nonprofit accounting audit services

Avoiding Issues of Fraud (or Perceived Fraud)

Among the many issues covered in discussions of nonprofit financial management, the issue of fraud, or avoiding the appearance of fraud, can be distressing. No one likes to think of their nonprofit falling into the ‘fraudulent’ category.

Yet GuideStar recently announced that they have rescinded their Seal of Approval for five charities that violated their policies for transparency.

The FTC investigated complaints against charities purporting to use donations to help veterans. Among these charities investigated, 100 received notice of legal action. GuideStar took it a step further and examined the 100 under legal notice and found that five had earned their Seal of Approval. They published a list of the charities for which the Seal has been rescinded along with the reasons for the change.

Among the many reasons stated are nonprofit financial management issues related to fraud or incidents that give the appearance of fraud even if the charity isn’t doing anything wrong per se. According to GuideStar’s report, charities were cited and censured for the following reasons:

State regulators found that the charity had misrepresented its financials.
The organization had dissolved but had not notified GuideStar.
State regulators ordered the organization to cease activities.

Charities obtain a Seal of Transparency after adding information to the GuideStar site. Charities are required to disclose with honesty and integrity their financial information and other information that adds to their public profile. The concept is simple: honest, complete information informs the public and helps the public make an intelligent decision about where and how to donate their money.

What the GuideStar and FTC Findings Tell Us About Nonprofit Fraud

Nonprofit financial management includes the prevention of fraud. The information obtained from the FTC review and the subsequent GuideStar article tells us a lot about issues pertaining to nonprofit fraud.

First, most of the fraud discovered wasn’t necessarily someone stealing money from the nonprofit, although that could be happening too. Instead, it was all around disclosure and failure to either disclose where and how the funds were being used or the activities of the organization.

Another problem was taking in money for an activity but then spending it elsewhere. Nonprofits who receive restricted funds, for example, that are earmarked for a specific project or program by the donor cannot spend them on anything other than what they were apportioned for in the first place. You can’t receive money for a scholarship for athletes and spend it to build a tennis court on campus, for example.

Nonprofits Have a Duty to the Public

Nonprofits have a duty and responsibility to the public, to their donors and constituents to be open, honest and transparent about their financials. It is then up to the public whether or not they choose to continue donations.

Some of the nonprofits receiving scrutiny from the FTC may be doing nothing wrong, but the perception of wrongdoing lingers. Why? It’s all in the financials. If the financials are poorly presented, if money isn’t categorized properly and if there is insufficient details included in the financial statements and annual report it can seem as if the nonprofit is trying to hide something.

This is where hiring a nonprofit accounting audit service can help. Professional nonprofit accounting audit services understand the changes to the FASB rules, for example, and can help you streamline net asset categories as well as assign the proper “nature” to expense items. The right amount of detail, the proper categorization and similar nonprofit financial management tasks undertaken during an audit can help clarify and communicate information in ways that help rather than hurt your nonprofit’s status.

If you’re ready to examine your nonprofit’s financials or you need nonprofit accounting audit services, contact Beck & Company today. We’re an independent certified accounting firm offering accounting and tax services for nonprofits, nonprofit financial management, auditing services and more. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting services that address all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

Year End Accounting Tips and Advice

Year-end arrives faster than the Christmas decorations in the local big box store, and as part of your nonprofit financial management duties, you should start thinking about auditing services and year-end close now.

Some nonprofits end their fiscal years on June 30^th, particularly nonprofits in the education sector; those in healthcare and other industries may be on a typical corporate calendar with the year-end December 31. For those whose bell will toll the close of the books as the ball drops in Times Square, now is the time for you to start thinking about nonprofit accounting audit services and all the things you need to tidy up the financials for year-end close.

Are You Ready for FASB Compliance?

Remember that new FASB guidelines affect asset categories, liquidity reporting, and expense reporting. Have you chosen where to move items that are in the third category of net asset classifications that’s going away? Now is a great time to start those discussions.

Liquidity is an area often confused by folks in the nonprofit world. Nonprofit financial management includes cash management; liquidity refers to having enough cash on hand to satisfy outstanding debts and obligations that may arise within a short period of time. Many nonprofits have a positive net balance but lack liquidity because their assets are tied up in restricted funds or grants. Be sure you have enough cash on hand to pay those bills that arise at year end.

Lastly, expense reporting is changing with the nature of the expense, like a line item, appended to your expenses. Take a look at typical expense categories and develop your own line items as needed.

This isn’t an exercise simply to satisfy FASB. The way that you depict your finances through the end of year report can tell a powerful story that encourages donations and support for your mission. With the right message, you’ll have an easier time courting donors and securing funds.

Plan for End of Year Nonprofit Financial Management

Take time now to plan for your end of year close and reporting needs.

Relay key dates such as the last date to submit year-end invoices to accounting to everyone in your organization.
Request that reimbursement receipts and reports are turned in with plenty of time for processing. Set a date now and circulate it among your staff to ensure everyone is aware of it.
Catch up on data entry tasks to ensure payables and receivables are up to date.
Review where your organization will present year-end financial results. Will it be at the typical board meeting or published on a site such as Charity Navigator or GuideStar? Consider their deadlines and requirements as well.
Leave adequate time in the schedule for printing and mailing. Publishing an annual report requires several weeks for writing the reports, graphic design, and printing if you send it to a commercial printer. Mailing at 3^rd class nonprofit rates also takes two to three weeks depending upon mail volume. With increased mail volumes around the holidays, leave plenty of time for mailing out reports.

If you are feeling overwhelmed by end of year nonprofit financial management requirements, consider nonprofit accounting auditing services. Some nonprofits are required by federal, state, or local jurisdictions to provide fully audited financial statements. Others reach a specific financial threshold that triggers an audit requirement. Regardless, all nonprofits benefit from a thoroughly audited financial statement.

Professional nonprofit accounting audit services can help your organization tell its story through financial statements in ways that are easily understandable to the public and donors. A strong, clear, and compelling story goes a long way in supporting the achievement of your mission and vision.

Beck & Company

Beck & Company is an independent certified accounting firm offering accounting and tax services for nonprofits, nonprofit financial management, auditing services and more. Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting services that address all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

A Look at the Changing FASB Nonprofit Accounting Principles

Whether or not your organization needs nonprofit accounting audit services depends on several factors. Funding sources may require audits to continue providing capital. Other requirements may come from local, state, and federal offices guiding your nonprofit’s activities. The National Council of Nonprofit’s Audit Guide offers helpful guidelines to nonprofits considering audit services.

Nonprofit audits aren’t just an item on your to-do list. They can provide an important service to an organization and help it tell it mission and story through financial analysis to the public and funding organizations. Properly prepared nonprofit audits satisfy both regulators and the public by offering insight into how a nonprofit obtains its funds and allocates them throughout the year.

It’s important to take a look at nonprofit accounting audit services now in light of the coming FASB changes to nonprofit accounting principles. These changes impact restricted and unrestricted net assets, liquidity disclosures, and functional expenses. Understanding the changes and using them to tell your nonprofit story can benefit your organization in many ways.

Restricted and Unrestricted Net Assets

Terminology around net asset categories has been changed. There are now two categories rather than three. The two categories are net assets “without donor restriction” and net assets “with donor restriction.”

One of the reasons why you might wish to hire Beck for nonprofit accounting audit services is this change in net asset categories and ensuring clarity around how monies are accounted for in your organization. Nonprofit accounting can be complicated, especially with restricted and unrestricted net assets. As you know, a donor can place any type of restriction they wish around their donation, making it challenging to categorize them.

For example, you might operate three programs with specific goals. Donors can give to one, two or all three programs with the stipulation that funds are used only to achieve the goals of each program. Another donor may give money that can be used for the operating budget but under the condition that the goals of program one are met. Do you see how this can get complicated very quickly?

Ensuring clarity around determining whether net assets are restricted or unrestricted is vital for telling the financial ‘story’ in your audit. Those interested in supporting your nonprofit want to know how, where and why they should give their hard-earned cash. By understanding where there are needs and how those needs are met through viewing the net asset categories, potential donors can get a better idea of how funds are being used and accounted for at your nonprofit.

Liquidity Disclosures

Liquidity is a term frequently misunderstood by those outside of the accounting and finance professions. Liquidity refers to cash on hand. Your organization may show a positive bottom line and positive net assets but lack liquidity because its assets are tied up in restricted categories, tangible assets, or other obligations.

Nonprofits often show when they accrue revenues but this doesn’t necessarily mean that the money is in the bank. Grants, for example, may be logged into your accounting system when notification is received that you have been given the grant. The actual check for the amount of the grant may not arrive for weeks or months and may push the grant funds into the next fiscal year. This is an example of how discrepancies arise between cash flow and assets.

This is why tracking actual liquidity is so important. The new FASB standards request that nonprofits list both quantitative and qualitative measures of liquidity. This encompasses both the financial resources available for the next year and methods by which the nonprofit manages and monitors liquidity. To satisfy the new FASB standards, you’ll need to disclose the resources on hand that can be used to cover all expenses and obligations in the next year.

Presentation of Expenses

The changes to the presentation of expenses aren’t extensive. Nonprofits must now break out their expenses into three functional areas. This isn’t news to those nonprofits who have always been subject to audits, but others may find the change a bit of a surprise. Nonprofit accounting audit services can help you figure this part of expense presentation out or you can follow the guidelines developed by FASB regarding expense presentation. Think of the nature of expenses as if they were line items and you’ve got the gist of it.

Nonprofit Accounting Audit Services from Beck & Company

These are the basics of the FASB changes and how they may impact many nonprofits. For specific information on how your nonprofit may be affected, consider a call to Beck & Company. Beck & Company offers nonprofit accounting audit services. We are Washington DC nonprofit advisors serving the eastern seaboard with advice and guidance for nonprofits. Contact us or call 703-834-0776 x8001.

Nonprofit Accounting Audit Services: Are you Ready for the Change?

Changes are coming, and nonprofit accounting audit services must be ready to answer the questions that arise from these changes. We’re talking about the changes to net asset classifications, part of FASB Accounting Standards Update No. 2016-14 Not-for-Profit Entities.

Although the effective date of the new changes was December 15, 2017, the new standards must be implemented by December 31, 2018, or fiscal years ending June 30, 2019. All the relevant requirements must be implemented the same year, so if you haven’t gotten started yet … now’s the time.

The Major Changes

There are seven major changes impacting nonprofits because of the FASB update. These include:

Change the number and type of net asset classifications from three down to two
Updated and improved disclosure relating to both classes of net assets
Additional disclosure required as it pertains to qualitative and quantitative liquidity aspects
The choice to eliminate indirect cash flow reconciliation when direct method cash flow is used instead
Required presentation of both natural and functional classification of expenses, as well as enhanced disclosure of expense allocation methodologies
Change in presentation and disclosure requirements for investment expenses
Complete removal of the “over-time” release method for restrictions relating to long-lived assets

Not sure where to start? The most significant change for many nonprofits it the shift from classification of three net assets to two. The changes were intended to clear up any confusion on how to categorize funds. But, in addition to the changes in net asset classifications, there are also enhanced disclosure requirements in place, so both must be donated at the same time to fully comply with the changes requested in this update.

An Example

Let’s assume you have board restricted funds. You will still need to disclose the amount of board-restricted funds versus net assets without donor restrictions. Although you do not need to remove underwater endowment from net assets with donor restrictions, you do need to disclose the fair asset value.

Enhanced Disclosure

The guidelines also suggest enhanced disclosure. By improving disclosure, you’ll help your nonprofit tell its story better, and help the public better understand how the monies are being apportioned and spent.

If you’d like examples of how to do this, AICPA provides several links to fictitious examples to showcase the best practices needed for disclosure and compliance with other aspects of ASU 2016-14.

More Resources on ASU 2016-14 from Beck & Company

That’s a lot to remember but, fortunately, Beck & Company has been sharing updates along the way about many of these topics.

See below for more information:

Net Asset Classification changes – a detailed article on the changes in net asset classifications and what this might mean for your nonprofit.
Categorizing grant revenues – how the changes to the ‘over time’ release method may impact assets.
Additional clarification on FASB update and a summary of changes ASU 2016-14 call for in many nonprofits.

Nonprofit Accounting Audit Services Can Help

We’ve done our best to provide information about these impending changes in a timely fashion. If you still need assistance, Beck & Company can help. We offer nonprofit accounting audit services, accounting, tax and other consulting services to help nonprofits thrive.

Since 1987, we have helped many nonprofits in the Washington D.C. area and along the Eastern seaboard with their accounting and financial management needs. We provide audit, tax, accounting, and consulting service that addresses all aspects of a small to mid-sized nonprofit organization’s business. Contact us or call 703-834-0776 x8001.

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

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.

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

Using Nonprofit Accounting Audit Services for Better Business Insights

Did you know that you can glean important business insights from nonprofit accounting audits? Nonprofit accounting audit services may seem like a necessary annual expense to adhere to the law when it comes to running a nonprofit organization. However, a good audit is worth so much more. Auditing services provide valuable information that can be used to improve many areas of your nonprofit organization.

Many nonprofit organizations are leaving valuable information in the files without understanding how an audit can help them. Here’s how you can leverage your audits for better nonprofit financial management.

Improve Business Performance

According to Deloitte, audits can be used to improve business performance. Currently, more than three-fourths of respondents to the Deloitte survey state that they use their annual audits as a benchmark against which they can check business performance. By examining key areas and financial information, they can assess how well their organization is performing against goals and where they may need to focus their attention in the future.

Finding the Information Needle in the Haystack

Another area in which nonprofit audits can be helpful is finding small pieces of information that have big ramifications. Such so-called information “needles” in the haystack of information may be enough to use as a springboard for improvement. The audit process may uncover such small bits more readily than typical business processes because audits examine everything in an organization’s business and finances.

Learning About Their Market

Another area in which audits may prove valuable is to learn more about the industry and market in which nonprofits work. Auditors who work with multiple organizations may provide insights into industry trends and marketplace knowledge which can be used to improve a nonprofit organization’s ability to compete in the marketplace.

Keeping an Open Mind and Communicating with Auditors

Two things are essential to getting the most value from your audit: keeping an open mind and communicating well with your auditors.

The auditing team may make suggestions or point to information in your audit which can be difficult to accept. It can be a struggle to keep an open mind, but if you do, you can learn more from the audit.

Communicate your needs to the auditing team. Ask them for their expertise and business insights. They will probably be glad to help! Most nonprofit accounting audit services are intended to help organizations grow stronger. It’s more than about compliance with the law; it’s about building better organizations.

As part of your nonprofit financial management, you can gain many business insights from a nonprofit accounting audit service. Work with your auditing team to set expectations and build a process by which their findings and insights can be communicated to the right people within your organization so that every bit of information can be shared and used to make your nonprofit stronger.

Nonprofit Accounting Audit Service with 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 and blend knowledge from the accounting and nonprofit worlds to help you improve operations and efficiency. For more information, please contact us at 703-834-0776 x 8001.

If You Need Nonprofit Accounting Audit Services, You’re Not Alone

Many companies struggle to find employees who can perform audits. Here’s why.

Nonprofit accounting audit services can be handled by staff or by a consulting firm, CPA, or another nonprofit accounting service. Larger nonprofits who seek employees to perform audits may find the task harder than it looks. Research suggests that filling internal auditing positions is challenging.

A study conducted by Deloitte found that 13% of chief audit executives (CAE) were very satisfied with the skills of their audit teams. That’s a lot of people who are less than thrilled with their teams! More than half are dissatisfied with the skills of their teams, which leaves a lot of room for improvement.

Many companies today struggle to fill vacancies on their internal audit teams. It’s not your imagination – it’s hard to find skilled auditors, and here’s why.

Lack of Formal Training in Auditing Skills

Nonprofit audits require extensive knowledge of both the nonprofit world and accounting. Specialized programs to teach auditing skills are few and far between, with only a handful of universities offering auditing majors and courses. Students interested in auditing tend to have general accounting or taxation majors, which does not prepare them adequately to fill vacancies on auditing teams. It’s no wonder that a PWC report found that the number one challenge facing auditing teams is finding qualified candidates and managers for existing employees.

New graduates entering the accounting profession who have majored in taxation or general accounting are more likely to obtain positions in the accounting department of an organization rather than in the auditing area. If they do land an entry-level position in the auditing area, it will be years before they’re able to lead teams. And during that time, senior level people may retire or move to other positions, leaving vacancies that are difficult to fill.

Leaders Needed

Companies seeking experienced nonprofit auditors may find it even harder to fill open vacancies. The hardest task is to find people with 5 to 10 years of experience in the field. People with experience in the industry are in great demand and may be courted by larger firms, drawing talent out of smaller nonprofits just when it’s needed the most.

More Training Needed

Even among those who work in the internal audit department, more training is needed. Auditing professionals need more training, especially in areas of risk management such as cybersecurity. All professionals need advanced training to keep their skills fresh, but for nonprofit auditing professionals, it’s critical that they keep abreast of the latest changes in the field. A mistake in this area could be costly.

Opportunities for Professional Development

Keep your eyes open for professional development opportunities for your team so that they can obtain the skills needed to help with audits. You may need to send them to conferences, seminars, or other events where such classes are offered. By investing in your team’s professional development, you’re demonstrating to them that they are valued, which goes a long way towards employee retention.

Nonprofit Accounting Audit Services

For companies struggling to fill vacancies, outsourcing nonprofit accounting audit services may be the answer. Firms such as Beck & Company are Washington DC area nonprofit accounting auditors and CPAs that provide services nationwide to nonprofits. Services include auditing, of course, but also consulting on a wide range of accounting areas that impact nonprofits.

For more information, please contact us at 703-834-0776 x 8001.

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.

Weather the Fraud Storm with Nonprofit Accounting Audit Services

Nonprofit accounting audit services can help you weather all kinds of storm. The “storm” most often feared is also a five-letter word: fraud.

Why do we fear fraud so much? It’s a taboo subject at many nonprofits. The word is never spoken. It’s as if by speaking the word, we fear we’ll bring it on ourselves.

Little children do crazy things to wish for bad weather like snow days. They’ll sleep with their pajamas inside-out, for example, following the old schoolyard fable that such sacrifices please the skies and encourage a nice blizzard and its attendance day off from school, sledding and snowman building, and hot cocoa.

We know wearing pajamas inside-out has nothing to do with the weather conditions that foster snowstorms, yet we exhibit the same type of superstitious behavior when it comes to fraud. We’re almost afraid to say the word for fear of calling it down upon ourselves.

Register for this Webinar Now: Survival Guide for Nonprofit Finance Teams

Instead of fearing the word, look it squarely in the eye. Face your fears and take proactive action to build a strong culture of honesty, integrity, and ethics within your organization. Make your organization so transparent that no one will think twice about uttering the word “fraud” because they know it’s impossible within your office.

Nonprofit Accounting Audit Services: Three Steps to Prevent Fraud

While we all wish life came with the same warning-sirens that herald a tornado or other severe weather alert, fraud does give off its own signals. They’re subtle, more like static than a siren, but you can still learn how to detect them in the nonprofit workplace and take steps to clear the static from the air so that fraud is difficult (or, we hope, impossible, for people to even consider). These three steps will be your warning and shelter from fraud.

Talk about it! Fraud isn’t a forbidden word. Some nonprofit workplaces are so afraid of even mentioning the possibility that they avoid talking about it altogether. If you don’t talk about the potential for fraud in the workplace, your staff won’t be on the alert for it. Make sure that fraud prevention, reporting, and resolution are all part of your employee handbook, training, and accounting practices. Don’t be afraid to talk to anyone who may have information about potential fraud. Keep an open-door policy so that everyone is comfortable speaking up if something happens.
Be aware: To prevent problems of any type, awareness is critical. Develop a culture of fraud prevention and awareness. Everyone should practice simple fraud prevention procedures such as always have two people count out cash or place checks into the safe. Create a series of best practices for fraud detection and prevention. As the accounting leaders in your organization, you have the opportunity to implement procedures to benefit your nonprofit.
Practice drills: Once everyone understands that fraud prevention is important to the organization and that the organization is serious about prevention, the last piece in the puzzle is to make sure that everyone understands the steps to take if they suspect fraud. “Practice drills” sound silly until you consider how many other emergency situations we practice for in life. Nearly every school, office building, and hospital practices fire drills and other emergency situations; shouldn’t your organization do the same to protect against losses? Practice “fraud drills.” Identify someone on the team who is a ‘safe’ person to report suspicions too. Have the numbers handy for your nonprofit accounting audit services so that if fraud is detected you have the go-to guys and gals on speed dial for immediate help. Write everything down into a simple procedure list so you have step-by-step instructions and action items at the ready.

With awareness, prevention, and reporting procedures in place, your nonprofit will be on dry ground when it comes to fraud alerts. While we all wish that fraud and other serious workplace events came with some kind of early warning signal, in the case of fraud detection, just being aware can be enough of a deterrent.

Financial Advice and Assistance for Nonprofit Organizations

Beck & Company Certified Public Accounts and Business Advisors specializes in nonprofit financial management, nonprofit accounting audit services, 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.