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Accounting

Best Practices in Accounting Ethics

By | Accounting | No Comments

We often think of business ethics, but what about accounting ethics?

The International Ethics Standards Board for Accountants (IESBA) recently issued the International Code of Ethics for Professional Accountants (including International Independence Standards.) That’s quite a mouthful! In sum, it’s a document many accountants have been looking forward to, that will help guide ethics throughout the profession.

IESBA, the professional body behind the revised code of ethics, is often viewed as the standard-setter for the industry. Their recommendations often impact professional codes of ethics in both for-profit and not-for-profit accounting. Many professional groups, including accounting professional groups in the United States, review the accounting ethics recommendations and apply them in their specific recommendations.

The Updated Accounting Ethics: Old-Fashioned Ideas Applied to Modern Accounting

The revised IESBA international code focuses on several key areas of accounting ethics:

  1. Integrity
  2. Objectivity
  3. Professional conduct and the concept of “due care”
  4. Confidentiality
  5. Professional behavior

Throughout the revised code, IESBA stresses independence. Accountants must always be independent when performing audits, reviews, or other professional services. This ensures that accountants won’t be swayed by personal or professional ties to those who request their services. They can review facts and figures objectively and provide clear, unbiased guidance if they remain independent.

Third-Party Test

The revised code stresses independence and suggests the so-called ‘third party’ test to determine whether or not circumstances meet the test. For example, consider all appearance concerns when determining if a situation meets the third-party test. Is there any appearance of bias, conflict of interest, or personal ties to one’s work? Would a neutral third party, upon viewing the situation, agree that the relationship between accountant and client meets this test?

Only by keeping one’s work completely free of all biases and ties can accountants offer their best advice to clients. A nonprofit client, for example, depends on their accountant for unbiased audits that will eventually be published as part of their due diligence for potential donors. It’s important for all to ensure a fair, just and unbiased audit, but perhaps even more so for nonprofits who depend on public trust and goodwill.

Professional Conduct and Confidentiality

Like a doctor or lawyer, an accountant also has a duty to provide professional conduct, due care, and confidentiality. For clients, this means they can trust that their accountants will behave honorably with their private information. “Due care” means that care and attention will be applied to an accountant’s work, so that, to the best of their knowledge, their work has been completed to professional standards. Yes, mistakes may be made, but not intentionally. Accountants have a responsibility to their clients to keep abreast of new tax laws, accounting standards, and other changes that impact their business and that of their clients.

Lastly, accountants must maintain confidentiality over all records, information, and financial information provided by their clients. Confidentiality forms the backbone upon which accountants and clients build long-term relationships. It ensures that clients’ information is protected and secure from competitors and others who should not access it.

Accounting Ethics Ensure Consistency

The new accounting ethics published by IESBA ensure consistency in the accounting profession’s actions and behaviors worldwide. For accountants, it offers them a rubric from which they can build an independent practice that meets the needs of their clients. For clients, it provides peace of mind and establishes expectations of duties, responsibilities, and relationship frameworks. Accounting ethics are an integral part of the profession and the new ethics provided by IESBA make a big difference.

Welter Consulting

At Welter Consulting, we believe strongly in shared ethical frameworks that guide our work and our clients’ expectations of us. Our goal is to bridge people and technology together for practical 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.

National Defense Authorization Act Raises Micro-Purchase and Simplified Acquisition Thresholds

By | Accounting, Government, Nonprofit | No Comments

If you work with tribes or are part of a tribal government, you should closely follow the changes made to the National Defense Authorization Act. On June 30, 2018, the NDAA issued changes that  increased the minimum thresholds for micro purchases and simplified acquisition.  These changes impact many individuals and groups, as well as impact tribal governments.

Raising the minimum threshold should ease some of the reporting burden on those receiving federal funds.

What Are the Exact Changes?

  • The threshold for micro-purchases is increased from $3,500 to $10,000
  • The threshold for simplified acquisitions is increased from $100,000 to $250,000

What Should You Do?

Groups currently receiving federal awards, including tribal governments, may wish to immediately revise internal procurement policies so that they can implement the new thresholds.

Memorandum M-18-18 also outlines changes for institutes of higher learning, nonprofit research organizations, and independent research organizations that wish to use a micro-purchase threshold higher than $10,000.

Specific Recommendations

There are some specific recommendations that can help you follow the new guidelines as stated in M-18-18.

  • Micro-purchase: You should include purchases when the aggregate dollar amount does not exceed $10,000. It may be helpful to distribute micro-purchases fairly among qualified suppliers if you can. You don’t need competitive quotes if management determines that the price is reasonable. Document a definition of how you define ‘reasonable’ prices so that you have something to reference to confirm your choices.
  • Small purchases: You can use simplified acquisitions for the purchase of property services that do not exceed an establish amount pursuant to 200.88 in the Uniform Guidance. This also includes purchases up to $250,000 according to M-18-18. Informal purchasing procedures are acceptable under the guidelines, but you should always obtain several price or rate quotes before making your choice. This is just good business practice that will also help you comply with the new requirements.
  • Sealed bids: Large projects, such as construction projects, commonly exceed $150,000. A formal RFP or bid solicitation process is required. The fixed price, lump sum, or unit price should be awarded to the best bidder who conforms to all the material terms and provides the best price.
  • Competitive bids and proposals: A formal bidding or solicitation process is required. Competitive bids and proposals covers purchases over $150,000. Fixed-price or cost-reimbursement contracts, as well as a formal bid process, should be used when sealed bids aren’t appropriate or warranted. Awarding the contract should be based on the quality of the program with price being one, not the only, factor.
  • Sole source: You can only use the sole source designation when specific criteria is met. The criteria includes:
    • The product or service is only available from a single source – no one else offers what you need
    • There is a public emergency, and the fastest or best way to handle the emergency is to buy from one source
    • Federal warding agency authorization, or the awarding agency specifically authorizes a non-competitive procurement. This is usually after a written request from the non-federal entity.
    • There’s not enough or inadequate competition after you’ve asked for bids from multiple sources.

Can you request an even higher threshold than these new amounts? Yes, but with a catch. You’ll need to request approval from your institution’s appropriate Federal agency for indirect cost amounts. They will then assign you to the appropriate office inside the agency who can approve the new amount and maintain records indicating compliance with the new amount. It’s also a good idea to keep records on your own to support any moves you make when it comes to micro-purchases.

The world of nonprofit accounting is always changing, and new thresholds and guidelines like these are important to understand and follow. Welter Consulting can help you if you have any questions about these guidelines or other nonprofit accounting and software needs.

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.

5 Tips to Squeeze More Life Out of Your Nonprofit Accounting Software

By | Accounting, Accounting Software, Data, Fiscal, MIP Fund Accounting, Nonprofit | No Comments

With more and more nonprofits embracing fund accounting as a strategy for growth, combined with the ever-changing reporting requirements from fund agencies, getting the most from your technology investment makes its way to the top of the priority list. Organizations need to be proactive when maximizing the returns on fund accounting investment.

Find out if you have you outgrown your accounting software by conducting a software review.

Start with a thorough review of your system’s processes. Next, conduct an in-depth analysis of the chart of accounts’ structure and financial statement formatting as they relate to supporting the organization’s reporting and tracking requirements. Finally, talk with your staff and key stakeholders  who use the system to find out what’s working, and what’s not.

The revelations may surprise you.The results of these three steps will create a roadmap to refresh your system.

Don’t have time for a thorough system review? There are some steps you can take right now to expedite your system and get more life out of it.

  1. Re-order chart of accounts. Remove unused segment values to make data entry and reporting more logical.
  2. Clean up and archive. Start with the Accounts Payable vendor and Accounts Receivable customer rosters, then tackle the register histories. This will speed up the system while reducing staff time sifting through obsolete information.
  3. Close, optimize, or delete old fiscal years. This will expedite report generation and system inquiries.
  4. Identify additional modules that can create efficiencies for staff. Contact your technology consultant to learn about modules that can be added to automate manual tasks like spreadsheet schedules, purchasing and reconciliations.
  5. Train & Re-Train. You can’t learn all there is to know during your initial software training session. Underutilized modules that your team revisits can streamline processes significantly.

Welter Consulting helps nonprofits get more out of their accounting software. We find the most affordable technology, the most powerful solution, and providing expert support. We are dedicated to assist you in achieving your mission by leveraging technology and superior reporting. If you’re needing technology help, we’d love to talk to you about your specific needs.  Contact us online or call 206-605-3113.

Managing Millennials: The Myths, the Realities, and Somewhere In Between

By | Accounting, Millennials, Nonprofit, Technology | No Comments

Ah, millennials…you either love them or loathe them. However, you won’t be able to avoid them for long. That’s because millennials, defined roughly as those born between 1977 and 1995, represent the largest demographic ever, even outstripping the famous Baby Boom of the 1960s.

Millennials carry with them a lot of baggage, especially in the realm of workplace myths. For example, some myths that surround millennials are that they’re good with technology, independent, and lazy.

The truth is, of course, that some millennials fall into this categorization and others are defying it. Here are the facts about managing millennials and how older generation X and Y leaders can ensure a happy, productive workplace when managing millennials.

 First Job, New Skills

Although millennials may like to work independently and may work best on their own, they still need coaching. Many millennials skipped over the afterschool jobs that older generations experienced, and they went straight from high school to college and college to careers without having any workplace experience.

Ringing sales at the local department store or slinging burgers at a fast food restaurant may not seem to correlate to working in the accounting department of a nonprofit. However, those minimum wage jobs that many older generation workers experienced as their first jobs taught valuable life skills that millennials never experienced. Showing up on time, learning customer service skills, and learning processes and procedures may not have been part of their life experience.

Do not assume that just because your new junior accountant has a college degree she understands how to work in a group, take direction, or follow procedures. She may need coaching on basic workforce behaviors. Set expectations and provide clear guidelines.

Pairing an experienced worker with your new millennial hires may also help. They may resonate with the partner or buddy system better than formal training programs and get more out of it.

Basic things like: how to dress for a business meeting, how to behave in a corporate setting, and even the importance of returning messages on time may all be new skills for your millennial employees. Take nothing for granted and consider them a clean slate with a lot to learn until they prove otherwise. They aren’t being rude; they just haven’t been taught a lot of the basics that older generations assume were learned along the way.

Millennials Are Loyal

One myth that we’d like to put aside is the myth that millennials are disloyal. The truth is that they can be loyal employees if the organizations they work for treat them right. To a millennial, that means appropriate work-life balance, challenging assignments, and valuing input. Millennials will remain at a nonprofit organization for three years or longer if they find their ideas, opinions, and talents are honored and used appropriately.

Tech-Dependent

Lastly, there’s a myth that millennials are tech-savvy. In actually, they are tech-dependent, and that’s a whole different story. Tech-dependent means they rely upon their devices to the point that they feel they can’t work without them. We may feel we can’t leave the house without our watch; they feel they can’t leave the house without their iPhone.

Millennials may not be technically savvy: Meaning that they may not be able to solve computer problems, understand how to integrate an API into the back end of an accounting program, or any of the myriad other technical problems we encounter in our work days. They do, however, know how to use their devices and rely upon them for many basic things.

Consider this when communicating with millennials. They may turn to their text messages first rather than their office phone lines for messages. They may rely upon instant messages, texts, emojis or other methods of communicating rather than picking up the phone and speaking directly to you. It’s not that they don’t value direct communication. It’s just not their first inclination.

Every generation interacts differently in the workforce. We are all, to some extent, molded and shaped by the life experiences and culture we grew up in. Millennials are no different. Understanding their rationale, knowing where they have knowledge gaps, and meeting them halfway goes a long way towards helping them acclimate into your workforce and becoming productive contributors.

 

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.