Is Now the Time for an Assessment of Your Accounting and Finance Function?

audit-CL-blog

An assessment can be a valuable tool in determining the current state of your organization’s accounting and finance function. Not having a good grasp of this information can lead to challenges down the road such as inaccurate data used in decision-making or even an unfavorable management letter from your external auditor.

A comprehensive accounting and finance assessment should include a review a of your nonprofit’s Statement of Financial Position to identify red flags indicating that some transactions may not be posted correctly. The assessment should also include a review of your financial and related systems, reporting, policies, procedures, and internal controls. Finally, the assessment should help the CEO/Executive Director understand the skill level and knowledge of the organization’s accounting and finance team, especially with regards to nonprofit accounting processes and standards. The assessment should be delivered in a clear and concise written report including findings and recommendations.

If you do not have a solid understanding of the capabilities of your accounting and finance function, now may be the time to engage a reputable accounting firm specializing in nonprofits to conduct an assessment. There are other events that may warrant an assessment as well.

1.When there is turnover in your accounting and finance department

Prior to, or soon after, a changeover in accounting personnel is a good time to understand the challenges a new staff member or team may face. Consider an accounting and finance assessment prior to hiring new accounting staff to understand the knowledge, level, and skill set required of new staff to do the job, and to determine if outsourcing a portion or all of the accounting and finance function would be beneficial for your nonprofit.

2. When a new CEO/Executive Director comes on board

A new nonprofit leader has a lot to learn when taking over an organization for the first time.  Many hours are spent the first 100 days simply getting to know members of the board and becoming familiar with the programs and services. Conducting an external assessment early on will provide the CEO/Executive Director with valuable information about the accounting and finance department without expending valuable time that tends to be in short supply.

3. When the Board signals a lack of confidence in the financial data

Your Board has a fiduciary responsibility to oversee the financial health of your nonprofit. If the Board and Finance Committee are not confident in the financial reports because the data does not seem accurate or complete, or if the explanations provided to their questions do not seem credible, a financial assessment is warranted. The assessment will identify the issues leading to the lack of confidence in the data, reports, and presentation.

4. If you receive an unfavorable management letter at the completion of your audit or when an audit cannot be completed by the auditor

No one wants to receive significant findings in their management letter but, if you do, or if an auditor has run into obstacles that make it impossible to complete the audit, there likely are issues within your accounting and finance function that must be corrected.  An assessment will identify the issues and present options for resolving the issues identified.

5. The absence of a recent assessment (or you have never had an assessment)

Conducting a periodic assessment will ensure that your compliance processes are current and that the accounting and finance function is operating efficiently. An internal accounting and finance team is consumed with performing day-to-day tasks and meeting reporting deadlines. They do not have the time to review new compliance standards or processes, as well as the latest technology designed to save time and improve the integrity of the financial data. It often appears easier to do things the way they have always been done. An assessment will provide an external view of opportunities for improvement and relieve busy team members of that burden.

Whether your goal is to correct a known issue, or simply to have peace of mind, an accounting and finance assessment is a sound investment providing returns that will benefit the organization for many years to come.

Need assistance with a financial assessment? We can help! 

Chazin and Company

Chazin and Company

With over 15 years working exclusively with nonprofits, we pride ourselves in having a unique understanding of non profit accounting needs. We believe that nonprofits deserve personalized, quality service and should not settle for a one-size-fits-all approach. We collaborate with you to provide a fully virtual, customized, solution that is not only cost-effective but also strengthens your accounting function. We offer a team of industry experts at your disposal to provide advice, leading technology, and to supplement existing staff to improve efficiency and compliance.

Share This Post:
Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn