Jan 06
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Improve Cyber Security for Remote Employees

By | cyber security | No Comments
remote employee working on home computer

Many organizations that eschewed remote work embraced it during the pandemic. Now, despite the abatement of the virus in many areas, organizations realize that adding a remote or hybrid work option to their policies is to their benefit. Not only can they attract more qualified applicants, but they can retain employees who might otherwise leave them without the availability of remote work.

Given that remote work is here to stay, it is important to look more at the cons as well as the pros. We know that remote work is attractive to employees. But on the flip side, as more people log in virtually, remote work is attracting cyber criminals, too. Criminals are finding remote workers an easier target. It’s vital to take steps to safeguard your organization against cybercriminals who can exploit remote workers and tap into sensitive data.

Scammers on the Rise

Scammers have always plagued organizations with all sorts of ploys, but the pandemic seems to have increased their number. Here are some of the newer scams hitting corporations and organizations nationwide. Many of the victims are remote workers.

The gift card scam: In this scam, someone pretending to be an employee, manager, or even the president of an organization messages an actual employee and asks them to purchase a gift card or debit card. The story is typically that the manager/president is in a meeting and wants to surprise someone with a gift card, but they can’t leave the meeting to purchase it. They ask the employee to purchase the gift card online and send them the information via a text or email. The scammers, of course, make off with the information needed to redeem the gift card, leaving the employee with the bill.

The” I lost my password” scam: Criminals know that executive assistants are often entrusted with sensitive information by senior-level executives. Many executive assistants know their supervisor’s birthdate, social security number, or computer password, for example. In this scam, someone purporting to be the manager contacts the assistant and pretends they’ve lost their password. If the assistant is working remotely, they may not be able to ask the account holder if indeed they are looking for their password. Unwary assistants have divulged passwords to criminals who can then enter sensitive systems and make off with data they can resell.

Phishing scams: Phishing scams are still active, and some have gotten more sophisticated. Many arrive in workers’ inboxes and look like documents sent by HR departments. Often, the email includes a link to click to update personal information such as a W9. The link directs the person to a site that captures the personal data and can lead to identity theft.

Other Security Steps to Take

In addition to the proliferation of scams, few organizations have improved their cyber security to protect systems during remote work access. Steps your team can take to secure access to critical information include:

  • Teaching remote workers basic home cyber security, such as protecting their SSID (home network) name and password, not accessing public Wi-Fi to link to organization systems, and not sharing a computer with open access with other family members.
  • Asking workers to either use company-issued hardware, such as computer purchased laptops, for work related matters, or locking user accounts on shared equipment with other family members by using a password.
  • Updating software, including operating system (Windows 11/MacOS) and commonly used applications.
  • Avoiding free software and non-company approved downloads of apps or software to organization-owned hardware. Some downloads contain viruses, while others just contain bloatware (excess computer code that slows machines down).

Communication Can Stave Off Many Cyber Attacks

One of the best ways to avoid compromising sensitive data is to ensure that remote workers feel connected to their teammates and free to ask questions at any time. Set up instant messenger platforms such as Slack, WhatsApp, or others to enable coworkers to reach out quickly to colleagues. One quick note (“Hey, are you at a client’s office, and are you really asking me to buy you a gift card?”) can save a lot of headaches later.

Remote workers may be more vulnerable to scams than those working in-person simply because they don’t have easy access to supervisors to check on the story given to them by the scammers. By improving awareness and communication, you can do a lot to prevent cybercrimes at your nonprofit organization.

About 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.

Nov 22
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Understanding the Discount Rate: FASB Lease Accounting Standard

By | FASB, Nonprofit | No Comments
people looking at a laptop on a desk which has a graph

In November 2021, the FASB board rejected an extension request for the effective date of the new lease accounting standards. That means that the time is now imminent for nonprofits to adopt these requirements.

Your organization’s discount rate is an important item to both understand and determine as you begin the implementation of Accounting Standards Update No. 2016-02 (Topic 842). The discount rate impacts both lease classification and liability.

Importance of the Discount Rate

To determine lease liability, the discount rate is applied to all future lease payments. This is needed to calculate the present value of lease payments. Because a right-of-use asset is based on lease liability, the discount rate will impact the initial value of a right of use asset.

Determining Lease Classification

There are two lease classifications:

  • Finance lease
  • Operating lease

To determine the classification of a lease, consider whether the present value of lease payments is equal to or almost all of the fair value of the asset.

Now you can see how the discount rate can impact the income statement and the balance sheet. It depends on how you determined the lease classification.

Determining Discount Rate

For lessees, the discount rate is the rate stated in the lease. If the rate cannot be readily determined, you can use either the incremental borrowing rate or the risk-free rate.

What if a lease needs to be remeasured? Then a new discount rate is established at remeasurement.

You Can Elect the Risk-Free Rate

To make things easier, entities that are not public may make an accounting policy election to adopt a risk-free discount rate as their discount rate instead of the incremental borrowing rate. This rate should be applied using a term comparable to the lease term based on the earliest date the lease is presented in the financial statements.

However, if the rate is readily determinable from the lease agreement, that rate should be used instead of the risk-free rate. The risk-free rate can only be used when the rate implicit in the lease is not readily determinable. You can find risk-free rates on the Treasury website.

The bottom line: the rate to be used must be the one that best reflects the accuracy of the transaction and be easily determined. Nonprofits should create various financial what-if scenarios to see how each discount rate affects their income statement and balance sheet. Then choose the one that makes the most sense from both an accuracy and transparency situation as well as what makes the most sense for their financial needs.

Welter Consulting can assist you with this determination and other questions—contact us for an appointment.

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.

Nov 15
0

Improving Communications with Data and Trend Analysis

By | Accounting, Data, Donations, Nonprofit | No Comments
people looking at papers on a desk with graph overlay

Charts, graphs, and financial reports may seem like they don’t say much to those outside of the accounting and finance department. But with the right data and trend analysis, the information contained in these reports can inform and improve constituent communications.

The Tip of the Iceberg

It’s an old cliché, but a good one—the tip of the iceberg. If you imagine an iceberg, you can only see the tip of it. The majority of the iceberg is underwater but it’s probably the more important part.

The same goes for your organization. The data that you can easily find is the “tip of the iceberg” and readily available. And it’s usually what your team uses to base their decisions.

However, what’s going on underneath the surface is often the more valuable information. Getting to it is the challenging part.

How Nonprofits Can Leverage Data

Many organizations only dig at the surface level into their data. They run basic financial reports to gauge how fiscally solvent an organization is, or which programs require more funding and leave it at that. But the data that can be used to assess funding can also be used to dig deeper into issues such as program demand, program use, and more.

Each nonprofit is unique and tracks different data. But, in general, nonprofits can mine their data to find information to help them improve programs, improve donor communications, and ensure transparency.

Look beyond your existing technology for additional data. Although your current accounting system may provide plenty of data, other data exists. If your nonprofit sells items, look at warehouse and inventory reports. If programs provide participation and survey data, add that to the data repository for examination. Consider many sources to leverage all of your data and build a stronger, better organization.

Improve Programs

Nonprofits that track program participation can look more closely at program data to update their offerings. Programs that receive higher participation, for example, should be examined to determine if they can be spun into additional opportunities. For example, an animal shelter offering a spay/neuter clinic may find that a free rabies vaccination clinic is also in high demand and brings people into the shelter to view (and potentially adopt) homeless pets. An education nonprofit that finds its free mathematics tutoring program for elementary school children in high demand may wish to expand into the high schools and so on.

Better Donor Communications

The same data that reports on your program activities can also be leveraged to improve donor communications. Program participation and success data can be parlayed into donation campaigns demonstrating the efficacy of your offerings. People like to give to successful initiatives as it makes them feel that their donation is worthwhile, so demonstrating how successful the programs are can go a long way towards encouraging additional donations.

Enhanced Visibility

Successful nonprofits know that increasing visibility into their activities and finances is an excellent way to court donors and participants. The more transparency and visibility into their actions, the greater the trust they engender with the public, which in turns leads to better utilization of their programs and increased donations. Sharing the data from your systems and using it to for storytelling purposes can take your nonprofit to new levels.

Increasing Nonprofit Success in a Tough Economic Climate

Inflation and global unrest have created a climate of uncertainty, and this in turn means fewer people donating to nonprofits … or does it? It doesn’t have to lead to a downturn in donations. Instead, leveraging stories and data, improving program offerings based on data, and ensuring transparency and communications can build up programs and services during times when other nonprofits may be struggling. For those nonprofits that can dig deeply into their data, they may find information that can lead them to greater improvements across 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 us for more information.

Nov 08
0

How Should Your Nonprofit Handle Cryptocurrency Assets?

By | Accounting, Cryptocurrency, Donations, Nonprofit | No Comments
person holding tablet and touching virtual screen with finance and bitcoin graphics

Cryptocurrency presents many challenges to nonprofits that accept it as payment or donations. Crypto such as bitcoin, ether, and the many other digital assets on the blockchain, are becoming ubiquitous with everyone from college kids to grannies dabbling in the new financial asset. And while regulations are being discussed, companies and organizations are left struggling to understand how to track and manage it. Here are the challenges and some advice for nonprofits interested in accepting or utilizing crypto assets.

What Is a Cryptocurrency?

Cryptocurrency, or crypto, is a digital asset tracked on the blockchain—an immutable public register of transactions that enable anyone to track the original and transfer of the asset. While you may know the major “coins” from the news such as bitcoin or ether, there are hundreds of other coins on the market.

Challenges of Cryptocurrency

Crypto is a new category of financial asset and one that regulators continue examining to determine how to account for them. Are they investments (like stocks or bonds) or assets (like gold or silver)?

In addition to challenges understanding classification and the rules governing such classifications, there are additional challenges inherent in accepting them either as payment or donation, including:

  • Highly volatile value: Unlike fiat currency, which offers a stable store of value (despite inflation), the value of digital assets varies widely from day to day, even hour to hour. This makes it difficult to estimate and track over time.
  • Incompatible with ERP setup: Crypto values are tracked to the 16th decimal place, which is completely incompatible with ERP systems set up to track dollars, euros, and other common currency.
  • Difficulty tracking: GAAP rules require tracking of assets on a cost basis (the initial purchase price of the asset), the fair value of their holdings, and the book value. This is impractical with digital assets due to their volatility, but clear guidelines are lacking from regulators.

Forming a Crypto Asset Strategy

Given the many challenges, you may be wondering why your organization should even consider accepting cryptocurrencies. Donors may wish to contribute to your organization using crypto, and this is a valid reason to consider adding it as a donation method. To do so effectively, you’ll need to create a crypto asset strategy to guide your staff in handling such assets.

  • Learn first: As with any new technology, platform, or asset, it’s important to learn all you can about it before diving in. Discuss adding cryptocurrencies to your organization with your accounting team and outside CPAs (if you have one) to understand their point of view.
  • Research payment gateways: Cryptocurrency payment gateways enable you to streamline transactions. Bit Pay and others offer ways in which you can send and receive crypto in the easiest manner possible.
  • Discuss with your board: Your board needs to be fully behind the project to add crypto as a payment or donation method. Bring the issue to your board and ensure a thoughtful discussion by sharing industry statistics and information with them. Some board members will be unfamiliar or even put off by the news from the crypto world and may need some additional information prior to engaging in a discussion.
  • Engage stakeholders: Bring the issue to your internal teams, too. Ask representatives from each department to be on a committee or group to investigate adding crypto to your organization. It’s vital to hear from every department that may be impacted by the decision.

Keep in mind that if you do proceed with crypto, you may need to customize aspects of your accounting system as well as internal controls to adjust to this new method of payment.

Cryptocurrency seemed like a fad when it appeared in 2008, but it’s still going strong. If it looks like an opportunity for your organization, begin exploring it today.

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.