hook if you forget to pay these taxes? Your Board of Directors is responsible for ensuring tax compliance on all taxable matters. If you are part of a nonprofit Board, be sure to look into taxation issues with the help of a good nonprofit CPA or tax accountant to ensure you are correctly following the laws and complying with all applicable state and federal laws.

What About Religious Nonprofits?

There are some exemptions that may apply to nonprofits. These include churches and certain church-controlled organizations. They can take an elective exemption from FICA taxes (social security and Medicare). Certain services performed by ministers or members of religious orders may also be exempt from FICA. And compensation paid to students by a nonprofit organization may also be exempt from FICA.

FUTA Taxes

In regard to FUTA taxes, the IRS states that “Religious, educational, scientific, charitable and other organizations described in section 501(c)(3) are exempt from tax under section 501(a) are not subject to FUTA tax and do not have to file form 940.” In order to qualify for this exemption, such organizations must receive a favorable determination letter from the IRS to qualify for this exemption. It’s not automatic; you must apply for and receive a favorable determination letter from the IRS.

Confused About Accounting for Nonprofits? Contact the Experts

All of these exemptions and rules apply on the federal level; states may have another set of rules that guides tax exemption items for nonprofit organizations. That’s why it’s important for you to have a local nonprofit accounting firm to work with who understands both federal and state tax rules and how to correctly apply them to your organization. Accounting for nonprofits can be complex. It is helpful to have experts by your side to navigate the financial waters safely.

Beck & Company

Improve Accounting for Nonprofits Communications with the Right Software

It’s hard to imagine it, but accounting for nonprofits can be even easier and better when the right software is in place. The right software facilitates communications among departments and fosters trust and collaboration. This is especially true with fundraising and accounting.

The fundraising and finance or accounting departments in your nonprofit organization often seem like two sides of opposing football teams. Each one wants “the ball” or the forward momentum on a project, and neither understands why the other doesn’t want to give it up and play along with them. Eventually, frustrations develop, and groups may back into their silos until communications improve.

It doesn’t have to be that way. Accounting for nonprofits works much better when both finance and accounting work together towards mutual goals and with equal respect and understanding. That begins with clear communications.

Causes of Miscommunications

Anytime you have two people speaking, there’s a chance for a miscommunication. Whether it’s in the message, the medium, or how it is delivered, miscommunications happen all the time. They are quite common between finance or accounting and fundraising. Some of this stems from not understand what each party does in the organization at large. There are some things that each group would like you to know about their work.

The fundraising group wishes that finance could…

Understand how challenging fundraising can be.
Acknowledge that to make money for the organization, you must spend money.
Trust the process of donor relationships to come to fruition and provide funds for the organization
Offer flexibility with deadlines, requirements, and requests.
Appreciate the effort that goes into fundraising.

And finance wishes that the fundraising team could…

Respect that their job is complex and demanding, often dictated by legal requirements that have no flexibility.
Ask for their expertise and help in accounting and finance matters.
Provide information proactively so that finance can do its job easily.
Understand basic accounting practices so that we “speak the same language.”
Adhere to deadlines.

It’s easier to come to consensus when mutual respect underscores the relationship. Knowing what the other party needs, why they need it, and how your actions impact their work can go a long way towards creating mutual respect and clear communications.

Similar Challenges Face Fundraising and Finance

Although the fundraising and finance teams each perform different functions in an organization, they face similar challenges. Data, provided by the right accounting for nonprofit software and systems, can create a shared understanding upon which clear communications rest.

The right software can provide data to both groups so that they cannot back into their own silos and retreat with their information. Information is easier to share, and easier to use for collaboration. Both groups must trust and depend upon one another to complete projects and tasks.

Some areas where this shared data can make a big impact include activities that:

Collaborate on budgets and tracking.
Improve reports and reconciliation of financial information.
Jointly plan and set goals.
Establish frequent, timely communications.
Identify ideal processes and procedures.
Integrate fundraising and accounting software.

Resolving the Challenges

Fundraising and finance may often feel like competing teams, but they should be both rooting for the home team, or working towards their company’s overall goals. By understanding one another’s work, sharing data, and experiencing the benefits of shared data and systems, the two teams can work more effectively and help your nonprofit achieve its mission.

Beck & Company

If you struggle with your accounting for nonprofits, Beck & Company can help. 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.

Accounting for Nonprofits: Changes to FASB Guidelines

Accounting for nonprofits must include clear, transparent reporting in order to paint an accurate picture with their numbers for members, donors, and the public. Although most nonprofits strive to do this, the Federal Accounting Standards Board (FASB) made some changes to enhance clarity and transparency on their annual reports. These changes, known as Accounting Standards Update No. 2016-14, change a model that has been in existence for over 20 years.

Here’s a rundown of the changes in accounting for nonprofits according to the new ASU 2016-14:

Reducing the number of net asset classes from three to two;
Continue allowing preparers to choose between the direct and indirect method for presenting operating cash flows;
Eliminating the requirement for those who prefer the direct method to perform reconciliation with the indirect method;
Reporting by nature and function, as well as reporting on liquidity risks and liquid available resources, as discussed in the ideas shared here.

While these changes may not seem earth-shattering, they do help you communicate better with others reading your financial statements and clear up several misunderstandings and points of confusion in nonprofit accounting statements. The goal of the FASB efforts it to make murky areas clear and the new standards seem to do just that.

Numbers Tell a Story

The numbers that your nonprofit organization shares with the public tell an important story. They relate how your organization gathers resources, accepts donations, and spends its money. People who donate or join your organization need to understand that story in order to make smart decisions about their money.

In recent years, many nonprofit organizations have come under fire for what is perceived to be excessive spending. Lavish entertainment, trips, and unnecessary meetings (especially in exotic locations) are red flags to donors who want to be sure that their money goes to the activities the nonprofit supports, not to someone’s trip.

Although nonprofits remain free to spend their resources as they see fit, the new ASU guidelines will make it clear how they have spent their resources. Their ‘stories’, so to speak, will now be told loud and clear.

Additional Qualitative Information

Additional qualitative information about how nonprofits manage liquidity and liquidity risks can also enhance your communications with others on your finances. The updated regulations also require reporting of expenses by both function and nature. These two areas can be used to share more information with constituents about how money is spent, thus clarifying the information and enhancing transparency

Reporting expenses by both function and nature enable you to tell people more about the work that you are doing. The functional areas can help them understand the areas of your organization. Additional details can be provided to help donors understand the various activities supported by these funds.

When Do the Changes Take Effect?

The changes recommended in ASU 2016-14 take effect in financial statements issued for fiscal years starting after December 15, 2017. They also take effect for interim periods within fiscal years beginning after December 15, 2018. Application to interim financial statements is permitted, but it is not required in the initial year of application. Early application of the standard is also permitted.

Accounting for Nonprofits with Beck & Company

The new accounting standards for nonprofits may seem confusing to apply to your organization. If you have any questions, Beck & Company is here to help. 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.

Apps for Accounting for Nonprofits: Apps that Make Your Life Better

The smartphone revolution has brought with it apps for accounting for nonprofits that can make your work life faster, more productive, and efficient. There are apps for everything from the local weather to daily inspirational readings. But for accounting for nonprofits, there are certain apps that you’ll want to add to your smartphone that provide a lot of information with the touch of a button.

Notability

Noteworthy is like a doodling pen and an online notebook all in one. With Noteworthy, you can take notes by typing or add drawings to your notes. It’s flexible and great for creative types who want to brainstorm via their smartphones or add to notes during meetings.

Notability may be downloaded for Apple devices from Ginger Labs.

Evernote

Evernote for Android and iOS is how many accountants are going paperless these days. It’s a great place to store, organize, and record notes. These notes can be videos, photos snapped with your smartphone of documents, handwritten notes, or typed notes – Evernote can handle it. It collects, stores and organizes the information in ways that are natural and intuitive, so you can easily find it again. A great tool for organizing much of your work and projects.

You can download Evernote from many online sources.

TripIt

Travel frequently for business? TripIt is the app for you. TripIt lets you organize air, car rental, hotel and other information into a simple itinerary and keep it all in one place. You can even include maps to help you find conferences, hotels, and client offices. The pro version includes details on baggage claim at airports, flight status, and other useful tools.

Download TripIt today.

Tallie

Accounting for nonprofits may include preparing expense reports. Tallie is an app that makes it easier and faster to repair expense reports. Log expenses in on your smartphone and Tallies does the rest.

Find Tallie for iOS and Android on your favorite appstore.

Flipboard

Need to keep up with the latest business journals, world needs, or industry-specific news? Flipboard is an app that creates a unique “magazine” subscription for you. It scours the internet for topics related to your inputs and builds custom magazines based on your interests. It can also follow specific journals and pull information into your account so it’s all in one place.

Download Flipboard today.

Social Media Apps

Interacting with your members, donors and constituents via social media has never been easier. Download and use the Twitter, Facebook or Instagram apps. With a few taps you can respond to inquiries, share images, and update people about important events – all from your smartphone.

There are hundreds of apps online today and more to come. As apps become more sophisticated, they provide us with even more tools to grow our businesses. Download these or other apps from your favorite appstore and make your smartphone your new personal assistant.

Beck & Company

Accounting for Nonprofits: Setting Transfer Pricing Policies

Accounting for nonprofits should including setting fair transfer pricing policies for organizations that buy and sell goods or services internally.

Transfer pricing is simply the price set for one division of your company to charge another in the event that it must ‘sell’ or set a price for its goods or services to another group internally. For example, if your creative services department is paid by members for graphic design services, you may also set an internal transfer price for their services so that if your membership division requests graphic design work, the number of hours spent on an internal project can be on the books in a similar way to an external paid request.

The problem with many transfer pricing situations is that the internal department selling the goods or services has an incentive to change the full amount, while the group purchasing it has an incentive to seek lower costs. The two may have difficulty negotiating prices since negotiations do not serve either party’s best interest. Instead, the purchasing group usually capitulates and pays more than it should for a service internally than they could get from an external source.

In order to make transfer pricing work, as part of accounting for nonprofits, the following tips and strategies may be helpful.

Enable better decision-making on internal pricing transfers: Smart accounting for nonprofits starts with accurate data. To make better decisions around setting prices, you must first have an accurate depiction of the costs that go into the goods being priced. This is where having a good nonprofit financial accounting system helps because it is easier to extract data from such systems and analyze it to build price points.
Build fair transfer-pricing policies: Written policies prevent miscommunications and mishaps during transfer policies. They also help organizations and companies set fair prices for all. A written policy can clarify how transfer pricing agreements can be reached and how to conduct internal transfers.
Assess autonomy levels: Some companies do well with a high degree of autonomy granted to both parties during a transfer negotiation. Assessing and understanding how much autonomy is healthy for your organization is an essential part of setting transfer pricing policies.

Why Bother with Transfer Pricing?

Accounting for nonprofits must include accurate depictions of both revenues and expenses, as well as labor costs, in order to make fair calculations. Without knowing what your transfer costs are, you could miscalculate and under- or over-estimate costs for your organization. Transfer pricing makes things fair, balanced, and transparent in your financials.

Recently, the IRS has also stepped up its review of nonprofit compliance with transfer pricing rules. Organizations that do not have documentation regarding their transfer pricing policies and rules may come under additional IRS scrutiny. Adjustments, penalties, and loss of tax-exempt status may result if the IRS investigates and finds your organization’s transfer pricing inadequately documented or handled. It pays to be proactive and take steps now to create the rules and documentation necessary to clarify how it is handled.

Although transfer pricing is most often thought of as a way to improve tax tracking and reporting, especially in cross-border transfers, it is also an integral part of accounting for nonprofits. Understanding and managing transfer pricing can help your nonprofit improve its financial management and compliance with taxation and financial rules and guidelines.

Accounting for Nonprofits with Beck & Company

If transfer pricing and other accounting for nonprofit topics are confusing for your organization, or you require audit assistance or other nonprofit accounting services, contact 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.