Category

Accounting

Mar 12
0

Tips to Choose the Right Auditor for Your Organization

By | Accounting, Audit, CPA, Nonprofit | No Comments
auditor working at desk with spreadsheets, computers, and calculator

The right auditor is much more than a CPA. Auditors provide valuable guidance and ensure donors, members, and constituents trust that your organization is a good steward of their finances. These tips will help you find the right auditor for your needs who is both well-versed in nonprofits and a good cultural fit for your organization.

Find Potential CPA Firms

The first step is to find potential CPA firms who provide auditing services. You can look online for local firms or ask other nonprofits who they use and like. Your employees may also suggest companies or individuals with whom they have worked in the past.

It is vitally important to find an auditor who specializes in nonprofits. Nonprofit accounting has unique requirements and regulations, such as fund accounting and compliance with IRS Form 990. A CPA familiar with these aspects can ensure accurate financial reporting and adherence to relevant laws.

CPAs with nonprofit experience can also provide valuable insights and recommendations tailored to the organization’s unique financial situation. This can include guidance on improving internal controls, financial management, and strategic planning.

Lastly, because nonprofits are subject to various regulations and compliance requirements. A knowledgeable CPA can help navigate these complexities, reduce non-compliance risk, and identify potential issues before they become significant problems.

Develop Questions

To ensure that you have an apples-to-apples comparison of CPA firms after you’ve completed your research, develop a set of questions to ask each firm. This approach is similar to a request for proposal (RFP) process. Consider your organization’s needs. Some potential questions may include:

  • Can you provide references? May I contact them?
  • Who will I be working with?
  • Do you work on site, or do you need remote access to materials?
  • What is the typical audit process your firm uses?
  • What can I expect during the audit?
  • What do you provide me with afterwards? How long will it take?
  • How much does it cost?

Depending on your needs, you may also have other questions to add to this list.

Consider a Formal Request for Proposal

A request for proposal (RFP) is a formal document issued to multiple possible vendors. It outlines your organization’s background, the project you have available, and the scope of work. It also includes a due date for the project and response requirements, such as references or case studies demonstrating experience with previous projects.

Responses are written following the outline given to vendors in the scope of work. The resulting documents help compare the relevant credentials of all potential CPA firms. Because the RFP requires all responses to be written in the same format, following identical guidelines, the results provide an apples-to-apples comparison among respondents, allowing you to sift through what makes one stand out above the others.

Gather all the responses, whether through a formal RFP process or a sit-down meeting with questions. Then, meet with your team and consider the answers. Your final selection should weigh all factors, including the firm’s relevant experience, assessing its approach, and comparing prices.

Consider Cultural Fit

Lastly, consider the cultural fit of the CPA with your organization. The best credentialed expert will not be effective if you feel intimidated or rushed when you work with them. Look for someone with whom you feel good rapport, a CPA who communicates clearly, who listens patiently, and who isn’t afraid to answer questions.

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.

Feb 18
0

Budgets Evolve, and That’s Okay

By | Accounting, Accounting Software, Budget, Nonprofit | No Comments
Budgets Evolve, and That’s Okay

It’s a strange but true statement: your budget will never be “right.” You’ll be over budgeted on some items and under-resourced on others. Predicted income will exceed expectations, or there will be a shortfall. Unexpected expenses mount on specific projects.

And all of this is okay. Budgets evolve, and that’s not only okay, it’s also expected. Here’s why budgeting should be viewed more as a business planning activity and less a “once and done” accounting function. Thinking strategically about budgeting and planning and working all year long with your budget as a business tool, will help your organization thrive.

Budgeting as a Business Planning Activity

Many people think of budgets as the purview of the accounting department. The best budgeting process, however, is collaborative. Program managers should work with the accounting team to analyze their budgets. The ensuing discussion around budget items should encourage reflection and analysis about program activities, focusing on those that support the organization’s mission and margin-generating activities.

For example, as you plan the annual budget, you may find that some program activities performed below expectations. Reviewing the data together, accounting and program leaders can decide if continuing the program makes sense or whether it should be changed in some way. Sitting down together to review the budget opens the door to important conversations that can lead to significant improvements. This reflection process is a healthy part of business planning and goes beyond financial planning.

Best Practices for Nonprofit Budgets

Budgets are “living documents.” This means that they grow and change over time. A good budgeting process allows for flexibility. Part of sound budgeting practices is regularly checking budgets and updating them based on the available data.

Here are some best practices for checking and updating nonprofit budgets:

  1. Regular Review: Schedule regular budget reviews with program areas, such as monthly or quarterly reviews, to compare actual income and expenses against the budget. This helps identify any discrepancies and allows for timely adjustments.
  2. Adjust for Changes: Be flexible and ready to amend the budget as needed. Financial positions can change throughout the year, so it’s important to update the budget to reflect new realities.
  3. Track Cash Flow: Monitor cash flow closely to ensure the organization has enough funds to cover expenses. This includes tracking both incoming and outgoing cash.
  4. Use Technology: Utilize budgeting software and tools to streamline the process and improve accuracy. These tools can help automate calculations and provide real-time data.
  5. Document Assumptions: Clearly document the assumptions made during the budgeting process. This helps with understanding the basis of the budget and makes it easier to explain any variances.
  6. Plan for Contingencies: Include contingency plans in the budget to account for unexpected expenses or changes in funding. This ensures the organization is prepared for any financial surprises.
  7. Communicate Regularly: Keep open lines of communication with all stakeholders about the budget status and any changes. Transparency helps build trust and ensures everyone is on the same page.

By following these best practices, nonprofits can maintain a healthy financial position and effectively manage their resources.

As you can see, budgets aren’t once and done. They evolve. Frequent feedback, adjustments, and discussions allow for much-needed planning and flexibility that helps an organization succeed.

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.

Feb 14
0

Using Data and Analytics to Improve CFO Decision-Making

By | Accounting, Accounting Software, Nonprofit | No Comments
Using Data and Analytics to Improve CFO Decision-Making

The CFO’s role is constantly evolving, with an increasing reliance upon data for decision-making. CFOs have always been data-driven, using economic and organizational data to shape their recommendations. However, with the advent of advanced technology, including nonprofit accounting systems, integrated donor and grant management portals, AI enhancements, and other enhancements, CFOs now have many resources at their fingertips for data-driven decision-making. Here are some factors impacting data use for CFOs, as well as various tools and platforms that enable better data use. 

The Continuing Accounting Talent Shortage

We’ve written before about the accounting talent shortage. Fewer people are choosing accounting majors in college, shrinking the available resources pool. With fewer junior-level accountants entering the workforce, there are fewer people rising through the ranks to the CFO chair. Kiplinger calls it the “graying” of the accounting workforce as the more seasoned professionals reach retirement age, with insufficient young recruits to replace them. 

Even though it is becoming harder to fill vacancies in the accounting department, newer technologies are filling some of the gaps. Automation tools built into existing accounting systems can route approvals, invoices, and reminders efficiently, saving a great deal of time. AI enhancements are also able to find information quickly thanks to AI’s inherent ability to parse large quantities of data. And many modern accounting platforms have robust reporting capabilities, which enable the CFO to generate much-needed reports without exporting data and manipulating it in spreadsheets. Although each of these time-savers seems small in comparison to the workload of a CFO, they add up, making it easier to gather data and derive useful information from it. 

Unified Systems for 360-Degree Visibility

Unified or integrated systems are necessary for today’s data-driven nonprofit. Systems that ‘talk’ to one another can share data across platforms to provide users with 360-degree visibility into their data. Consider a nonprofit accounting system that exchanges data with customer and donor relationship management software, grant and funding software, and similar platforms. The reports generated through such systems contain rich, robust data that significantly improves decision-making. 

Of all the tools in the CFO’s arsenal, having data visibility and integrated systems is the key to using data wisely and making data-driven decisions. When systems are integrated, they provide robust reports that CFOs can analyze to make decisions. Instead of generating separate reports from multiple systems and comparing them manually, or extracting data and manipulating it in spreadsheets, the CFO can access data quickly and efficiently. 

Managing Risk Through Data

CFOs must assess risk to the organization’s financial health. But this can be challenging without accurate and timely data. Newer technologies including cloud platforms ensure that system data is accurate and timely. Integrating these systems with other data points, such as economic, demographic, and other forecasts, provide the enhancements that CFOs need to assess risk and develop appropriate what-if scenarios and recommendations. 

Leveraging Technology for Better Decision-Making

As you can see, technology is the key to improving efficiency and clarity with which CFOs can make decisions. Data flowing freely through integrated systems ensures that the CFO has the insight and transparency needed to make data-based decisions. The right systems, adequately integrated, make this possible. 

What if the right systems are lacking? Then, planning, budgeting, and exploring new technologies should be on the organization’s task list for the new year. CFOs must have accurate, timely, and complete data to make decisions crucial for an organization’s success. This is another reason CFOs must be part of the selection committee for new software. Not only are many decisions made with the data captured by the software, but the software itself can help CFOs in their role as analysts, planners, and forecasters. 

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.

Jan 22
0

Improve Your Expense Management This Year

By | Accounting, Nonprofit, Technology | No Comments
person at laptop computer using Expense Management software

The expenses related to a nonprofit’s budget rarely come from one big item. Instead, small expenses often accrue, resulting in a significant financial drain on revenues. Surprisingly, these small expenses are often technology expenses: site licenses, cloud SaaS platforms, and smaller apps or programs used by only a handful of people. If reducing expenses is one of your goals this year, examining your technology expenses should be the first step to improving expense management.

The Hidden Costs of Technology

We often discuss how cloud-based software is more cost-effective than site-based systems and frequently recommend cloud accounting programs to our clients. Yes, these platforms are often more cost-effective for the average nonprofit than investing in site-based systems and the accompanying hardware and personnel needed to manage them. However, hidden expenses can arise. Here’s what to look for:

Align Technology Expenses with Organizational Goals

Conduct an annual review of existing technology expenses and compare them to the organization’s plans for the upcoming year. All technology expenses should support business goals in some way. If they do not, discuss with current system users why they need the software. Can their needs be accommodated by using another system so that you can sunset one and its related expenses? You will need to take this case-by-case, but any systems that do not currently support organizational goals and objectives should be evaluated.

Audit Recurring Software Expenses

Recurring software expenses are often a significant expense. Those small, sneaky annual fees can quickly add up to quite a large expense. Many examples abound of recurring software expenses: photo editing software, social media automation, and apps that perform single functions. Perhaps these were needed last year for a project but are no longer necessary today. The accounting team should conduct an annual audit of all recurring expenses and discuss with users whether they are still needed. You may save considerable money by canceling unused software or app licensing fees.

Check Site Licenses

Another technology expense that, if it is not monitored, can quickly add up is licensing fees. Some software companies charge by the user; for example, 1-5 users incur a certain charge, 5-10 users another charge, etc. Or you pay for each individual. If your staff has changed over the past year, you must check each license to see if you can drop to a lower tier or retire individual licenses.

Where NOT to Cut Expenses

Trying to eke out another year or two from existing hardware is tempting. However, hardware such as computers, laptops, networking equipment, and mainframes often have a limited ‘shelf life’ as established by the manufacturer. Check with your managed services provider or IT department and follow their recommended replacement schedule. It is not smart to wait until things break before replacing them. When it comes to hardware, replacing aging equipment before it completely fails can prevent bigger issues, such as lost data, time, or productivity.

Other technology expenses that you probably shouldn’t trim include cybersecurity licenses, such as anti-virus software and patches, and updates or upgrades to existing technology. Support for Windows 10, for example, will end on October 14, 2025. This means that Microsoft will no longer provide security updates or patches after that date. Your systems may be vulnerable to attack if you do not upgrade to Windows 11. It is “penny wise and pound foolish,” as the old saying goes, to delay this upgrade, for a cyberattack can be stressful and costly – and possibly prevented by simply having the latest operating system on your organization’s computers.

There are more places where you probably shouldn’t cut technology expenses. However, by carefully evaluating your existing software needs, recurring expenses, and site licenses, you may be able to reduce your organization’s technology expenses significantly.

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.