Category

Accounting

Apr 16
0

Can’t Find Internal Auditors? You’re Not Alone

By | Accounting, Audit, Nonprofit | No Comments

If you can’t seem to find internal auditors with some experience for mid-level career positions, you’re not alone, and you’re not imagining the scarcity in the marketplace. There’s a shortage of internal auditors with 5 to 10 years of experience. Worse, many organizations are dissatisfied with the skills of their existing internal audit team.

What’s behind this problem and how can it be addressed?

The Current Situation: Few Are Happy with Current Situation

A study released by Deloitte sheds light on the situation. According to the results of the study, just 13% of Chief Audit Executives are very satisfied with the skills of their current audit team. More than half responding to the study expressed outright dissatisfaction with their teams. How can this be?

We could blame poor leadership, but there are some wonderful CAEs out there, and many organizations have strong leadership, yet weak teams. The real problem lies in the fact that there are few university-level programs that educate people for the internal auditing profession.

Most internal audit professionals begin their careers with a general accounting or finance degree. They end up specializing in the internal audit function by accident. A job opening appears and they take it, entering the audit department as junior level members.

When they reach the mid-career stage, however, many either leave the audit team or seek jobs elsewhere. This leaves a gap within the mid-level ranks.

The trail to the audit team is also one that is not well known to most college graduates. Many graduates with degrees in accounting and business look for work in the for-profit sector. The internal audit function is a relatively hidden profession within the larger sphere of accounting that many might be attracted to if they only knew it existed.

The Remedy: How Can We Encourage More and Better Internal Auditors?

The problem seems clear enough: lack of a formal education pathway into the professional and a lack of clear progression in a career path once established. Lack of awareness for the job’s many interesting facets is also part of the problem.

To remedy this situation, nonprofits might consider the following steps:

  • Recognize that the internal audit department provides a valuable and important function in your organization: Ensure that everyone knows the importance of internal audits and why they aren’t just checks and balances for finances, but are viewed as a valuable aspect of business development. The internal audit function can help nonprofits successfully analyze their finances and plan better for development. They are a vital, integral part of the finance and accounting teams.
  • Support professional development: Offer professional development to your existing internal audit staff. More than half of internal auditors surveyed by the Institute of Internal Auditors, for example, admitted that they lacked training in cyber security, a growing threat to nonprofit organizations. Such training is relatively easy to find online or through many organizations and could bolster your nonprofit’s ability to defend against attacks. These and other professional development opportunities could help your current auditing team feel engaged and motivated, both of which reduce employee turnover and improve retention rates.
  • Talk to undergraduates: Consider contacting the chairs of the local business colleges and ask if you can address business and accounting students on career day or in their accounting classes to share with them what the internal audit function is like and why there are so many opportunities for young, smart graduates in the field. Someone out there may just need a nudge in the nonprofit direction to find a rewarding career as an internal auditor, but they won’t know the career path exists until it is shared.

These are just a few of the steps you might wish to take to help improve the situation among internal audit teams at your own nonprofit and to support the profession in general.

Internal auditors provide so much assistance to a nonprofit, that it’s hard to imagine an organization without them.  Yes, the shortage of mid-career talent is real, but we can do so much more to fix that problem then we are doing now. With the right steps, we could improve the situation and help more people enter the field.

Welter Consulting, Your Bridge to Solutions

Navigating the many options available to you for technology resources can be tricky. There’s always something else tugging at you for attention. Where do you start? How do you decide?

Welter Consulting offers a bridge to solutions that work 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.

 

Mar 26
0

12 Steps to Improve Internal Controls

By | Accounting, Audit, Fraud, Internal Controls, MIP Fund Accounting, Nonprofit | No Comments

There’s no better time than now to review and analyze your organization’s internal controls. We’ve broken up the intimidating task of updating and maintaining proper internal controls while being slightly more focused and productive, with these 12 simple yet necessary steps.

Step 1: Map out your current processes and workflows. Detail out internal accounting procedures with a simple step-by-step checklist or list of rules. Clearly identify how long each step of authorization should take to process.

Step 2: Identify clear separation of duties. Open your workflow documentation back up and assign owners for each procedure, and other process owners who may be involved in authorizations, approvals, or reviews.

Step 3: Bring in an outside expert to review your current processes. Leverage outside expertise like certified fraud examiners (CFEs) or attorneys specialized in evaluating and improving internal controls. They can help identify any gaps or vulnerabilities.

Step 4: Find a new home for your documentation. You’ll want to maintain documentation of your processes in a commonly-used location that is easily accessible by staff. It will need to be continually updated as needs shift throughout the year.

Step 5: Review security permissions in your fund accounting system. Your technology should fully support your desired workflows encompassing your separation of duties. Update your security settings to limit system access, based on defined roles and security groups.

Step 6: Set up monitoring alerts. Ideally, your fund accounting system can be set up with active monitoring alerts to quickly notify other staff about key activities, such as when checks are printed, but not recorded, or vendor hold payment status is changed.

Step 7: Create a digital audit file. Here you’ll organize and maintain artifacts for future audits, including bank statements and reconciliations, investment summaries, fixed asset and depreciation schedules, documentation of donor pledges and grant funds received, and year-end accounts payable and expenses.

Step 8: Update your employee onboarding. Now that your documentation is up to date, you’ll need to update your new employee onboarding to reflect the changes. It’s important to promote a shared commitment of financial responsibility from the start with a new employee.

Step 9: Set a reoccurring monthly budget review. The budget is not just a planning tool – this is a key internal control. Schedule monthly budget reviews for reconciliation, explaining variances to the budget keeps proper checks and balances across departments.

Step 10: Recruit for an audit committee. You’ll want to institute a strong audit committee of independent members (typically from the board) who are familiar with finance and accounting. They should select and review the independent external auditors and help monitor for fraud.

Step 11: Schedule an internal audit. The best prepared organizations perform internal audits to ensure key control activities are being followed, and to identify any reconciliation discrepancies. Find an appropriate time for your team and stick to the date.

Step 12: Set up quarterly staff trainings. You must reinforce your controls with periodic trainings. Take the time now to get these on the calendar and build into the agenda time to discuss any shifting accounting standards for which you may need to adjust.

Remember, the objective of internal controls is to put “checks and balances” in place to help manage and preserve the charitable assets of the organization. It builds a foundation of policies and procedures that ensures employees act responsibly and ethically and prepares the organization for expected scrutiny (for example, audits and budget reviews) and tough to predict events (for example, staff turnover).

Here are a few resources to help you implement the 12 Steps to Better Internal Controls:

 

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.

Mar 12
0

5 Tips for Effective Mentoring

By | Accounting, Mentoring, Nonprofit | No Comments

Mentors play an important role in our lives. From the coaches who taught us to draw from the strength within to the parents, relatives neighbors, friends and teachers who believed in us when we didn’t believe in ourselves, mentors change lives.

So why aren’t business people talking more about mentoring? Part of the reason is that we often think of mentors as something we only need when we first embark on our careers. We think that college students need mentors, not seasoned professionals. Thus, we may inadvertently miss opportunities both to be mentored and to mentor others.

What makes an effective mentor? Here are a few key takeaways on what effective mentoring looks like and how you can give and receive mentorship to others.

Mutual respect: For mentoring to be effective, there must be a feeling of mutual respect between the mentor and the mentee. Mentors must respect the personal space and boundaries of the people they are mentoring, and mentees must respect the wisdom, experience, and boundaries of the mentor.

  1. Accountability: Mentors aren’t just cheerleaders urging you on with praise. Instead, they hold you accountable to your goals and your talents. They know what you are capable of before you know it and they encourage you to stretch to reach higher goals. They call you on the carpet when you fail to live up to your promises.
  2. Trust: The mentoring role involves a great deal of trust. Mentors often trust mentees to take on greater responsibilities. Business leaders may assign tasks and goals to subordinates they are mentoring that feel like they are impossible to achieve, and then guide and encourage mentees to reach those goals. There’s a great deal of trust involved in this process since failure may mean a negative reflection on the mentor. In return, the mentee must trust the mentor’s wisdom in assigning, delegating, and evaluating their work.
  3. Generosity: The mentoring role is one of generosity. Mentors must generously share their time, talents, and feedback with those they are mentoring. You can’t be stingy and be a mentor.
  4. Encouragement: Mentors need to be unfailingly positive, encouraging even in the face of adversity or stumbling blocks. While a Pollyanna mindset isn’t desirable, an optimistic one tinted with reality is the best direction for a mentor.

Other key takeaways include:

  • Mirroring the good in the mentee and reflecting back what is right, true, smart and strong.
  • Teaching new skills and guiding mentees to their strengths.
  • Maturing, in that the mentor has walked the road before the mentee and knows that setbacks are temporary and can be overcome.
  • Positivity, an enduring sense that things will work out for the best.

Finding a Mentor

Given the value of the mentoring relationship, and the fact that mentoring can be a lifelong process, how do you find a mentor as an adult? As a child, teenager or young adult in the business world, mentors seem to come out of nowhere. A favorite teacher, grandparent, neighbor, coach steps into the role easily and naturally, and before we know it, we are learning and growing.

As a professional in the nonprofit world, it can be challenging (but not impossible) to find a mentor. Senior-level executives may find mentors through formal business organizations, nonprofit organizations, or among peer groups.

Reach out to your junior members and provide opportunities for growth and professional development. Slowly build up trust by allowing them to lead projects that increasingly stretch their talents and comfort zones. Guide, teach, and lead, but do not dictate; allow the person’s talents to grow at their own pace.

Keep in mind the concepts of mirror and positivity. Mirroring back the positives and reflecting back the good work without ignoring the mistakes is also an important part of mentoring.

Mentoring can be a lifelong event, one that enriches and supports personal and professional growth. Your organization will benefit from a culture that embraces mentoring and the role of mentors in the 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 Welter Consulting at 206-605-3113 for more information.

Mar 05
0

Financial Audits Improve Nonprofit Operations

By | Abila, Accounting, Audit, Data, MIP Fund Accounting, Nonprofit | No Comments

Are you getting the most from your nonprofit’s annual audit? Financial audits aren’t just a necessary exercise to meet the requirements for keeping your nonprofit organization’s status or to please donors and board members. They provide valuable, useful information that can help you improve many areas of your organization.

A study conducted by Deloitte and reprinted in the Journal of Accountancy surveyed 300 executives and 100 members of audit committees nationwide. Their findings point to the usefulness of audits as a business evaluation tool.

  • 79% of executives and 91% of audit committee members agree that financial audits help them identify opportunities to improve business performance;
  • 46% of executives and 62% of the audit committee members believe that audits helped them identify business issues that they might have missed without the audit information;
  • Companies that review and utilize audit information achieved strong growth over a three to five year period (as noted by self-observation.)

Clearly, there is value not just in the audit process itself but in the use of the audit findings for analysis of current operations,

Quality Counts When It Comes to Choosing an Auditor

Throughout the survey, respondents cited the quality of the audit as a key element of a useful business improvement tool later on. A good-quality audit starts with selecting an auditing firm with experience helping nonprofits both through the auditing process and to improve later on.

Audits can provide more than information into the company’s financial state. They can provide market and industry comparisons and analysis. Process analysis, identification of gaps and potential for improvement can also be part of the audit findings. Each of these elements provides an item that can be used as a springboard for action later.

When selecting an auditing firm, look for one with experience working in the nonprofit world. It may also be helpful to find a company that provides more than auditing services. Business consulting, nonprofit consulting, and other related services offered by the auditors mean that they can infuse additional insights into the audit process and continue working with your nonprofit after the audit to implement the changes that you wish to make.

Data and Analytics

Another new area in which nonprofits are finding useful information is the data and analytics that are derived from the audit. Many aspects of a nonprofit’s business can be analyzed. Examining items such as expenses like leases, long-term contracts and expenditures can reveal places in which money can be saved. Long-term donor patterns, grant analysis, and areas where the nonprofit’s work has shifted over the years may also be revealed from an analysis of data patterns found within the audit and the nonprofit’s financial statements.

It takes a special auditor to be able to analyze and detect such patterns. If you aren’t looking for them or for places from which you can derive such information, it can easily be overlooked. Again, choosing an auditor with the insight and experience in the nonprofit world to assist you with your business improvements it the key to success.

Are You Using Your Audit Information?

Are you using all of the information that can be obtained from your most recent audit? According to the previously mentioned Deloitte study, about 35% of the nonprofits responding to the study rarely or never use the information obtained through the audit for improvement. Talk about a missed opportunity!

Why aren’t they using the information? Approximately 48% percent of executives surveyed state that they do not have a process in place to use the information post-audit.

Therein lies the key – process. Develop a process now to use the information obtained from this year’s audit to improve your nonprofit. Begin now to find an auditor who can partner with you to develop a series of action items for follow up. Put in place the teams, groups, committees or leaders within your company who will be accountable for following up on the audit information.

By using these techniques, you can use the annual audit as both a financial document and the start of process improvement.

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.