Monthly Archives

June 2026

Jun 29
0

Preparing for a Retirement Plan Audit (It’s Not as Bad as It Sounds)

By | Accounting, Audit, Nonprofit | No Comments

The word “audit” generally has unpleasant connotations, but frankly, nonprofits should be used to the term by now! Most nonprofits work with independent auditing firms to ensure compliance with accounting and other rules, and third-party audits build trust with donors. Other audits may be conducted, for example, by the state employment commission to ensure compliance with workers’ compensation laws and payments. Each of these audits focuses on a different aspect of your business, and none of them indicate something is wrong – they are just part of doing business as a nonprofit organization.

There’s another type of audit you may not be as familiar with, especially if your organization is small: a 401K or retirement plan audit. The Department of Labor (DOL) requires organizations to file an annual Form 5500, which reports on the plan’s financial condition.

blurred image of keyboard with crowd of people with an overlay of the word audit and symbols to support the idea

Plan sponsors with fewer than 120 employees participating in the program at the start of the year can file a short Form 5500 and generally do not require an audit. However, once your organization has 121 employees participating in the retirement plan at the start of the year, the longer form must be used, and this automatically triggers an audit.

Who Conducts the Audit and When Is It Due??

If your organization must conduct an audit, you are responsible for hiring an independent accountant or accounting firm to complete the retirement plan audit. Form 5500 is due on the last day of the seventh month of the plan year. The plan sponsor may file for an extension if necessary.

Who Participates in the Audit and What Do They Do?

Generally, the plan administrator or sponsor, recordkeeper, and custodian all participate. Each must provide all required records and answer questions. The investment advisor should also attend, as this professional’s guidance directly impacts the fund. Lastly, the auditor will, of course, lead the audit and work with all participants to gather and analyze the necessary plan records.

How Audits Unfold

A thorough audit can take several months, so it’s best to contact the independent accountant several months before the actual audit is due. The auditor provides a list of documents necessary for the audit, and the plan sponsor and other participants gather and send the documents to the auditor. The auditor then reviews the documents. They may have questions or need clarification on certain items. After they complete their review, they prepare financial statements and the final audit report.

Documents Needed

Many documents are needed to successfully complete a retirement plan audit. These include, but are not limited to:

  • Current IRS letter
  • All plan documents
  • 401K administrative meeting minutes
  • Rollover, distribution, and loan reports that detail transactions by participants
  • Participant Account Summaries
  • Statements of Net Assets Available for Benefits and Statement of Changes to Net Assets Available for Benefits 
  • Draft Form 5500
  • IRC Compliance Testing Results
  • An employee census with details of the plan participants

A second set of documents may be requested. This includes a sample of the employee participants and may require Form I-9, detailed payroll and reporting records or stubs, termination records, and requests for transactions.

Once the audit is complete, you will receive the report and documentation needed to complete your filing.

Audits, Just Part of Running a Nonprofit

Audits can require significant time and effort to gather the necessary documents, but they provide a valuable service. Not only will your audit report help ensure compliance with retirement plan requirements, but the detailed findings and report can be a valuable tool for improvement. With the right approach and planning, your retirement plan audit can go smoothly and will become just another annual milestone for your growing nonprofit.

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 us for more information.

Jun 26
0

Use Scenario Planning to Build a Strong, Healthy Budget

By | Accounting, Budget, Nonprofit | No Comments

We’re in a period of volatile federal funding and delayed reimbursements right now. The current administration’s push to tighten purse strings and cut waste and fraud has led to a slowdown in available funds, some of which nonprofits rely upon for their work. Add to this the rising costs of everything, inflation, and the decline in donor giving, and you’ve got many organizations feeling nervous about their financial future.

Instead of feeling nervous, feel prepared and ready to face the future with a strong budget forecast that takes these factors into account. Forecasting is the bedrock upon which solid nonprofit organizations are built. How do you accomplish this? With scenario planning. By using what-if scenarios, you can build budget forecasts that take into consideration the most likely situations your organization can encounter.

people in office using scenario planning

What Is Scenario Planning?

Scenario planning goes by many names: worst-case scenario, tabletop exercises, and what-if planning. All of this means using an imaginary, possible situation to think through your organization’s response. When it comes to budgeting, consider the most likely situations, and build your what-if scenarios against them.

For example, an education nonprofit may face the following what-if scenarios:

What if …

  • Our largest donor decides to give his money elsewhere?
  • The grants that cover our programs are not funded next year?
  • The large contract we have with the state is rebid, and we lose the RFP?

Other scenarios are possible, so brainstorm them with your team to identify the most likely your nonprofit may face. Perhaps it’s staff attrition or the need to move your operation to a new location. These and other scenarios all significantly impact budgeting and should be addressed as part of your what-if scenario budgeting.

For each of these scenarios, building a budget in response to “it happens” will help you anticipate and prepare for the worst-case scenario. If it doesn’t happen, you’ll have a rock-solid budget. If it does happen, you’ll be prepared and know what to do.

Budgeting Strategies to Address Uncertainty

Uncertainty is always with us. Smart budgeting strategies can make you feel more confident about navigating the future and what it holds for your organization.

Spend Less

It’s obvious, but something many organizations are reluctant to do is spend less. See where you can cut expenses. Ask managers to review their department budgets and find ways to reduce expenses. Even small efforts add up to a stronger financial position over time.

Adjust Staffing Levels

Some organizations find that they must adjust staffing levels to improve their financial health. Budgeting for the future may involve adjusting staffing levels, such as a temporary moratorium on adding new positions, or deciding not to fill vacancies if someone voluntarily leaves.

Shift Fundraising Efforts

Many organizations shift fundraising efforts to broaden visibility and donor engagement. Look for ways to move from uncertain funding to more certain opportunities, such as finding additional donors if your organization relies on one or two large donors, grants, or foundations.

Use Technology to Improve Forecasting

Nonprofit organizations can also tap into their existing technology to improve forecasting or look to new nonprofit accounting systems for better forecasting support. Integrating your donor relations (CRM) platform with your nonprofit accounting system ensures that data flows between the two systems, reducing manual errors and saving you time.

Many nonprofit accounting systems, such as Sage Intacct, offer AI-enabled shortcuts and time savers within the platform. You might not need to invest in new software. Explore how to get more from your existing platform.

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 us for more information.

Jun 24
0

Encouraging Diversity in the Accounting Profession

By | Accounting, Corporate Culture, Nonprofit | No Comments

For several years, we’ve written about the current and expected shortage of senior-level accounting professionals. This accounting employment crisis may get worse before it gets better, especially for nonprofits seeking to attract and retain top talent. And, while we have talked about neurodiversity and how to accommodate neurodiverse individuals, we haven’t talked about the elephant in the room everyone is tiptoeing around: the lack of diversity in the accounting profession.

Try it. Ask several people to tell you what they think an accountant looks like. Chances are good it’s a middle-aged white man in a gray suit seated behind a desk. He’s Mr. Bland or Mr. Everyman.

diverse group of people working together

But he’s not really Mr. Everyman, is he? He represents just a small fraction of the rich diversity of people on this planet: the black, the white, the brown-skinned, and others. And of course, he represents only 50% of people, since there are many amazing female accountants as well. I’m one of them.

Unfortunately, diversity and inclusion in the accounting profession is lacking. And, until we examine what causes it, and take conscious steps to fix it, we’re going to keep finding Mr. Bland behind the desk…covering six jobs, because there won’t be enough accountants to fill the vacancies.

The Accounting Profession’s Talent Shortage

The AICPA 2025 trends report found that there was a 12.4% increase in the number of accounting students; however, the year before, there was a 6.6% decline in graduates compared to prior years. This suggests that some progress has been made to increase the number of newcomers to the profession, but we still have work to do.

What more should we do? Should we go to college and career nights, handing out flyers and extolling the glories of debits and credits?

Although that could be fun (and just might convince one or two people to give the accounting major a second look), colleges typically spend time and effort recruiting for “hot” careers and majors. STEM careers get a lot of attention, but accounting is often included among business school majors and is not pushed as much as other mathematics-based professions.

Hidden Biases Keeping People Out

However, no amount of college night guest speakers will encourage people to enter the profession if they don’t feel welcome. Diversity and equity programs are winding down, often to the detriment of hiring practices. Many people feel that accounting is a profession dominated by white males (Mr. Bland, anyone?). It’s a hidden bias that can keep many talented young people from declaring an accounting major and progressing in a field that rewards talent and hard work.

Inclusion goes beyond the college experience. CPA Journal reports that students often felt corporate internship experiences were uncomfortable due to the lack of diversity among other corporate accountants. Feeling out of place, like you don’t belong, is often the motivation to change jobs or professions. The more people feel included and valued, the more likely they are to remain and contribute.

The Way Forward

I don’t have a magic wand to fix the accounting profession, although sometimes I wish I did. Instead, I’d like to offer a few words of encouragement to students considering a career in accounting.

First, this is a stable career. AI is offering great efficiencies, but a smart accountant must be behind the keyboard working with AI to get things done the right way. There will always be room for newcomers to this profession, with a good career path forward, advancement opportunities, and significant income potential.

Next, we need to consider diversity and inclusion in your hiring practices. Yes, DEI mandates were sunsetted by the current administration. That doesn’t mean you can’t encourage your hiring managers to be inclusive and seek candidates with diverse backgrounds and experience. It’s up to you, as leaders of your organizations, to speak to your HR department if you don’t see that happening and encourage them to include more diverse candidates in the hiring pool.

Build a truly inclusive culture at your organization. Provide visible role models for newcomers to the profession. Be welcoming, not just with words, but also with your actions.

We may not be able to solve the national talent shortage, but we can solve cultural problems within our own organizations. By helping people feel welcome, giving them a place at the table, and encouraging them to use their gifts, we can improve retention rates and make a dent in the accounting talent shortage.

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 us for more information.

Jun 01
0

Protecting Your Organization from Cybercrime – The Latest Update

By | Accounting, cyber security, Nonprofit | No Comments

Cyberattacks are up 40% globally in 2026. Nonprofits aren’t immune to the threat; they are also experiencing an uptick in cybercrime. Both large and small organizations have been hurt by cyberattacks. According to U.C. Berkeley’s Center for Long-Term Cybersecurity, a hunger relief nonprofit in Philadelphia lost $1 million to a cyberattack; the International Red Cross experienced the theft of personal data for over 500,000 people it had served.

While you may think your nonprofit is too small to be affected, criminals know that smaller nonprofits are less likely to have robust cybersecurity controls and training in place to guard against attacks. It doesn’t take much to get beyond people’s defenses if they haven’t been trained to watch for threats.

We recommend taking several steps to protect against cybercrime. Just as you make sure you lock the doors of your office each night to keep robbers out, you must also lock the “digital door” to prevent cybercrime. These tips will help.

Evaluate Your Cyber Defense Strategy

Take time now to evaluate your organization’s cyber defenses. These include:

  • Routine updates for software
  • Special antivirus software
  • Training for all personnel to recognize, avoid, and respond to threats
  • Cyber security response plans
  • Cyber liability insurance

Keep All Software Updated

Attackers find and exploit vulnerabilities in existing software. This includes operating systems (Microsoft Windows, Mac OS), applications (Word, Excel, others), and websites. Companies issue updates and patches once these vulnerabilities are known. Keeping all your software up to date prevents many attacks from succeeding by closing loopholes in system code.

Invest in Anti-Virus Software

Sure, your PC might come with Microsoft Defender installed. Or you might find free antivirus software online. But these programs come with limitations. Experts agree that installing an extra layer of protection, an antivirus software package, adds another layer of protection.

Many companies offer antivirus software, including McAfee, Norton, Sentinel One, and others. Check reviews and prices and discuss with your IT consultant which one might work best for your organization.

Fortunately, if you use cloud-based nonprofit accounting and other cloud-based systems, they typically include all updates and update automatically.

Train Your Personnel to Recognize Cyberattacks

While software can help ward against attacks, the best defenders in your organization are your employees. Most cybercrimes happen because people make mistakes. They click on bad links or respond to phishing texts. They download infected software. They inadvertently reveal passwords or answers to security questions that can be used to access accounts.

Create a training plan to help everyone in your organization remain vigilant against phishing and other cyberattacks. This isn’t a once-and-done training; it should be held regularly to keep the information fresh in everyone’s minds. Provide concrete examples of what attacks might look like, and ensure people know the approved process for activities such as downloading software, resetting passwords, and accessing systems.

Cybersecurity Response Plans

Do you have a cybersecurity response plan? Such plans provide your team with guidelines in the event of a cyber breach. For example, what if antivirus software flags a file they just downloaded as infected—do they know how to quarantine and who to report it to?

Working with a nonprofit consultant or your IT director, develop what-if scenarios. Document the steps you’d like your team to take if they believe a data breach or cyber-attack has occurred. Be sure to update these plans annually and include them in your team training.

Purchase Cyber Liability Insurance

Along with workers’ compensation and general liability insurance, smart organizations also purchase cyber insurance. This insurance provides protection against data breaches and cyberattacks. Costs and coverage vary widely, so speak with your insurance agent to determine the package that suits your risk level and needs.

Prevent Cyberattacks Before They Happen

The old adage, “An ounce of prevention is worth a pound of cure,” is definitely true when it comes to cybercrime. No matter how small your organization is, you’re a target. AI has made it easier than ever for criminals to launch campaigns, and they work hard to personalize them to make them seem real. Take steps now to protect your organization.

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 us for more information.