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Six Areas Auditors Focus on During a Digital Audit

By | COVID-19 | No Comments

We’re all navigating new territory during the COVID-19 pandemic, and that includes your auditors. Few anticipated that their nonprofit’s auditors would need to work remotely to review the 2019 accounts. Some auditors may even be reluctant to conduct audits from their home offices, citing misgivings about whether professional standards permit fieldwork performed remotely.

With no choice, most auditors will begin to perform their duties. As a leader of a nonprofit organization, what do you need to know about digital audits? Do they differ from an audit conducted at your office? And how will the pandemic affect the financial statements and disclosures?

Digital Audits: 6 Areas Your Auditor Will Examine

There are six areas that auditors are likely to focus on during a digital audit.

  1. Verifying hard copies: Auditors are used to fieldwork, that is, going to a client’s offices and looking at documents and other resources on site. They can easily ask employees questions about the materials under scrutiny. With the COVID-19 pandemic, that’s out of the question in many parts of the country where the outbreak continues to limit interactions with others. Instead, auditors may request that documents be sent to them. If they do need access to papers or hard-copy records, they may ask that a third party verifies the accuracy of them. This isn’t a slight aimed at your organization or an individual. It’s simple due diligence if they are forced to work from scans, photocopies, or materials delivered by a trackable, traceable courier or delivery service.
  2. Going concern: The financial strain from the pandemic may call into question whether or not a nonprofit will continue operations as a ‘going concern.’ The auditors will look at whether or not there are considerations that will impact if the nonprofit can continue as a going concern. In some hard-hit areas and industries, there may be substantial doubt that the organization can continue operating. “Substantial doubt” means that, in management’s opinion, the organization may not be able to remain open. Such doubts must be disclosed in the notes to the financial statement. Including such notes is required, even if management has a plan to rectify the situation.
  3. Emphasis of matter: Even if there isn’t substantial doubt, auditors may still request that a nonprofit adds an emphasis of matter paragraph to the financial statement. At a time when the future is uncertain and information changes rapidly, auditors may feel it is in the organization’s best interest to do so.
  4. Scope limitations: Remote audits may impose scope limitations on the audit. Key evidence and confirmations may not be returned. Auditors may be unable to evaluate the design and implementation of controls at the client’s location. These and other factors that are dependent upon being physically present at the client’s location may limit the audit scope.
  5. Subsequent events: Audits based on a calendar year-end of December 2019 may find that COVID-19 events are Type II events. Disclosure may be required even if the events do not have to be recognized in the financial statement. For 2020 events, COVID-19 related events may require adjustment to the financial statement. For example, investment income may fall as a consequence of the pandemic. These may fall into the Type I event category or events that provide evidence of conditions that existed at the financial statement’s date.
  6. Risks and uncertainties: Management must disclose risks and uncertainties. Right now, everything and anything might feel risky and uncertain. Auditors will focus on risks and uncertainties that arise from the nature of the entity’s operations, significant estimates, or current vulnerabilities due to certain concentrations. Your organization’s auditors will advise you if you need to disclose such risks and uncertainties. Things such as geographic areas in which you operate, travel restrictions, and the like will be considered as part of this evaluation.

Remote Audits the New Norm?

As the world hopes for a vaccine or an effective treatment against COVID-19, nonprofits should plan for a future where remote work continues to be the norm. The COVID-19 pandemic has exposed the need for many companies and organizations to invest in cloud software and remote-working technology that enables them to continue operations seamlessly, whether working from home or office. To that end, nonprofits should plan for a future in which auditors require access codes rather than physical hand-off of documents as part of their auditing duties. Remote audits are likely to become part of the “new normal” post-pandemic world.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

The Lasting Impacts of COVID-19 in the Nonprofit Business Community

By | COVID-19 | No Comments

As the world settles into the “new normal” of life with COVID-19, new patterns emerge in people’s business and personal lives. What was important in 2019 now seems unimportant. The COVID-19 pandemic has forced everyone to rethink and reprioritize what gives their lives meaning and purpose.

We also see significant effects ripple throughout the business community. These effects are likely to impact the nonprofit business community just as much, if not more, than the for-profit world. The following three are the most likely COVID-19 changes that will continue well beyond the current crisis.

Celebrating the Average Citizen

People still enjoy sports and mourn the loss of baseball, football, and other national sporting events. Glamorous Hollywood stars still vie for Instagram attention. Celebrities remain in the news.

Yet fewer people look to them as role models. Instead, many recognize that the true heroes in our midst aren’t the athletes, the movie and television stars, or the musicians. The true heroes are the doctors, nurses, and other healthcare workers clocking in for their shifts on the front line during the pandemic…the first responders, like our police and fire departments, who are essential workers and must respond no matter what the danger to themselves.

It’s the return of the ordinary citizen as a hero, and we couldn’t be more delighted with this change.

Expected impact: Nonprofits who work with celebrities for endorsements may find that choosing a local hero for a spokesperson resonates better with their constituents. Celebrating the heroes at your nonprofit and the role they played in the COVID-19 outbreak (if any) may also be a story worth telling.

Telecommuting Gains Wider Acceptance

Remote work was supposed to be the way of the future. Many nonprofits resisted the concept, however, insisting that employees needed to be in-person to collaborate.

COVID-19 forced everyone to work from home. Some transitioned smoothly, especially those using cloud-based systems. Other struggled. But most are finding that there’s little if any, loss of productivity once their employees get used to working from home.

Businesses everywhere are now part of the most massive telecommuting experiment in history. And it’s working to everyone’s benefit. Pollution is down, thanks to fewer cars on the road. Even insurance companies are giving rebates to drivers for a portion of their insurance premiums because there are fewer accidents.

Expected impact: Workers will continue to request remote work options. Technology will respond by providing better equipment to stay in touch and collaborate over distances. The days of large office spaces may be over. Instead, only core workers will gather in an office, or workers will spend part of the week in the office and part working remotely. Remote work is here to stay.

Move Over, MacGyver

In the 1980s, a television hero name MacGyver used everyday items – duct tape, a Swiss army knife – to get out of trouble rapidly. To “MacGyver” something became code for figuring out an ingenious solution to an emergency.

Today, we see “MacGyver” solutions to many COVID-19 problems. Citizens and students designed masks for healthcare workers and began printing them on 3D printers. Town Councils began live-streaming meetings they never imagined could be live-streamed before. Churches discovered Facebook live for worship services.

There’s an upsurge in resources for nonprofits among accountants and other consulting professionals to help them understand the ramifications of the changing business world and how it may impact them financially. Relief and financial survival tactics are being shared with clients, and accountants are finding new ways to work with clients via telecommuting methods. It’s all part of the creative, MacGyver-like response to the emergency.

Expected impact: Nonprofits must continue to respond creatively to the challenges at hand. Some solutions thought of as temporary may become permanent, such as changing costly in-person meetings to videoconferencing.

Consultants Rise to the Occasion

Lastly, we’re seeing the demand for consultants to rise to the occasion and develop innovative suggestions for their clients to continue working. Figuring out a solution to the problem of stay-at-home and social distancing for restaurants, retail stores, and other nonessential businesses forced to shut down has been challenging, but they’re doing it.

So too, in the nonprofit world, many consultants are finding creative ways to help their clients keep the doors open and meet their mission objectives. It’s not easy, but in this pandemic-driven world, nothing is easy.

Expected impact: Like many consulting firms, our team is doing its best to provide information, resources, and support to our clients. Look at our website and articles such as this one for the latest resources to help your organization during the COVID-19 pandemic.

Welter Consulting

We hope that this message gives you some hope and inspiration. The world is changing, and nonprofits must change alongside it. Change, difficult as it can sometimes be, is inevitable. And it can be for the best.

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Communicating During COVID-19: What Nonprofits Need to Know

By | Nonprofit | No Comments

During the initial days of the COVID-19 pandemic, many nonprofits halted their communications activities. Many were uncertain if they should continue their usual activities. Would it be misconstrued if they sent out a fundraising campaign? What about the quarterly magazine—should it be put on hold? Would it seem in poor taste to send press releases out to the local papers about recent activities in the community?

These are great questions, and no two nonprofits will answer them the same. What remains consistent during this time of uncertainty is the knowledge that constituents both want and need to hear from their favorite nonprofits.

It’s easy to let communications slide when there’s so much to manage right now. Transitioning everyone to remote work, figuring out how to continue providing services to the public during social distancing, are all pressing needs. But communications must be part of the immediate response to the COVID-19 crisis, or you run the risk of becoming invisible.

Stay Connected

If your organization doesn’t have a marketing or communications manager, appoint someone to take on the task during the pandemic. It’s essential to have a consistent and meaningful communications strategy. Discuss among crucial team members what messages you believe the public needs to hear during this time, and then develop a strategy and outreach program to share those messages.

Connect with key internal and external stakeholders:

  • Employees and volunteers: Use instant messenger, email, video conferencing, and phone calls to stay in touch. Make sure that your teams feel connected even though everyone works from home.
  • Donors and supporters: Send periodic messages to donors and supporters assuring them that your organization continues its work during the pandemic: update blog posts, social media, and other channels.

Tips for Sharing Information

During times of crisis, it’s essential to remain calm and focused. A sound communications strategy should be:

  • Focused: Stay on message. Don’t rush messages out without ensuring that they are accurate and verifiable.
  • Transparent: Keep key internal stakeholders updated on the messaging strategy and ensure they’ve reviewed messages before they go out. They may have advice or feedback to improve messages.
  • Multichannel: Don’t rely on one channel, such as email. Utilize all of the communications channels at your disposal, including social media, blogs, and snail-mail, if appropriate.

Tell People What You Are Doing Now to Help

Supporters of your organization want to know how you’re continuing to offer services during this time of crisis. Consider the many ways in which your organization is helping during the COVID-19 pandemic. These may be direct help (such as donating supplies to first-response workers) or they may be indirect help (such as working from home).

A few ways in which your organization may be helping to combat the COVID-19 epidemic:

  • Keeping employees and volunteers safe by asking everyone to work from home
  • Ensuring all employees keep their benefits even if you have to cut back on pay
  • Maintaining sanitary and clean conditions in offices and other spaces
  • Offering online resources, programs, and other virtual services
  • Other facts unique to your organization

Remember, share only what is relevant, verifiable, and factual. Avoid speculation and wishful thinking and stick to specifics.

During the COVID-19 epidemic, remaining silent or hesitating to communicate means losing valuable supporters. People do want to hear good news now. They want to know that their favorite nonprofits are still active and supporting the work that’s meaningful to them. For your good, and the good of others, communicate now with precision, accuracy, and thoughtfulness, and remain top of mind among your supporters.

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Fundraising During COVID-19

By | Fundraising | No Comments

If you’ve been hesitant to restart fundraising activities during COVID-19, there’s good and bad news. The good news is that it’s not in poor taste or tone-deaf to restart your organization’s fundraising activities during the pandemic. Although their attention is elsewhere, most people recognize that nonprofits still need money to continue their good work.

The bad news? In-person fundraising activities are canceled, at least for the foreseeable future, until scientists provide us with a vaccine, a cure, or both for COVID-19.

But take heart—even if you count on the annual silent auction or dinner-dance for most of your funds, you can switch to fundraising online. And, if your organization is also using technology to support its fundraising activities, you’re in an excellent position to continue operations.

What Do Donors Want?

Donors want two things: transparency and accountability.

According to the National Center for Charitable Statistics, there are over 1.5 million charitable organizations registered in the U.S. with the IRS. Nonprofits must work hard to secure donations when donors have so many choices.

Take steps to ensure that your organization’s activities are visible. Keep your website up to date as well as your social media channels. Use stories, case studies, and data to illustrate the work that you’re doing. A donor-centric approach to fundraising means putting your donor’s needs front and center. When you do this, all of your digital communications will be both accountable and transparent.

Keep in Touch Regularly

Some nonprofits fear that they send too many messages. In their quest for both transparency and accountability, their communications manager sends emails, newsletters, and direct mail to donors. How much is too much?

According to the Network for Good, 28% of recurring donors say that the best thing a nonprofit can do to keep them engaged is to send plenty of success stories and communications. Only 4% of respondents to their survey said that nonprofits send too much information. The same study says that 40% would like communications from their favorite nonprofits once or twice a month.

Keep the good news coming. Donors want to know what their favorite organizations have accomplished!

Doing Digital Donor Relations Right: 5 Must-Have Tools

There are many ways to keep in touch with donors. The following five digital communication tools can be used to support donor communications and outreach and ensure fundraising efforts remain consistent. You’re probably using many of these digital communication tools right now. Track, monitor, and measure the response to each, and use more of what works to improve digital fundraising and donor relations.

  1. Email: Emails are the most popular digital fundraising tool in use. Email ‘blasts’ or messages sent to your entire list with a fundraising appeal can be easily tracked and measured. A clear call to action or request to donate positioned prominently within the email can improve response rates.
  2. Blogs: A blog can be used to share stories and updates. Tools added to blogs can automatically send links from new posts out to your social media sites. Blogs are also useful for SEO or search engine optimization. Each time you publish a piece on your blog, it adds one more way for search engines to help people find your nonprofit, so consider the topics of your blog posts and the keyword phrases you select for the issue very carefully; and use free tools like Google Keyword Planner to assess potential traffic for a keyword phrase.
  3. Social media: Social media remains a popular medium to connect with the public. Use plenty of photos and keep profiles updated. Monitor social media channels for questions and respond promptly.
  4. Online giving pages: Specific pages on your site dedicated to encouraging online giving are a great way to use your site for fundraising.
  5. Mobile giving: Mobile giving is a text-to-donate method that enables people to text donations to your organization. The 2019 M + R Benchmarks Survey states that mobile fundraising has a 13% click-through rate, which is noticeably higher than other channels.

These are just a few ideas of how your organization can continue its fundraising activities right now. If you’ve been hesitant to ask for donations during the pandemic, when so many people are out of work or on partial pay due to social distancing, hesitate no longer. Many people remain employed, and loyal supporters want to hear from their favorite nonprofits. To remain silent is to be forgotten; stay top of mind by using digital technology.

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.