It’s been a few weeks since the release of the 2016 Nonprofit Finance Study, and the buzz around the findings continues! In fact, it was alive and well during our live webinar last week in which my colleague Jenna Overbeck and I covered the study, its findings, and recommendations on how to overcome nonprofit finance complexities and compliance challenges.
During the webinar we received some great questions from attendees. Here, we share some of those questions, along with answers and additional insight. For more, be sure to check out the recording of, “Wading Through Nonprofit Financial Complexities.”
Q. What is recommended for smaller orgs that may not have the money to purchase the more expensive software that has robust revenue reporting capabilities?
A. As nonprofit finance professionals, you need tools to efficiently manage multiple revenue sources and increasing complexities. Off-the-shelf, spreadsheet-type software likely isn’t cutting it today … and certainly, not tomorrow. And, true fund accounting software doesn’t have to cost an arm and a leg.
Do your research on what’s available in the market, and paint a compelling picture of your needs and pain points for board members. When they understand what’s potentially at stake – noncompliance, failed audits, fraud, etc. – they’ll find a way to get you the tools you need.
Another option you might consider is selecting software that offers a subscription model (such as a cloud-based solution). This will help offset IT costs by offloading a big chunk of them onto the provider, and enables you to make smaller payments more frequently. This SaaS (Software as a Service) model also provides you with automatic updates, services, and added security. In sum, leveraging a subscription service provides the flexibility of a more advanced fund accounting system without a large price tag.
Q. What method do you recommend to document internal controls?
A. There are a few simple best practice guidelines to follow when it comes to documenting internal controls, including:
- Place them in a commonly-used location that’s easy to access.
- Continually update as needed throughout the year.
- Review with multiple people (your internal controls shouldn’t be just one person’s responsibility to manage).
- Review at an executive or board level annually so everyone understands the processes, where to find the documents, and the organization’s primary guidelines.
Q. What is process mapping? (In reference to documenting internal controls and processes to increase audit preparedness, deter potential fraudulent behavior, and conduct proper succession planning.)
A. One recommendation for documenting your internal controls is to create a process map. Process mapping can help turn a wall of text into an easy to understand concept. It involves drawing a diagram of a process, with the decision points that might be made and outputs that might be produced by the process. It’s essentially an image/graphic that illustrates a workflow or process.
If you’d like hear more on the findings from our study and the recommendations provided by our Abila in-house experts, check out the recording of, “Wading Through Nonprofit Financial Complexities.”