The Data Analytics Chain: A Primer for Accounting Professionals

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Accounting professionals are used to working with data. After all, they work with numbers all the time. And aren’t numbers just a form of data?

Numbers are indeed a form of data, but there’s much more to data and analytics than working with standard reports. Data has come a long way from the manual data collection and use that some may remember from years ago. Now the question becomes which data to collect, rather than if it can be collected.

The Data Analytics Process

The data analytics process is a loosely connected series of steps that collects, prepares, organizes, reports, and offers for analysis important data from your company. This data may take many forms. It may include financial data, but it may also include warehouse reports, time to completion, and other quantifiable facts.

Sources of data today abound in the workplace. Many companies utilize enterprise resource planning, or ERP systems, which are finance and accounting systems that gather data from various points through a company.

The data analytics process takes into account every step of the process from finding to utilizing data.

  1. Data Collection

The first step, data collection, may already be taking place within your organization. As an accountant or financial professional, your input into data collection is invaluable. You can identify valuable data within the organization or among its suppliers and vendors that should be tracked.

Take time to work with your team to identify and list all potential sources of data that would be useful to your data analytics process. This activity should also include “dark data.” Dark data is data your business has access to but may not know how to extract it from its source. Sources include competitor websites, government and state websites and data reports, PDFs, and similar public documents. Web scraper or technology that can extract data from such sources can add to your repository of data.

  1. Data Preparation

Data preparation includes profiling, cleaning, and correcting the data before it is used. You’re probably familiar with profiling and cleaning data. It’s not unusual for accountants to work with data files in this manner. What is unusual is the size of the newer data files. They are often too large to work with manually and instead must rely on automated processes to identify data duplicates or discrepancies and clean the files.

  1. Build Information Models

The information model is critical for the analysis phase. The model provides the details of the data to be stored in the data warehouse. If the information model is incomplete or inaccurate, it can lead to significant challenges and mistakes later on during the analysis phase.

This is the time to build and review information models with your team. Go through what-if scenarios to ensure the information you’ve collected is enough to fulfill needed situation analysis. If not, return to earlier steps to define and collect the appropriate data.

  1. Analytics

In the analytics phase, insights are developed and shared with key stakeholders. Many companies find that business intelligence tools, aligned and integrated with enterprise resource planning systems, enable the analytic phase to be completed quickly and easily. Business intelligence software prepares visual representations of data that, depending on the type of report and the data fields chosen for the report, may be more easily understood than pure data alone. Bar graphs, pie charts, scatterplots, and similar diagrams are examples of business intelligence reports that transform data into more easily understandable graphics.

Challenges and Opportunities

There are many challenges and opportunities available in the data analytics process. Being aware of various challenges in each step of the analysis process can help you avoid or overcome them.

Data has always provided accountants with powerful information. Now, more than ever, with access to so many software tools to gather and utilize data, accountants can provide useful and valuable insights to benefit others.

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.

Critical Issues Facing Nonprofit Boards

By | Accounting, Nonprofit | No Comments

Nonprofit boards have duties of care, loyalty, and obedience (or trust) to their organizations. How these duties are carried out may depend upon the organization and the work that the board completes, but it almost always spans important areas such as compliance and governance. The following critical issues facing nonprofit boards are sometimes overlooked in the wake of the COVID pandemic, but all are important to the long-term success of an organization.

Tax, Accounting, and Financial Compliance Issues

Even though nonprofits may have tax-exempt status, tax issues are still something that nonprofit boards must be knowledgeable about in order to manage effectively. Boards must be aware of:

  1. Unrelated business income tax: This is a tax imposed on a nonprofit that is not related to the nonprofit’s primary revenue-generating purpose. Boards must be aware of these activities and ensure that positions are well-documented.
  2. Worker classification: A critical compliance issue for nonprofits is the proper designation between employees and independent contractors. Under-counting employees by hiring (and treating) independent contractors as if they were employees can be a significant issue for nonprofits.
  3. Executive compensation: Executive compensation remains a hot-button issue for the public, and one that should be kept in mind by nonprofit boards as they review salary and compensation packages for executives.
  4. Financial reporting: boards are responsible for understanding the organization’s mission and ensuring that the organization’s funds are used appropriately. This means that, at a high level, funds are used to support the organization’s mission. Members must take the time to review financial information and understand the financial ramifications of major decisions.
  5. Clear documentation: Lastly, boards must note anywhere that audited financial statements are shared such as GuideStar and Charity Navigator. They should take care to add any financial disclosures or additional information that may be needed and to alert auditors of any known issues or needs pertaining to financial disclosures.
  6. Revenue recognition: FASB ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and ASU 2018-08, Clarifying the Scope and the Accounting Guidance for Contributions Received and Contributions Made, effective in 2018, should be reviewed by boards and understood to ensure consistent and careful compliance.

Nonprofit Governance Issues

Boards also must exercise a duty of care for governance issues. Some issues that may occur include:

  1. Conflicts of interest: Both perceived and actual conflicts of interest should be taken seriously and addressed. Perceived conflicts of interest can be just as harmful as actual ones, and may tarnish a nonprofit’s reputation and goodwill with the public.
  2. Form 990: IRS Form 990 poses good questions that the board members should consider when thinking about governance issues. It’s a useful document to help the board remember important governance issues.
  3. Strategy: Nonprofit boards are key drivers of organizational strategy. It is incumbent upon the board to work with chief executives to develop and drive the strategy and messaging for the organization. To do so ensures continuity of mission and message and helps position an organization effectively.

How Healthy Is Your Board?

Having a seat on a nonprofit board is an honor, but it is also a lot of hard work. Understanding the nonprofit environment, basic accounting and financial information, ensuring the bylaws and rules regarding the nonprofit’s operations and management are followed, and working with key staff members to position the organization for strong and steady growth is the equivalent of a full-time job.

But for board members who believe in the organization’s mission, it is a labor of love. How does your nonprofit board measure up?

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.

Three Ways in Which the Accounting Profession Is Changing

By | Accounting, Nonprofit | No Comments

If you’re a mid-career or senior accounting professional, you’ve seen many changes over the years to the accounting profession. Some of you may even have begun your career when computerized accounting was in its infancy; you used ledgers and calculators to match debits and credits. The changes to the profession over the past two or three decades have been astonishing, and the rapid pace at which changes continue to occur necessitates that accountants demonstrate curiosity, flexibility, and adaptability.

There are many ways in which the accounting profession is changing, but we’ve identified the following three as having major impacts upon the majority of accountants. Which do you see as the biggest changes in your work?

The Importance of Disclosing Non-Financial Information

Accountants have always been thought of as the “numbers people” – the professionals on the team that provide accurate information and insights into the numbers behind the organization.

Now, however, the public is no longer content with disclosure alone. Framing the disclosure of financial information and providing plenty of information about what, how, and why funds were spent at a nonprofit organization is essential to building trust with donors and supporters.

Working alongside marketing professionals, accountants are no longer responsible solely for the financial health of the organization. Now they must become advocates for the organization’s mission and help shape and frame the overarching story behind the financial information disclosed to the public.

Diversity, Equity, and Inclusion

Diversity, equity, and inclusion continue to be part of the current dialogue among business leaders. However, only 34 percent of business leaders identified in an Accenture report from 2020 are putting their organization’s efforts behind DE & I initiatives.

The sad truth is that although accountants perceive their profession as inclusive, minorities tend not to enter the accounting field at all.

According to the American Association of CPAs, African Americans and Hispanics make up only 4% of partners in accounting firms, yet represent 30% of the population. Caucasians hold 75% of the accounting positions and 90% of senior leadership positions in accounting firms. Howard University published a paper exploring why so few minorities enter the accounting profession. The sad truth is that both parents and educators tend to undervalue accounting as a career for their children, discouraging them from majoring in accounting in college.

The area of diversity, equity, and inclusion remains top of mind for most in America. Accountants should embrace this concept and strive to support diversity throughout their organizations.

One way in which accountants can lead the change in minority representation in the field is by working with their alma maters as mentors and speakers to incoming freshman. Those who are “undecided” majors may find that the accounting field holds just what they’ve been looking for in a career. Helping to mentor young people as they enter the early stages of their careers or encouraging minority high school students or college freshmen to choose accounting as their major is a great way to encourage diversity in the field.

New Technology

The third major shift in the accounting profession is the use and some might say reliance upon new technology for accountants to do their jobs. Productivity software is ubiquitous in every office, and most nonprofits use some form of fund accounting software to support their accounting and financial records. Additionally, other types of technology and software, such as browser-based or cloud software, have enabled remote work, near-instant updates of the accounting system, and seamless communications with other departments.

Mastering new technology is among an accountant’s many job duties today and is likely to continue to be an important task. Among the three, this is one area that is well within an accountant’s control. Most new technology now comes with excellent training and an abundance of online resources to help everyone using the system get the most from it.

The Future of Accounting

While the core concepts of accounting are unlikely to change, the tools with which accountants perform their jobs continues to evolve and change. If you are looking for a partner you can count on to update your technology, contact Welter Consulting.

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.



New Year, New Guidelines – 2021 Mileage, Retirement Plan Limits, and More

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It’s 2021, and we all hope this year brings health, happiness, and prosperity to all. With the new year comes new guidelines for many aspects of accounting, so let’s dive right into the changes, updates, and other information you’ll need for your business accounting.

CARES Act Rules

The CARES Act provided economic relief to American workers and healthcare workers during the coronavirus crisis. First passed in March, the act was intended to provide aid and economic support to workers negatively impacted by the COVID-19 crisis. Several components of the ACT provided direct financial aid as well as assistance to businesses and individuals.

Several elements are involved in the CARES Act relief bill, but the ones potentially impacting nonprofits and their employees include:

  • Penalty for early withdrawal of IRA funds is waived on up to $100,000 withdrawn for coronavirus reasons.
  • For nonitemizers, up to $300 of cash donations may be deducted.
  • For itemizers, deduct charitable contributions of up to100% of AGI (adjusted gross income).

Nonprofits should seek to educate their donors about these changes to encourage additional donations. The Journal of Accountancy provides a tax season preview that offers additional insights into various effects and impacts of the CARES Act.

Additional information is available from Welter Consulting on the provisions of the CARES act for nonprofit organizations.

Mileage Reimbursement Changes

The business mileage rate is 56 cents per mile. Business mileage is no longer deductible as an unreimbursed employee business expense. Charitable services rate is 14 cents per mile.

Retirement Plan Limits

The maximum employee 401K deferral remains at $19,500 with $6,500 additional “catch up” for employees age 50 and older. The overall plan limit moves from $57,000 to $58,000. The defined benefit plan maximum is at $230,000.

The Roth IRA contribution limit is $6,000 with an added $1,000 for “catch up” for 50 and over. The Roth IRA contribution limit phaseout (MAGI) is $196,000 to $206,000 for married, filing jointly, and $124,000 to $139,000 for single head of household. Married, filing separately ranges from 0 to $10,000.

The SEP minimum required compensation is $600. The compensation limit for determining maximum allowable contributions by employer is $285,000.

Social Security Changes

The Social Security Administration also published their set of guidelines for 2021. This includes the number of credits needed to accrue from time in the workforce to qualify for social security, and much more. All employees of nonprofit organizations must still pay into the social security system; working for a tax-exempt organization does not exempt individuals from paying taxes, including social security and Medicare taxes.

Looking for Additional Information?

The IRS now has an opt-in form for exempt organizations to sign up for their ongoing news briefs. Each news brief contains an update about new materials for exempt organizations and links to the IRS publication pertaining to the update. It’s a time-saving service for nonprofits and available directly on the IRS website.

As the new year progresses, stay informed of the latest news from the accountancy and tax world for nonprofits right here at 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.