Nonprofit

Dec 19

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Evaluate the Internal Controls at Your Nonprofit Organization

By Team Welter | Nonprofit | No Comments

Internal controls are important for both nonprofit and for profit organizations. Simple, yet effective internal controls prevent losses, theft, and mistakes. While it may seem as if you are being overly cautious, even the most honest employees can be prone to temptation when lax security and internal controls are the norm.

Situations Requiring Internal Controls

Some nonprofits may need internal controls at charity shops, boutiques, or retail outlets that sell members goods, books and so on. Others may need internal controls only when hosting charity events or fundraisers. Evaluate your nonprofit’s needs and list the situations calling for internal controls. Then consider these situations and suggestions for internal controls.

* Cash deposits: Nonprofits that run thrift shops and charitable stores to raise funds for their operations should treat cash deposits the same way that a retail store would treat them. Keep cash registers locked. Always have an employee near the register to guard against theft. Set a limit on how much cash is stored in the drawer. Have a strict policy in place for how register drawers are counted out and stored at the end of the day or end of shift. A manager or other senior staff member should be the one to take deposits to the bank, and two people should be present at all times when cash drawers are counted.

* Check storage: Checks received as donations, payment of membership dues and the like should also be treated like cash and stored with good security. It is not uncommon for checks to be lost or stolen at places with lax internal controls. Establish protocols for recording checks immediately upon receipt. Place them in a safe and limit access to the safe to managers or only the few people in the accounting department who need them. Designate bank drop days and times to deposit checks in a timely fashion.

* Petty cash: Petty cash should always be kept in a safe or a locked drawer. Implement a policy in which at least two employees must be present at all times to count out the petty cash. Record petty cash amounts in a receipt book. Sign cash in and out, and do not make exceptions to this policy.

* Events: Fundraising events, raffles and carnivals tend to generate cash and small bills which are easy to overlook. Volunteers should store cash at the event in a lock box until it’s time to finish the event. Train volunteers and workers to never leave cash unattended at the booth or table. Instruct them to place all cash into the secure box or official cash register, never in their pockets or purses. Reconcile ticket sales with cash that night before everyone goes home to make sure no one has made mistakes.

* Payroll: Fraud occurs in payroll as well as with cash receipts. Employees may tag a little extra time here or there to their payroll accounts so that it adds up to overtime. To prevent payroll padding, ask managers to pre-approve overtime and sign off on time cards.

The old adage to trust, but verify, is very important for nonprofit internal controls. Although it may feel as if you do not trust your employees or volunteers, often having internal controls in place is enough of a deterrent to prevent problems. Employees typically appreciate having internal controls in place since it prevents problems and inaccuracies that can reflect poorly on them as well. Internal controls are necessary at nonprofit organizations.

Welter Consulting

Welter Consulting helps nonprofit organizations bridge the gap between people and technology. Software support, implementation and training, as well as audit support, are our main areas of service. If you would like assistance with your nonprofit accounting needs, please call us at 206-605-3113 or email us at welter-conssulting.com.

Dec 12

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New Methods to Obtain Professional Education Credits for CPAs

By Team Welter | Accounting, Nonprofit | No Comments

CPAs now have two new ways in which they can obtain Continuing Professional Education (CPE) credits. The AICPA and the National Association of State Board of Accountancy recently changed the standards for CPE providers as well as NASBA’s Field of Study document. These new opportunities to earn continuing education credits seek to open more opportunities for CPAs to earn valuable continuing education credits so that they can better serve the organizations they work with.

Computer and Live Events: Blended and Nano Learning

The two new methods now accepted are blended learning and nano learning.

* Blended learning includes a combination of learning methods such as seat-based (classroom) sessions, self-study, and video lessons on demand.

* Nano learning consists of short 10-minute modules, usually focused on a specific task. This type of learning is often used to help CPAs acquire specific skills rather than master overarching concepts.

Not all states accept these methods, so you must check with your local branch of the AICPA and the NASBA to find out if your state accepts nano and blended learning.

Additional changes are also being made to the Fields of Study document. These changes update categories and descriptions so that they are both current and relevant. The biggest change occurs in the Specialized Knowledge field of study, which now separates computer science application and information technology into its own categories. Specialized knowledge topics can now be specific to industries or categories.

Continuing Education and the Nonprofit Sector

Nonprofit financial managers need excellent quantitative as well as qualitative skills to best serve their constituents. These skills including exceptional accounting and financial management, as well as good communication skills.

Specialized skills that nonprofit accountants may also need include:

* Presentation and public speaking skills: Nonprofit CPAs may be called upon to address board meetings, and conferences. These are valuable opportunities to educate the public as well as members and donors.

* Interpersonal communications: Communications inside your office as well as throughout your organization are essential to good management. Persuasion and articulation of thoughts, ideas and concepts is essential for department leadership.

* Social media skills: Social media may seem like an esoteric area for accountants, but even accountants and financial leaders use tools such as texting to reach colleagues with quick messages. Learning the proper methods of communicating via social media is now an essential skill for CPAs.

* Data visualization: Data visualization helps non-accountants understand the nuances of the materials you are presenting. Understanding how to share information via charts, graphs and other methods can help both colleagues and the public understand the nonprofit’s financials easily.

Online learning and the new blended and nano learning methods may provide you with opportunities to build these skills and more. Professional development is essential for CPAs.

Welter Consulting

Welter Consulting helps nonprofit organizations bridge the gap between people and technology. Software support, implementation and training, as well as audit support, are our main areas of service. If you would like assistance with your nonprofit accounting needs, please call us at 206-605-3113.

Dec 05

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New FASB Rules Go into Effect for Enhanced Clarity in Nonprofit Financial Reports

By Team Welter | Accounting, Nonprofit | No Comments

FASB announced changes to Accounting Standards Update No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. This landmark set of guidelines is the first update since 1993 and will change how many nonprofits report their numbers.

Summary of the New Guidelines

The new guidelines call for the following changes:

* Reducing the net asset classifications from three to two, net assets with donor restrictions and net assets without donor restrictions;

* Underwater amounts of donor-restricted endowment funds in net assets with donor restrictions are now required to be reported;

* Enhanced disclosures about underwater endowments are also required;

* Preparers can now choose between the direct method and indirect method for presenting operating cash flows;

* The requirement to reconcile the direct method with the indirect method is now waived;

* Requires a not-for-profit to provide in the notes qualitative information on how it manages its liquid available resources and liquidity risks;

* Requires reporting of expenses by function and nature, as well as an analysis of expenses by both function and nature.

The new standards take effect for fiscal years beginning December 15, 2017 and for interim fiscal years after December 15, 2018.

Enhanced Clarity for Donors, Members, and the Public

The impetus behind the changes is twofold. First, FASB sought to update the rules after a long period of consistency. The last update occurred in 1993, and an update was thought long overdue. With the changing nature of nonprofit organizations, donations, and information access by the public, new guidelines were thought necessary for enhanced clarity and confidence in the financial management of nonprofit finances.

The rules also seek to simplify financial reporting for nonprofits. FASB has no wish to complicate reporting for anyone, and the new guidelines, once understood and implemented, will likely make financial reporting easier for nonprofits.

Making the Switch Easier on Your Organization

How the changes may or may not impact your organization depends greatly on how your accounts are currently kept. For those who need to adjust their accounting methods, now is the time to begin planning to meet the compliance deadline of December 2017.

Reducing net asset classifications should not be too difficult for most nonprofits. Many already used two net asset classifications, and the former classifications can be rolled into three without too much difficult by most.

If you need assistance making these changes, Welter Consulting can help. We bridge people and technology together for effective solutions for nonprofit organizations. Your accounting software is an important component of the changeover from the older 1993 regulations to the new rollout. We can help you with the change and more.

Please contact Welter Consulting at 206-605-3113.

Dec 01

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