Financial Management – 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.

Great Questions Asked by Great Nonprofit Managers

How well do your managers ask questions? Some might not even give any weight to this or consider it a skill. You may not even see “question asking” on any list of managerial expectations. However, asking the right questions, and the tough questions, is an effective part of a manager’s job which implies it may require more attention.

Being a manager isn’t easy. Managers have finite resources and growing task lists. They must handle people and budgets with equal finesse, and in a nonprofit organization, also manage public perception. More importantly, they must be willing to ask the hard questions and to listen and learn from the answer they get as they explore ways in which to enhance and build their organization.

Asking the Hard Questions

The difficult questions are the ones whose answers may yield an unpleasant reality for the asker. In other words, you may not like what you hear! When it comes to nonprofit organizations, these three questions are at the top of the list of the hard questions that must be asked for organizations to ensure they’re doing the best they can to fulfill their mission.

1. Am I doing my job well? Followed by, are we doing our jobs well?

Your “job” at a nonprofit is more than the list of things you are responsible for. It’s also your job to help the organization maintain and achieve its mission, to build public perception and awareness, and to help keep a positive perception in the public’s eye. It’s not an easy task. Your responsibilities in this mix may be weighted more heavily towards one area or another depending on your role in an organization. But you still need to ask if you are doing your job.

Reviewing organization-wide goals and plans and assessing how well you are achieving key performance indicators can help you answer this question.

2. Are we adapting to changing circumstances?

As the proverb goes, “change is the only constant in life.” Situations, personnel, and other facts of nonprofit life can change over time. Organizations that can grow, adapt, and change are ones that thrive.

Look around your organization. How well have you adapted to changing circumstances? If your nonprofit began with one specific task in mind, have you been able to adapt to meet new challenges?

Examine systems, technology, personnel, geography, and other factors. Each area influences how well your nonprofit can do its job. Those that change with the times are those that can continue to grow, prospect, and help others.

3. How well are we using our resources?

The push within most nonprofits is to find ever-increasing sources of donations and funding to fuel growth. Looking at how well you are using your current resources isn’t easy. It can be troubling to realize that you’ve overspent on a marketing campaign or haven’t invested other resources wisely. Yet it’s only by asking these questions and facing the truth that you can find better ways to use existing resources.

Resources aren’t limited to funds, either. They can also refer to personnel. It’s a good idea to look at your team and make sure that you are allowing individuals to work to their strengths. Place them in positions where their unique talents can help the organization thrive. Outsourcing tasks like audit prep or nonprofit accounting can free your team up to do the work they were hired to do. Make sure that you are using people as well as financial resources in the best possible way.

Practice, Practice, Practice

Asking questions is a skill and can be improved with focus and practice. Managers are in place to find ways the organization can function more effectively. The best way to determine this is to ask questions about the people, process and systems being used. Getting curious about why things are done a certain way and if there’s a better approach only makes for a stronger manager, thought process and organization. Asking questions in a way that does not make others defensive is a great skill to hone in on too. As you practice this skill, and focus on getting better in this area not only improves your management style, it sets an example for others to learn and grow too.

Nonprofit Financial Management – Funding Technology Upgrades and Projects

Nonprofit financial management includes budgeting for special projects. One such project you may be considering is a technology upgrade or special project. Purchasing new systems, updating hardware, or even finding a better smartphone plan for your nonprofit’s employees are all part of technology upgrades.

As a nonprofit organization, you may have even bigger aspirations than new hardware. Perhaps your organization uses technology to help achieve its mission. A big technology project can be costly, but with the right nonprofit financial management and a few tricks up your sleeve, you may be able to find ways to pay for it that won’t break the bank.

Read today’s article to learn how to plan for your next fund accounting investment using Intacct, Beck & Company’s nonprofit accounting solution. If you’d like to know more right now, contact Beck & Company online or call direct: (703) 834-0776 x 8001.

Donated Computers

Donated computers offer many pros and cons. The condition of the equipment affects its value. Newer equipment is, of course, more valuable, and given the two to four-year utility of computers, an important consideration.

Monitors, printers, copiers, and other devices can also be donated to your nonprofit. A donation drive for technology can be a productive endeavor, especially if you are seeking several computers to fill a classroom or as part of a giveaway program.

Corporations may contact your organization to donate computers when they upgrade their own hardware. It’s important to find out all you can about the potential donation before it arrives on your doorstep. Ask how old the computers are, if they are Mac or PC, and when they were last used. Confirm if the company will deliver the equipment of if you should pick it up yourself.

If you cannot use the donation, be honest with the company. What you cannot use, another charity may be able to use.

Donated computers may need their hard drive reformatted and updates installed. It’s a good idea to have a technician run a virus scan on them, as well, to make sure there’s nothing malicious accidentally lingering on them.

The unfortunate drawback of donated computers is that given a short lifespan for the average PC, the donated machines may not last very long. Corporations get heavy use out of their computer equipment and only trade up when they can no longer justify the cost of keeping up old equipment. You may not be getting a great bargain.

Finding Technical Help

If you need technical help with updates, upgrades, or programming needs, there are several options to find volunteers. You can check with your local college or high school’s computer science department to see if they have a job placement board. Ask if they place interns, too. You may be able to offer someone a hands-on internship and a letter of recommendation.

Finding Funds: Focused Donation Drive

Another route you can explore is a focused donation drive, with the proceeds benefiting a specific technology project. A special alert sent to donors, a landing page constructed just to announce the project, and the promise that 100% of the donations received from this drive will go towards the purchase of technology may inspire people to give for your project.

The more specific you can be about the project requirements, the better. Spend time in your marketing and donation materials explaining how the computers will be used and how they will benefit the end users.

An education nonprofit dedicated to helping at risk kids in a poorly funded school may share pictures (with the school’s permission) of the classrooms where the computers will be used, the school budget deficit that led to the drive, and other facts that help paint a clear picture of the need. All these ideas go a long way towards helping donors see how their money will be used to support the organization’s mission and goals.

Approach Your Trusted Donors

There’s a cadre of trusted donors, friends of the organization, and people who you can rely upon to come through for your nonprofit in a crunch. Consider making a personal appeal or pitch to these people, explaining the technology need and requesting donations.

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 you improve operations and efficiency. For more information, please contact us at 703-834-0776 x 8001.

Nonprofit Financial Management and the Need for Security – Even for People You Trust

“Trust, but verify.” That adage is quite true, especially in nonprofit financial management. Even among the best-managed nonprofit organizations, people can be tempted to commit fraud.

It’s important to trust your employees. No one likes to work in an environment of suspicion and doubt. However, trusting employees is one thing—never checking on their work is another.

Many tasks in nonprofit financial management can provide an opportunity for embezzlement, workplace fraud, theft, check forgery, and other financial crimes. Fraud prevention is an important task that many nonprofits leave until it is too late. Then, the proverbial barn door is wide open, the horse is out, and he’s nowhere in sight. Closing the barn door or protecting your systems by putting into place strong checks, balances, and fraud prevention tips is an important part of nonprofit financial management.

Don’t panic! Setting up internal controls for your nonprofit can be easy with Beck & Company’s nonprofit services. Get fast answers when you contact Beck & Company.

Too Much Trust Leads to Temptation

Nonprofit leaders may be completely unaware that theft is taking place. A little money knocked off the top here and there, a dollar or two skimmed from a charity event … it all adds up, even if you can’t see it.

Too much trust can lead to temptation. Take the hypothetical example of Mary Money. Mary is the bookkeeper for a small nonprofit organization. She has two employees working with her, an accounts payable clerk and an assistant she shares with the donation and fundraising person.

Mary has been with the nonprofit for over 17 years, since it was founded. She volunteered with the organization for a year, then became a paid staffer. Today, volunteers and employees alike know they go to Mary with any question or issue and she has the answer.

Mary is so trusted, in fact, that she can sign checks on her own, without the president’s signature. The present travels often on fundraising trips and isn’t in the office every week to sign checks, so she thinks it expedient that Mary can sign off on checks. The president rarely asks to see the accounts.

Auditors, however, find problems. They discover that Mary has embezzled more than $600,000 in dribs and drabs throughout the years. In the past several months, temptation has gotten the better of her, and she has made out several checks to cash which were easy to spot. With a little probing into the company’s security arrangements, it becomes clear that Mary has been using the nonprofit association as her personal piggybank for several years.

Loss Control Methods

No one likes to work in an organization that doesn’t trust its employees. When it comes to nonprofit financial management, however, loss control methods should be in place to deter fraud. It isn’t a sign that you don’t trust your employees. It’s a sign that you care about your organization and the trust that donors and others have placed in it through their financial contributions.

Loss control methods for nonprofit financial management include:

Employee background screening: While screening would not have picked up anything in Mary’s case since she was a long-time employee, it might pick up applicants who have financial woes that could lead them to succumb to temptation.
Financial oversight: Review your organization’s finances on a regular basis. In Mary’s example, the president didn’t review finances regularly enough, leaving plenty of time for Mary to cover her tracks. Both scheduled and spontaneous reviews can help you catch any errors or fraud attempts early.
Anonymous reporting: Set up an anonymous tip line or email box for employees to voice their suspicions. Perhaps the two people who worked with Mary had noticed something amiss but hesitated to “tell” on their supervisor. An anonymous program makes it easier for people to share any problems or issues.
Quick follow up: Any items reported through the tip line should be followed up on promptly. This ensures early detection of fraud.
Two-fer: Always have two people sign checks or have one person sign with the other giving written approval, and two people present when counting out cash or checks.

These are just some steps to take for fraud deterrence and detection. A comprehensive program and policy, along with a process to follow to both detect and report fraud, can save your organization a great deal of headache and heartache later. We can provide services for both accounting and auditing to assist you.

Although it is admirable to create a corporate culture that inspires trust, it is not always wise to trust blindly. Following simple fraud deterrence procedures isn’t a mark of lack of trust, but rather, a simple step that can prevent good people from making bad mistakes.

Nonprofit Financial Management and Consulting from Beck & Company

If you need help planning, preventing, and formulating a response to potential fraud, Beck & Company can help. We are Washington DC area nonprofit advisors and 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.

Nonprofit Financial Management and the New DOL Overtime Rules

If you are responsible for nonprofit financial management, it is important to understand the new DOL overtime rules. These rules will be in effect starting December 1, 2016, and will impact both for-profit and nonprofit businesses alike.

What Is the New DOL Overtime Rule?

The new DOL overtime rule resets the threshold for who should be paid overtime and when overtime pay takes effect. The revised Fair Labor Standards Act (FLSA) increases the salary threshold for white-collar workers. The threshold for exempt employees has increased from $455 to $913 per week. That is about $23,660 to $47,476 per year, on average.

The only exemptions from paying overtime are for executive, administrative and professional positions making $47,476 or more per year. The annual salary must meet or exceed $47,476 in order to qualify as exempt from overtime pay.

The threshold for so-called highly compensated employees has also been raised. These employees earn between $100,000 and $134,004 per year and perform non-manual labor. They must supervise two or more employees. These employees are now covered under overtime rules as long as their salary does not exceed the upper threshold limit.

Register for this Webinar Now: The Benefits of Integrated Project Accounting and Financial Management.

Both the standard salary and HCE annual compensation limits will be updated again in three years.

Why Does this Matter for Nonprofit Financial Management?

The new DOL rules matter a great deal for nonprofit financial management. You may be required to adhere to it if you conduct business transactions exceeding $500,000 per year (excluding membership fees, grants or gifts).

Individuals may be covered under the revised law if they produce goods or services for interstate commerce and make amounts within the threshold limits. An example may be a nonprofit employee who regularly travels to other states for business purposes. You may need to review each situation on a case-by-case basis and make decisions based on the preponderance of activities that adhere to the rules. Err on the side of caution and compliance with the rules if you are unsure in a given situation.

Consider the implications of overtime on your payroll budget. Depending on how many employees are now covered under the revised DOL guidelines, you may now be required to pay overtime for a considerable number of people.

You may wish to revise schedules and limit overtime, depending on your needs. Weigh the pros and cons of hiring new employees or temps against the need for overtime.

There are several options to navigate these new salary rules. The options include:

Raise salaries: If you have employees who meet the ‘duty qualifications’ and have salaries near the $47,476 threshold, raising their salary would exempt them from the overtime requirement.
Pay overtime: Organizations should pay overtime salary to workers exceeding the 40-hour work week and who meet the requirements.
Redistribute workloads: Examine employee duties and hours, and redistribute tasks if necessary to avoid overtime.
Require overtime approvals: Occasional overtime payment may not be a problem, but you may wish to approve overtime requests to control your budget and employee workloads. Employees may not be aware that you are able to redistribute their workload.

The DOL leaves it up to the discretion of the organization or employer how they wish to address the changes. They neither endorse nor recommend a specific approach, which does give you some flexibility in how you address it within your organization.

Payroll and salaries account for a large portion of any organization’s budget. Nonprofit financial management includes the ability to balance budgets and avoid excess costs. By carefully adhering to the new regulation and understanding its impacts upon your organization, you can maintain a balanced budget that allows you to continue funding your mission.

Financial Advice and Assistance for Nonprofit Organizations

Beck & Company Certified Public Accounts and Business Advisors specializes in nonprofit financial management and issues pertaining to the world of nonprofits. We have extensive experience helping nonprofits of all sizes achieve their mission without sacrificing margin. Contact us for more information.

Add Processes to Improve Nonprofit Operational Efficiencies

Nonprofit Financial Management for Improved Performance by Adding Process Roadmaps

How many times have you started on a project or a task only to have that sense of déjà vu? Perhaps you had to perform that task last year, or a similar task last month. Unless you documented how you went about performing this task, however, it’s unlikely that you’ll remember the exact steps. That leads to duplicate efforts and re-creating the same task over and over again. In other words, you end up reinventing the wheel.

Many nonprofits fall into this trap simply because they are under-staffed. Their current staff is busy completing their assigned task lists, thinking ahead to next month, serving constituents, and doing all of the myriad tasks it takes to keep a healthy nonprofit organization humming along. It can be difficult to carve out time to draft a process roadmap, and still even more difficult to develop a plan to store such roadmaps and transmit them to others during the employee onboarding process. Still, without such roadmaps in place, valuable time is wasted. Nonprofit financial management can improve operational efficiencies by creating a process roadmap.

What Is a Process Roadmap?

Roadmaps are going the way of the telephone book, but they still provide a good analogy for documents around the office. A process roadmap maps out the path from start to finish that you take in order to complete a task. It includes vital information such as who performs which task in the process, what resources may be needed, and when the task should be completed.

Such a document need not be lengthy or cumbersome. In fact, the simpler and easier it is to read and understand, the better. Some companies require process documents to be one page or less to ensure they are as simple as can be.

Once a process is documented, it can then be replicated by anyone in the organization or delegated to someone outside of the organization. It is a great time saver after the initial time is invested into creating the document.

Uses of Process Maps for Nonprofit Financial Management

Let’s take a look at two common tasks nonprofits face and how process roadmaps can help:

Annual charity event: Many nonprofits hold annual fund-raising events such as golf tournaments, sales, open houses, and the like. These events are frequently process-driven and require that multiple people pitch in and ready things for the date of the event. The date is usually set far in advance, so that a timeline can be easily mapped out from the event date back to the first tasks in the process, such as securing the venue. When a process map is in place for an annual event, it can be delegated to multiple staff members, volunteers, or outsourced partners.
Audits: An annual financial audit is another event that can be transformed with a basic process in place and mapped out. You know when the audit will take place, and which documents must be gathered for the auditors. Specific resources may need to be earmarked for the auditing process, such as conference rooms reserved, personnel available, files organized and so on. Once a process is mapped and in place, the audit can go smoothly each year if the process is followed.

Organizing Your Processes

The most efficient way to organize processes is to create a template. The template can include:

Name of the process
Date when the draft was created
A brief explanation of the process
Goals and outcomes
Timeline and deadlines
Materials or other things needed
Step by step instructions, tagged with the role assigned to each step.
List of resources

A shared network drive or cloud-based system such as Google Docs, free to use with a standard (and free) Google account, makes it easy to organize all of your processes and provide access to staff at any given time.

Include Training

Lastly, be sure to include some basic training once the processes are in place. A process can only be used if it’s efficient and if people are aware it exists. Training familiarizes everyone with the steps in the process and provides a valuable opportunity for feedback to adjust the process.

Having your most important projects and events mapped out using a process roadmap saves you a great deal of time and effort. It enables you to transfer knowledge to new employees or volunteers and to smoothly and successfully navigate the path yet again. It is a great tool for organizational efficiency.

Beck & Company

Beck & Company is an independent certified public accounting firm located in Washington, D.C. Founded in 1987, we specialize in the world of nonprofit financial management, helping you to navigate the complex world of finance and accounting. Our services are always personalized, and cost-effective for your institution. We welcome your inquiry or call. Contact us today or call 703-834-0776 x 8001.

Nonprofit Financial Management Tips [Free Webinar]

Why Nonprofits Need to Learn More About ASC 606 and IRFS 15

Nonprofit financial management includes keeping abreast of FASB changes, and examining your accounting methods to ensure they coincide with the latest recommendations. In May 2014, FASB issued Topic 606: Revenue from Contracts with Customers. In it, plans were unveiled to require all entities, both public and private, to change how they accounted for revenues. Revenues were to be recognized when the entity satisfied the performance obligation with the customer. This usually means that when goods or services are transferred to the customer, the revenue can be recognized.

While much of the work of a nonprofit doesn’t fall under the new ruling, some of it might, which is why you should pay attention to the changes and evaluate your revenues accordingly. Activities typical of a nonprofit that might be considered under the new ruling include membership fees, conferences and seminars, subscriptions, tuition, products and services, advertising, licensing, sponsorships, royalty agreements, and federal and state grants and contracts.

Nonprofits seeking to learn more about the law should sign up for the forthcoming seminar from Intacct: The Impacts of ASC 606 on Subscription Businesses. This webinar will take place on Thursday, November 3^rd at 11 a.m. PST/ 2 p.m. EST.

If you are currently using spreadsheets to manage your accounting, it will be almost impossible to comply with this law and IRFS 15 compliance, the effects of which will begin in December 2016.

The webinar is led by Tony Sondhi, a member of FASB’s Emerging Issues Task Force and an expert on revenue recognition. This is a unique opportunity not only to learn first-hand about 606 and IRFS 15 compliance but to learn from a well-known expert and member of the FASB task force.

At this seminar, you will learn more about the changes begun by these rulings, as well as information on how you can interpret and implement them for your organization. You will also learn more about the financial risks for subscription businesses. Many membership organizations rely upon a subscription model, which is directly impacted by these rulings.

According to the FASB document, “The core principle is that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.”

The AICPA has put together a good paper that outlines the requirements and delineates the steps to take under each. There are five basic steps to comply with the new regulation:

Identify the contract with the customer.
Identify the performance obligation within the contract.
Determine the transaction price.
Allocate the transaction price.
Recognize the revenue when the entity satisfies the transaction.

Typically, step 5 occurs when goods or services are delivered satisfactorily to the customer.

The goal, of course, is to protect customers and to make it simpler and clearer for entities to recognize revenues. Many organizations are already using similar protocols, and for those organizations, making adjustments to satisfy the requirements should be simply. For others, it may take a deeper look at the way they are recognizing revenues, and shifting some of their processes.

Do You Need to Make Adjustments?

All nonprofits should assess their accounting practices and see how their revenue streams compare to the new rules. Organizations should also consider what, if any, impact this may have on their financial statements. It is a wise move as part of nonprofit financial management.

Keeping Abreast of FASB Changes

We have previously shared details of the proposed FASB changes taking effect in 2016. Any changes that impact your business should be noted and researched as soon as possible. Nonprofits, like other business entities, must comply with all requirements. Failing to do so can put your nonprofit at risk for losing its nonprofit status. You also risk falling behind in compliance issues, an important part of accurate nonprofit financial management.

More seminars are available to provide updates on various issues pertaining to accounting and nonprofit accounting and finance. You may view our complete list online.

Beck & Company

Beck & Company is an independent certified public accounting firm located in Washington, D.C. Founded in 1987, we specialize in the world of nonprofit institutions, helping them to navigate the complex world of finance and accounting. Our services are always personalized, and cost-effective for your institution. We welcome your inquiry or call. Contact us today or call 703-834-0776 x 8001.

FASB Set to Release Nonprofit Accounting Changes Summer 2016

The Financial Accounting Standards Board (FASB) is set to release the first wave of nonprofit accounting changes during the summer of 2016, according to an article in Accounting Today.

The article indicates that FASB has completed its assessment of the feedback received on Phase 1 of its intended changes. The organization appears ready to release the first set of accounting standards changes that will guide nonprofit organizations in the near future.

The changes are expected to significantly affect the way nonprofits report net revenue, as well as other less significant changes impacting how nonprofits report and account for their finances. This is the first major overhaul of the nonprofit accounting guidelines in over 20 years. The overhaul came because FASB recognized the changing face of the nonprofit sector, with newer types of nonprofits requiring a different view on accounting standards.

Nonprofits Prefer to Stay Flexible, In-Sync with For-Profit Accounting

One thing that surprised the people at FASB was the outpouring of feedback they received from the nonprofit sector. Typically, the standards board receives only a smattering of feedback when it requests public input. The nonprofit sector sent in 250+ letters detailing feedback on the proposed changes.

The biggest request was that FASB retain the flexibility it has previously allowed in nonprofit reporting. Another request that came over loud and clear was the desire for nonprofits, in similar industries as for-profits, to continue using accounting methods and standards in line with the industry itself, rather than based on tax status.

The goal of keeping both for-profit and nonprofit accounting models in sync is to keep their reporting methods clear and easily understandable by most people. Because many people are at least familiar with basic accounting concepts used by for-profits, by keeping the nonprofit model similar, donors and the general public can better understand the finances of nonprofits. Transparency is maintained as it pertains to financial records because the information can be understood more easily.

The Rollout Schedule: What to Expect

As Phase 1 begins rollout this year, it will impact reports generated starting December 2017. Financial statements for the fiscal year ending December 2017 should follow the new guidelines, with early adoption permitted.

The Big Change: Two Net Asset Reporting Categories Instead of Three

The biggest changed planned for Phase 1 includes condensing the three net asset reporting categories into two. The current categories include unrestricted, temporarily restricted and permanently restricted. The two new categories will be donor restrictions and without donor restrictions. The “without donor restrictions” category replacing the former unrestricted category.

Other areas impacted by the changes include some minor tweaks in the reporting of investment returns, as well as liquidity and availability.

Help Navigating the Changes

An upcoming webinar will be discussing how the FASB and IASB have released a new revenue recognition standard – which will dramatically impact the financial processes of software companies. Although the effective date is several quarters away, you need to begin taking action now. Click here to register for the New FASB Rev Rec Standards, Actions You Should Take Now Webinar on Thursday, June 16th at 11 AM PT/2 PM ET.

It can be difficult to discern which changes may truly impact your nonprofit organization and which may be considered and evaluated for your particular needs. The professional CPAs and consultants at Beck & Company can assist you through these changes, helping you update your accounting standards to reflect your nonprofit’s financial models and goals. We invite you to contact us to learn more. Call us at 703-834-0776.

Is My Nonprofit Organization Susceptible to Fraud?

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

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

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

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

• Bank Statements including all cash balances

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

• A report showing credit lines with the amounts borrowed.

• Accounts receivables reports.

• A list of fixed expenses.

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

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

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

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

2. Conduct employee background checks.

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

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

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

6. Ensure compliance to internal controls.

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

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

The Cure for Unhealthy Financial Reporting

Are you feeling like your financial management is ineffective and inaccurate? Do you need a CURE for “unhealthy” financial reporting practices and records? Look no further. We have just the financial management treatment you need to nurse your financial records and reports back to health. And, there is no better time to do this than now as you finish up the year 2014 and look to the new year of 2015. Having your financial reports in order now will help you with upcoming budgetary and company decisions that you will be making and will keep you on track to get a clean bill of health throughout all of 2015. This will also set you up for success in being prepared with reports at a moment’s notice upon request. Who doesn’t want to be healthy in the New Year?! We all do. Your business needs to be in a healthy place, too, and financial reports that are accurate and organized are vital lifelines in this health and are important tools and resources for constituents of your company or organization.

If you are in need of personalized help and attention in the area of financial reporting, Beck and Company’s Certified Public Accountants and Business Advisors are trained professionals who can help you reduce costs through business process optimization. This involves improving workflows and operational efficiencies that can ultimately have a positive impact on your bottom line. Learn more about our client accounting services here.

In addition to the personalized accounting services we offer, here are some general tips for what characterizes good and healthy financial reports and statements. As a general rule of thumb, keep in mind that the information contained within the reports should have the needs of the users of the reports in mind. Consider the audience when creating reports so the needed information is included and information that is not pertinent is not included. Not all audiences are created equal so not all reports should be created equal. Regardless, though, the reports must be correct, and more detailed information must be available upon request when more concise reports are shared. Just think of C.U.R.E., and you’ve got the cure you need when it comes to healthy financial reports!

C- Comparability

The information must be comparable to the financial information presented for other accounting periods so that users can identify trends in the performance and financial position of the reporting entity.

U- Understandability

The financial information must be readily understandable to users of the financial statements. This means that information must be clearly presented with additional supporting information supplied as needed to assist in clarification.

R- Relevance

The information must be relevant to the needs of the users, which is the case when the information influences the economic decisions of users. This may involve reporting particularly relevant information or information whose omission or misstatement could influence the economic decisions of users.

E- Error-free

The information must be reliable and therefore free of material error and bias while also not being misleading. Thus, the information should faithfully represent transactions and other events, reflect the underlying substance of events, and prudently represent estimates and uncertainties through proper disclosure.

In addition to the CURE above, there are many other characteristics of effective financial reports. These include showing context and keeping investors in mind, being compliant with rules and regulations, following the Disclosure Management Cycle, creating the reports in collaboration with others within a business team, etc. You can learn more here. Please contact us to learn more about how we can help you and your business to succeed in all areas including in the financial realm with your financial reporting practices and efficiency. Stay tuned next week for another cure to the financial record mismanagement blues!