Category

Accounting

Jun 19
0

Finding and Supporting the Next Generation of Accountants

By | Accounting, Nonprofit | No Comments
accountant at laptop computer

We’ve written about the anticipated shortage of accountants many times. Fewer college students are graduating with accounting degrees, and among those who are, fewer still become CPAs. There are ways to mitigate against the possible shortage of accounting talent, such as embracing automation, technology, and AI efficiencies, but no amount of tech will substitute for the skills of a good accountant or CPA.

That’s why we celebrated the recent steps that the AICPA has taken to address the possible shortage of accounting talent. Here are all the things they’re doing to help prepare the profession for the future.

The AICPA Pipeline Acceleration Plan

The AICPA Pipeline Acceleration Plan addresses the ongoing talent shortage in the accounting profession by implementing targeted initiatives at various stages of the CPA pipeline. The plan focuses on increasing awareness, improving perceptions of accounting careers, enhancing education and training, and fostering diversity and inclusion.

Highlights of the plan include:

  • Career paths in accounting: CPAs share their career journeys with students, highlighting the daily challenges they face and encouraging them to explore various career paths.
  • Addressing stereotypes: Books, movies, and television often portray CPAs as nerdy and unattractive. By directly confronting these stereotypes, CPAs can offer students a realistic view of the CPA profession that challenges and dispels stereotypes.
  • Interactive sessions: Another way in which CPAs are encouraging students to consider accounting careers is through direct interactive sessions. Career days or classroom visits within their local community can encourage students to ask questions and to consider accounting careers.

Experience, Learn & Earn (ELE) Program

Launched in 2023, this program provides students with paid work experience while earning affordable college credit hours. It is designed to help candidates meet the 150-hour CPA licensure requirement without excessive financial burden. The program goal is to increase both access to and the affordability of the CPA license requirement.

STEM Recognition for Accounting

STEM fields encompass science, technology, engineering, and mathematics. The AICPA is advocating for accounting to be classified as a STEM field, which would allow K-12 STEM grant funding to support accounting education and improve access for underrepresented students. The organization is actively seeking bipartisan support to allow K-12 STEM grant funding for accounting education, as well as adding six accounting degrees to the government’s list of STEM degrees.

Accounting Opportunities Experience

CPAs are also stepping into the classroom to share their experience with students. Part of the AICPA outreach includes the “Accounting Opportunity Experience,” in which CPAs participate in career awareness events at local high schools. Through direct, personal community outreach, these CPAs are introducing a new generation to the profession.

Firm Culture & Business Models

The plan encourages firms to offer competitive salaries, career advancement opportunities, and flexible work environments to attract and retain talent.

The AICPA is working with stakeholders, including state CPA societies, academia, and accounting firms, to implement these strategies and strengthen the profession’s talent pipeline.

What You Can Do

While the AICPA is doing its part, you can do yours as well. Encourage the young people in your life to consider a career in accounting. Teens often view accounting as boring. Help them explore the many ways in which accounting contributes to society and business, including specialties such as nonprofit accounting, forensic accounting, tax accounting, and more. Students often form an impression of a career from television or movies, and there’s so much more to any field than what is depicted in their favorite shows.

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.

May 21
0

Why Your Nonprofit Needs a Financial Risk Assessment

By | Accounting, Accounting Software, Budget, Nonprofit | No Comments
person at desk with notebook, pen, and laptop and graphs showing high/low waves for risk assessment

A financial risk assessment is an annual audit of many areas of your organization’s financial preparedness and stability. Such an assessment looks at many areas of your company, including the overall management, human resources, facilities, finances, accounting, sales, information systems, and more. Here is why a financial risk assessment is vital for a healthy nonprofit.

The Purpose of a Financial Risk Assessment

Everything in life involves risk. That includes running a nonprofit. A financial risk assessment examines the current state of your business and identifies potential risks. It’s only after identifying risks that you can take action to address them.

You can conduct your own financial risk assessment; however, many find that obtaining outside assistance from their CPA, a nonprofit consultant, or another similar professional is helpful. Often, we are too close to our own business to see potential risks clearly. An outside perspective can cut through the familiarity of the everyday and see the gaps that we often miss.

Benefits of a Risk Assessment

A financial risk assessment provides many benefits to nonprofits by enhancing their overall operations and safeguarding their missions. It helps organizations identify potential risks, such as fraud or inefficiencies, ensuring that their funds and resources are managed effectively to achieve their goals. By addressing these vulnerabilities early, nonprofits can streamline their operations and make better use of their resources.

Conducting regular financial risk assessments builds trust among donors, board members, and the community. It demonstrates a commitment to sound financial practices, which can attract and retain long-term supporters. Additionally, these assessments ensure that nonprofits comply with legal and regulatory requirements, minimizing the risk of penalties or reputational damage.

Finally, a financial risk assessment equips nonprofits to navigate uncertainties like economic shifts or changes in funding sources. By preparing for these challenges, organizations can maintain their focus on their mission and continue to deliver meaningful impact.

Costs of Avoiding a Risk Assessment

Perhaps you’re thinking, “This is all well and good, but we’re so busy! We just don’t have time to stop and do a comprehensive assessment.”

Do you have time to address a big risk, like a cyber-attack? What about a trip and fall accident because you haven’t assessed the risk of a worn carpet in your reception area?

It’s like owning a car—do you ignore the knock in the engine until the car breaks down, or do you take it to a mechanic to get it checked out?

The costs of avoiding a financial risk assessment may include:

  • Mistakes in the balance sheet, such as liabilities not properly recorded or other mistakes that can muddy the financial picture, can be time-consuming to fix later.
  • Failing to conduct a physical inventory on a regular basis can lead to adjustments, negative equity, and other problems.
  • Missing or poor internal controls can lead to employee theft or mismanaged funds.

There are many more areas where failing to conduct a risk assessment can lead to problems. As you can see, it’s always better to prevent problems than to spend time later fixing them.

Other Benefits of a Risk Assessment

Other than avoiding scary problems, there are many more benefits derived from conducting a comprehensive risk assessment. The assessment can help you build your strategy, setting the stage for thoughtful decisions about where to invest for risk mitigation and where to step out in growth. It may also uncover untapped potential and lead to productive discussions about how your organization can expand.

Start Now

Don’t wait until the end of the year planning to conduct your assessment. You can start now. Pick one department or area of the company, such as finance or operations, and come up with a list of questions. Ask yourself what is working, what isn’t working, and what may be improved.

This is where working with an outside consultant can help. We’re happy to discuss your plan of action and the next steps for financial risk assessment and management.

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.

Apr 24
0

Best Practices for Nonprofit Excellence, Part 2: Finances and Fundraising

By | Accounting, Fundraising, Fundraising Software, Nonprofit | No Comments
meeting with a person up front talking to others seated at table, finances and fundraising

Welcome to Part 2 of our series of best practices for nonprofit excellence—finances and fundraising. Without enough margin, you won’t be able to fulfill your organization’s mission. That’s why learning about the best practices in finance and fundraising goes hand in hand, because it’s not just money in (fundraising) but managing that money (finance) that ensures a robust budget for a nonprofit.

Nonprofit Financial Management Best Practices

Donors, members, and granting institutions have entrusted funds to your organization so that it may carry out its mission. These gifts represent trust – trust in your nonprofit, its management team, employees, volunteers, and board. To win and keep this trust, you must use nonprofit financial management best practices.

Budgeting

Of course, you are using best practices for budgets, including updating the budget periodically. The board should review the annual budget and discuss any questions or concerns with leadership. It’s important that the board fully understands how the organization derived its numbers and how the expenditures relate to achieving program—or organization-wide goals.

Internal Controls

Another financial management best practice is to ensure the organization has good internal controls in place. These controls involve implementing measures such as segregation of duties, where different individuals handle recording, approving, and reconciling transactions to prevent errors and fraud. Nonprofits should also establish clear policies for financial authorization, requiring approvals for significant transactions to maintain accountability.

Regular reconciliations of financial records, such as bank statements, with internal accounts help identify discrepancies early. Additionally, conducting periodic audits—both internal and external—can ensure adherence to established policies and uncover potential issues. By safeguarding assets, maintaining accurate financial records, and upholding industry standards, nonprofits can foster stakeholder trust and effectively pursue their mission.

Financial Management Software

Another best practice is to have good nonprofit accounting software. This system can save a great deal of time and effort by accurately tracking revenue, expenses, payroll, and more. The reporting features found in nonprofit accounting software also make it easy to generate reports you can share with the board and donors for clear and transparent communications. If you’re currently managing your finances using spreadsheets or small business software, you’ll find switching to nonprofit accounting software like night and day in terms of its efficiency and usefulness. Adopting nonprofit accounting software is definitely a best practice to incorporate into your organization.

Fundraising Best Practices

There’s more to fundraising than promotion. Fundraising should also include processes, procedures, and guidelines about how funds are raised, acceptable contributions, and how to handle gifts in kind.

Transparency and Accountability in Fundraising

A few years ago, several nonprofits made the news for high overhead spending. Their overhead and fundraising costs seemed to the public like an extravagance. However, the public’s negative reaction was probably based more on lack of transparency than on expenditures. Always be transparent with the public about your expenses: share reports and updates with the board, donors, members, and the public. This level of accountability demonstrates a high degree of trustworthiness as well as good financial stewardship.

Pay Your Fundraisers

If your organization subcontracts fundraising to an external person or company, always pay them a reasonable fee. Do not offer a percentage of money raised as their payment. It is considered a best practice to pay directly for these services rather than to ask the subcontractor to take a percentage of the gross.

Monitor Fundraising Practices

One best practice often overlooked among nonprofits is to monitor fundraising activities and ensure that you follow all the required rules and regulations for your state. These vary according to where your nonprofit is registered, so take time to understand them. For example, in Washington state, if you are using a commercial fundraiser, the relationship must be disclosed in your fundraising materials. Fundraisers must also follow additional requirements for phone solicitations, mass distributions, and collection containers or vending machines to ensure accountability and compliance with state regulations.

Ready to Implement Best Practices?

It may seem overwhelming to read articles like Part 1 and Part 2 in our series and see so many areas for improvement. Every organization has some areas to improve. Choose your starting point on the area that will experience the greatest impact from the changes. Whether it’s improving transparency with the public about your expenditures or exploring nonprofit accounting software, making big changes starts with today’s small step. 

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.

Apr 22
0

Best Practices for Nonprofit Excellence, Part 1: Governance and Accountability

By | Accounting, Nonprofit | No Comments
person at laptop and holding a tablet - nonprofit and other for overlay, finance and accountability

Welcome to the first in a two-part series where we will examine best practices for nonprofit excellence. In our first article, we’ll look at governance and accountability. Then, in Part 2, we’ll examine Financial Management and Fundraising.

Governance and Accountability Best Practices

Nonprofit boards of directors are stewards and guides of the organization’s direction and finances. They set policy and should actively support the organization’s mission by approving adequate funding, providing direct oversight to leadership, and evaluating the effectiveness of the organization’s programs and how well these programs achieve its mission.

Choose Board Members Carefully

However, the effectiveness of a board depends upon its members. There are several best practices for developing strong, effective, committed nonprofit boards. These practices include recruiting board members who reflect the constituency you serve. While the entire board may not be a perfect reflection of your constituency, it should at least reflect the majority of the people you serve.

You should also strive to find board members who are as deeply committed to your mission as you are. Board members should have a passion for your organization’s work.

Board Responsibilities

Board members should have a comprehensive understanding of their roles and responsibilities to the organization and the public. This can be achieved by providing a clear set of expectations and responsibilities, access to bylaws, articles, and other key organizational documents, an introduction to the organization’s work, and continuous opportunities to engage in discussions and review their duties.

Members must also fully comprehend their legal and fiduciary responsibilities, ensuring the effective execution of their duties in key areas. These include strategic planning, policy approval and periodic review, annual evaluation of the executive director’s performance and compensation, succession planning, determination of compensation structures, preparation of annual budgets and revenue plans, oversight of financial procedures, management of risks, and compliance with nonprofit financial filings and regulations.

Governance Frameworks

Boards should convene at least six meetings annually and expect regular attendance from members. A consistent meeting schedule helps board members remain actively engaged and accountable for their responsibilities. Term limits on board participation encourage a healthy influx of new ideas and perspectives. 

Boards should adopt practices that maximize participation, including providing accommodations for remote or electronic participation during meetings, deliberations, or decision-making. 

Committees are an important part of governance. A committee structure enables a board to function effectively by creating smaller working groups with specific goals. 

Choose your board chair carefully. This person presides over meetings, oversees committees, and ensures all board members have access to the documents and materials they need to be effective. Like a good CEO or president, board chairs must be good leaders and communicators, able to run effective meetings, gain consensus among members, and listen to differences of opinion. 

Accountability

Lastly, as part of governance and accountability, ensure that your organization follows best practices related to compliance with laws and regulations. For example, filing IRS Form 990 and the organization’s annual report is an essential part of nonprofit compliance.

Your organization is accountable to more than just the IRS. It’s accountable to its donors, members, or constituents. Ensuring that annual reports, audited financial statements, and other reports of how your organization manages its finances and achieves its mission are also part of nonprofit best practices. Prioritizing donor communication is a best practice worth following. 

Next: Financial and Fundraising Best Practice Ideas

We hope you enjoyed Part 1 of this series. Next up, we’ll share financial management and fundraising best practice ideas. 

For more fresh ideas and best practices to implement at your organization, subscribe to our newsletter or read our blog.

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.