Tag: Nonprofit Audit

Transparency’s Potential for Positive Impact on your Nonprofit

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

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

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

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

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

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

Here are five essential benefits of being transparent:

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

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

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

4.      Enriched quality of delivered services

5.      Heightened operational efficiency within the organization

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

Making Sense of Nonprofit Audit Conclusions and Results

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

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

During the Audit:

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

Auditor Unqualified and Qualified Opinions upon Conclusion of the Audit:

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

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

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

In Conclusion:

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

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

Nonprofit Financial Audit: Successfully Communicating with your Auditor

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

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

How should you communicate with the auditor during the audit?

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

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

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

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

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

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

  • Existence or occurrence
  • Completeness
  • Rights
  • Obligations
  • Valuation
  • Allocation
  • Presentation
  • Disclosure

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

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

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

Tips for a Successful Non-profit Financial Audit

Nonprofit organizations undergo financial audits for a variety of reasons. In addition to being in compliance with various covenant and membership requirements, audits also provide an organization with tools that can help with best practices and offer accountability to the institution. Just like the notion of having surgery, the idea of undergoing a financial audit can be less than appealing. At the same time, it is important to focus on the significant value that results. Here at Beck and Company’s Certified Public Accountants and Business Advisors, we can help you properly prepare for an audit and make the process less painful and more beneficial. We offer an array of auditing services to assist you.

How can your nonprofit prepare for, manage, and benefit from a financial audit? The following tips offer suggestions to do just that.

1.       Before the Audit- The Pre-Op:

Advanced preparation for your audit is essential. Your team should create and use a list of items that will need to be prepared before the auditor arrives. Having all of the necessary documentation ready for the auditor saves time and money in addition to resulting in less staff distractions during the actual audit process. Through many years of auditing and assisting nonprofits with this process here at Beck and Company CPAs, we have compiled a list of task items designed to help you successfully prepare for an upcoming financial audit. You can access it here. Remember that auditors are likely to request additional reports and information based on what is initially supplied. These requested reports should be added to the preparation list for the following year.

Choosing the right professional who will work with your company is extremely important. Just like choosing a competent surgeon that specializes in what needs to be operated on, you’ll want to choose an auditor that you feel comfortable with and who is experienced at working with not-for-profit organizations. Think of your choice in auditor as a partner not a distant professional.

In the preparation process, be clear about deadlines. The time frames for your audit are crucial. If bank submission, board meeting, audit committee session, or grant deadlines need to be met, be sure to communicate these to all teams involved and do this early on in the process. Clear communication eliminates surprises and delays.

2.       During the Audit- The Surgery:

Similar to the notion of having surgery without the surgeon present, the greatest efficiency and most useful results come from maximizing your time with the auditor. Be sure to get as much done and as many questions answered while the auditor is onsite. If there are any open items that cannot be accomplished, set completion deadlines before the auditor leaves.

3.       After the Audit- The Post-Op:

The most significant aspect of an audit is what results from it just as the results of surgery are why you had it in the first place. Without following recovery and therapy instructions, a successful operation still will not produce the intended outcome. Similarly, an audit will not be beneficial to your organization without implementing changes and using suggestions to make improvements. The most valuable part of an audit is often the management comment letter. It should highlight areas of control deficiency, concerns, and needed improvements. The implementation of changes, as appropriate, are the central benefit that an audit affords your organization. In addition, the results can help make future audits even smoother in the upcoming years.

Beck and Company CPAs have helped many nonprofits prepare for annual financial audits and would be happy to assist you as well. Please contact us and request a complimentary audit services consultation by visiting our website.