Category

Nonprofit

Nov 06
0

Accounting and Project Management: Two Unlikely Allies

By | Accounting, Grant Management, HR, Nonprofit, Uncategorized | No Comments

As an accounting professional, you know that you play an important role in your organization. Your team can help your organization achieve its goals more effectively by  working alongside project managers.

Project managers may be part of the marketing, creative services, information technology or any other department. Their job is to organize, guide, and as the name implies, manage a project from start to finish, ensuring that timelines, milestones, and budgets are met.

As you can imagine, accounting can best partner on the budget side of projects, however, accounting teams can help project managers with so much more. Here’s how the two can become unlikely but powerful allies to build organizational efficiency.

The Accounting Team Knows How It’s Done

Accounting teams have a special knack for understanding the workflow within an organization. Chalk it up to knowing where the money flows in and out, but the accounting team can be the organizational experts on who does what, when and how.

That information is essential for project managers struggling to align processes and people with project goals and milestones. The accounting staff understand the risks, controls, and other details that can help projects move smoothly through the organization. They know how work gets done internally and can guide project managers around any potential obstacles.

Project Management Methodology

Accountants who wish to add value to the project management team must, however, learn the language and methodology of successful project management.

Projects are mapped with a specific workflow in mind. There is a beginning,a middle (or milestones to reach), and a stated goal which marks the end.

The overall project map can be called a charter or project plan. Accountanting professionals, used to managing risk, can add value to the creation of a project plan or charter by objectively identifying potential risks from their unique perspective.  This can help the project managercorrect any faulty assumptions and keep projects on track.

Accounting Participates from the Start

Another helpful hint: Participate in project plans from the start. Don’t wait until the project is near completion and the project manager needs help finding additional funds in the budget to complete it. You can add the greatest value to a project by working alongside the project team from the start to advise on process and budgets.  Instead of coming in at the last minute, your guidance is essential near the project kickoff, in the middle when the project may need changes or additions, as well as with final budgeting.

Tips to Manage Project Risks

Accountants are risk managers. To add your greatest strength to the project management process, use these tips to help manage risks.

  • Help the project manager at the beginning of a project.
  • Stay involved with the project. Attend meetings of the project team and review any documents, emails or other materials promptly.
  • Ask questions like an auditor. Key stakeholders in project meetings can help identify the most important project milestones that deserve focus.
  • Be aware of workload dips and spikes, and accommodate the crunch periods with additional help.
  • Identify project scope creep, or when the work moves outside of the intended project. Gently guide it back into scope with the help of the project manager.

By asking the right questions and using your talents and strengths  in managing financial accounts, you can become a valuable ally and asset to the project management team in your 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.

Oct 30
0

How Important Are Internal Controls for Nonprofits?

By | Accounting, Audit, Nonprofit | No Comments

An office clerk “borrowing” money from the office petty cash is a classic example of why internal controls are necessary. How easy would it be for an office clerk to “borrow” a few dollars for her morning coffee?  What internal controls are in place so that this cannot happen?  One answer to this illustration is is to have someone who does not handle petty cash  conduct random and monthly audits of the petty cash box and keep records of the cash and receipt amounts.  If a large amount of petty cash is kept, it would be an added safeguard to audit petty cash with another person just in case the cash comes up short.

A wise person once said that locks just keep honest people honest. The same is true for internal controls.

A publication by the Virginia Society of Certified Public Accountants explains that good internal controls are essential to:

  • Prevent loss through errors, misappropriation of funds, or theft
  • Prevent an “honest” employee from making a mistake that can ruin his or her life
  • Document the responsibility of the board as it safeguards the assets of the NPO
  • Assure that all transactions are properly authorized and recorded

While seemingly time consuming, the simple act of having two people present during the petty cash audit protects both employees and assets – a distinct advantage of using adequate internal controls.

Internal Controls Defined

The National Council of Nonprofits defines internal controls as financial management practices systematically used to prevent misuse and misappropriation of assets, such as occurs through theft or embezzlement.  Internal controls protect not just assets but reputations as well.   It is critical for nonprofit organizations to maintain the highest integrity and ethical standards  in orderto attract and retain funders.

The objective of internal controls is to put “checks and balances” in place to protect the assets of the organization.

What Can Go Wrong

Any discussion of the most important internal controls for nonprofits Should be prefaced by answering the question,  , “Just consider what can go wrong.”

I scoured the internet to find examples of what can go wrong with weak or non-existent internal controls.  The following stories are true and could happen to you.

Scenario:  Cash – MIA (Missing In Action)

Suppose checks are merely kept in the bottom drawer of a file cabinet.  An enterprising employee might take a few checks from the bottom of the stack, forge a signature, and cash them, stealing thousands of dollars before being caught.

Internal Control Solution:  Secure the checks with keys held by two different financial managers. Ensure that bank reconciliations are performed by staff with no access to deposits or withdrawals.  Bank reconciliation should be prepared on a monthly basis, at minimum.

Scenario:  Employee Alert

A clever payroll employee adds overtime hours to pay himself or herself at time and-a-half.

Internal Control Solution:  Timecards should be signed by managers. A second person compares the payroll totals to signed timecards.

Scenario:  Sad but True Fundraiser Fiasco

During a fundraiser, a volunteer handled all aspects of the cash ticket sales, including depositing funds and reconciling the bank statement.  Occasionally short on cash, she would borrow funds and then pay them back….until she didn’t pay them back.  This well-meaning volunteer “borrowed” around $10,000.  The event intended to be financed by the fundraiser  had to be cancelled.

Internal Control Solution: Anytime cash is involved, the responsibilities should be divided among several people.  At least two people should be present when cash is counted.  Separate people should make the deposits and reconcile bank statements.

Closing Thoughts

Internal controls should be clearly documented in a procedural manual and authorized by the board or governing authority of the organization.  Discovery of theft or embezzlement and the resulting investigation is hard on the organization internally, and the external damage to the organization’s reputation can cause loss of funding.  Additionally, bonding insurance premiums could skyrocket, especially if it could have been prevented by using good internal controls.

Establishing internal controls protects the organization and the board members, officers, and staff.  For more comprehensive reading, Abila has created “Internal Controls for Nonprofits: Best Practice Principles, Policies, and Procedures.”

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.

Oct 23
0

Improve Your Nonprofit Legal Knowledge and Practice

By | Nonprofit | No Comments

Have you heard anyone in your organization say something like this?

“Google Images is a great place to find pictures.”

“We’re a nonprofit so it’s okay to send out letters asking for donations, and promising that they are tax deductible.”

Since, as in the statements cited above, there is misinformation in the workplace, it is important to gain some basic legal knowledge applicable to the nonprofit sector. Even though you run a nonprofit organization, it is still vital to conform to the law for all matters pertaining to incorporation, taxes, donations, intellectual property and more.

A new free paper called “Let’s Go Legal” offers nonprofit organizations guidance in these and other matters to help them follow the law  in all their operations. Reading and understanding this paper is a good first step to help improve your organization’s compliance with federal, state, and local laws.

Non-Profit Law Is Complicated

Since non-profit law is complicated, it is to ensure you receive professional guidance on legal issues.

Even non-profit organizations, should still be run like corporations, requiring the completion. of paperwork to maintain your corporate status annually. Once a non-profit becomes an official entity in the eyes of the state, it also becomes a corporation and must be run like one to maintain its legal status.

Five Important Legal Areas

Like for profit companies, non-profit organizations have five areas of law to pay attention to:

  1. Federal: Federal law includes charitable purposes and assets, private benefits, lobbying, political campaigns and donations to campaigns, and public documentation.
  2. State: State law includes articles of incorporation, bylaws, fiduciary duties, recordkeeping, and state taxes.
  3. Employment: Employment laws govern the hiring, employment, pay rates, and firing of employees. Included in this category is the employment status of your workers, independent contractors, payroll, anti-discrimination laws and policies, and areas pertaining to human resources.
  4. Intellectual property: Intellectual property includes assets that can be copyrighted, such as text, photographs, videos, artwork and other works; respect of ownership of such property; patents and trademarks; website and online usage; and privacy policies.
  5. Fundraising: Covered under fundraising are the laws pertaining to how fundraising activities are conducted, reporting donations, registration and reports, written acknowledgments, and restricted gifts.

As you can see, non-profit law can be complex. But there are several steps you can take to make sure you are doing the right things.

Basics of Non-Profit Legal Compliance

It takes years to earn a law degree, however,  you can take steps to ensure that your non-profit is compliant with typical rules and regulations.

  • Maintain accurate records of Board meetings, Annual Reports, and other paperwork.
  • Pay any dues, such as annual incorporation fees, promptly.
  • Understand your duties and obligations for payroll processing, maintaining proper employment records, and any tax obligations as they pertain to employees. Just because you run a non-profit organization doesn’t mean that your employees do not have to pay income taxes.
  • Keep paperwork such as W9 forms and independent contractor agreements on file and updated for every employee.
  • Respect intellectual property rights. Properly license photographs from the copyright owners or from legitimate stock photography sources, following licensing agreements. Maintain records, contracts, and other paperwork on the source and use of intellectual property. Teach your employees the basics of respecting IP rights of others.
  • Track all financial reports, records, donations, and receipts carefully. Use a good non-profit financial accounting method or software.
  • Conduct an annual audit. Hire a CPA firm well-versed in nonprofit financial accounting to complete the audit.
  • When in doubt, seek the answer from your attorney, CPA, or another professional service provider.

Non-profit law is an area where many individuals have questions. Finding the answers, and following the basics, can go a long way to keeping your organization compliant.

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.

Oct 16
0

Addressing the Dangers of Cyber Attacks

By | Data, Nonprofit | No Comments

No one is immune to cyber attacks, hackers, viruses and phishing scams, including non-profit associations. Both your organization’s money and its reputation may be at stake.

At Welter Consulting, we want your organization to be safe from such cyber attacks. We offer consulting services to make technology planning easy. Contact us online or call us at (206) 605-3113 to learn more.

Boards Must Lead the Charge Against Attacks

Boards cannot afford to be complacent about cybersecurity. Many nonprofits are too small to have a dedicated IT staff or resources. In those cases, it falls upon the Board as the leadership team of the organization to develop policies and processes to guard against cyber attacks.

How Breaches Occur

Nonprofits may find themselves in the thick of a cyber attack through completely innocent circumstances. An employee may accidentally download an infected file. Someone may be searching for information and stumble across an infected site, leaving a virus in their browser.

These are common ways in which nonprofits become infected with malware. Recently there has been an increase in the number of extortion-related viruses. Such viruses lock users out of their computers until money is paid to someone who supposedly holds the virtual key to unlock the computer. Criminals do not care whether you run a charity for orphans or a financial firm; they take the money and continue their extortion schemes.

Other types of cybercrime include data theft. A data breach in which your donors’ or members’ personal data including names, addresses, social security numbers or credit card numbers are stolen can result in negative publicity for nonprofits and the threat of potential lawsuits. These crimes often aren’t noticed until long after they occur, giving nonprofit leaders a false sense of security. In truth, anyone can be the subject of such an attack.

Taking Steps to Prevent Attacks

Nonprofit board members can take several positive steps to ward off the threat of cyber attacks. While you may not be able to prevent them all, you can ward off many.

Steps you can take include:

  • Encourage management to adopt policies that prevent cyber intrusion. This may include frequent software updates, limits on web browsing, and training to raise awareness.
  • Add cyber insurance to your organization’s coverage to minimize the financial ramifications of cleaning up after a breach.
  • Build a proactive response plan, imagining worst-case scenarios and including steps to take should they occur.
  • Take an inventory of your current cyber security measures to disclose gaps.
  • Close any identified gaps or hire a consultant to do so for you.
  • Evaluate security risks among vendors and suppliers.
  • Find out where the most valuable information is stored – and treat it as you would money in a safe. Take extra precautions to make sure it is secure.
  • Discourage risky cyber practices, such as downloading documents from unknown sites or clicking links requesting that users reset their passwords.

Above all, make cybersecurity a top priority for your company. When boards do so, they send a powerful signal that it is an important topic worthy of employees’ time and effort to address it.

Cybersecurity is like the doors and locks on your home. You invest in strong doors, locks, and alarm systems to prevent burglars from stealing your television and computer. By making sure your cybersecurity efforts are up to par, you’ll prevent virtual burglars from walking off with important assets. You’ll add a layer of safety to your nonprofit that provides better peace of mind.

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.