Accounting Excellence: What Nonprofits Can Learn from Accounting Firms

Measuring Practice Excellence

Before looking at the results, it’s important to understand how Karbon conducted their study. They measured practice excellence across “four pillars”: strategy, efficiency, growth, and management. The four pillars are then further subdivided into a total of 12 areas that the firm explored in 20-minute telephone surveys with participants. The resulting interviews were distilled into the findings of the report.

Efficiency Drives Success

The main finding throughout the entire study was that improving efficiency drives success for accounting firms. Firms that prioritized efficiency were also the most successful. These companies embraced new technologies, and by doing so, improved operations. The resulting improvements carried over well beyond the pandemic.

There’s also a strong correlation between focusing on business process improvements and overall practice excellence. The study found a 71% correlation between Business Process Excellence and Practice Excellence scores. Accounting firms that spent time examining and improving business processes made improvements across their entire company, resulting in higher scores in Practice Excellence.

Closing the Talent Gap

We’ve written many times about the talent shortage in the accounting profession and how companies, as well as the AICPA, are addressing this gap. Another important finding from the Karbon report is that accounting firms that were intentional about closing the talent gap were more successful than their peers who did not take steps to find, recruit, train, and manage talented people. Factors that improved talent management and retention among successful accounting firms included a thorough onboarding process, searching for candidates with higher emotional intelligence scores and attributes, effective meeting management, and 360-degree performance reviews. It is worth noting that managing meetings effectively is an integral part of the overall talent management cycle. It may be inferred that “meeting creep” (i.e., too many meetings, unfocused meetings, unproductive meetings) exhausts talented people. Or at least that’s what we think!

Adopting the Right Technology Is Critical for Efficiency

Among the many findings in the report, one thing stands out: adopting the right technology is crucial to support efficiency and practice excellence.

The “right” technology differs among firms, of course. A large accounting firm with multiple offices needs a different system than a nonprofit or a government accounting department. Matching accounting software with an organization’s needs is a crucial factor in driving success.

The study found three types of software supported practice success:

• Business intelligence 
• Practice management 
• Communication 

Each type of software supports excellence in different ways:

• Business intelligence software enables companies to measure performance through visualizations that are often easier to read than standard reports.
• Practice management software helps accounting firms centralize workflows and streamline operations.
• Communication tools enable secure real-time messaging.

Key Takeaways for Nonprofits

At Welter Consulting, we help nonprofits find solutions that work for their unique needs. Our key takeaways for clients, based on the Karbon report, are that the right software, matched with the right client, does wonders to improve performance and drive excellence.

Nonprofit accounting software can help nonprofits transition from spreadsheets or general-purpose small business software to nonprofit-specific platforms that support their unique accounting needs. Such software enables program-specific metrics tracking, can integrate with donor and grant software, and supports many of the efficiencies cited in the paper as drivers of practice excellence. Talent management software also supports recruiting and training talented individuals, a challenge that nonprofits often face.

As the Karbon report indicates, accounting firms that not only survived the pandemic but thrived afterwards focused on improving efficiencies. They did this by examining and enhancing business practices, improving talent management, and adopting the right software. Nonprofits can learn from this example and adopt these ideas to further improve their own operations and accounting groups.

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.