If you’re getting close to an annual audit, you’ve probably heard the term “PBC”—but what is it and what does it mean? First, it is important to understand what an audit REALLY is. So many organizations view an audit as an opportunity to issue financial statements. It’s not uncommon to even refer to the audited financials as the auditor’s financials when, actually, it is the responsibility…
Accounting manuals are key to any organization, regardless of the type. Although the task of creating an accounting manual might seem daunting, it is a worthwhile endeavor. This blog post will explore the benefits and identify the key components of an accounting manual and as an added bonus you can download a typical table of…
When you want to change your diet to achieve better health, it is helpful to start by getting on the scale. If you don’t do this, it is difficult to determine if what you’re doing is actually working. To really be proactive, you should get on the scale regularly and consistently so you can continuously…
Internal controls are a must for nonprofit organizations. It should be a priority to establish proper internal controls from the start to ensure that assets are protected, and risks are mitigated. NPOs often struggle with limited staff and resources, which makes them particularly vulnerable to the risk of fraud or mishandling of funds. Nonprofit leaders,…
If you have ever wanted to expand your knowledge of nonprofit accounting basics, learning about functional expenses is a great place to start. Nonprofits have unique reporting requirements that set them apart from for-profit businesses. One of these reporting requirements is presenting an analysis of natural expenses by function – most commonly through the Statement…
Cash flow management in any organization is nothing more than the mix and timing of cash receipts and cash payments. In its most simplistic form, it is cash in and cash out and, ultimately, it is where budgets, projections and forecasts meet reality. It is critical to ensuring that funds are available to pay the…
5 Steps for Nonprofits to Develop a Wise Investment Policy Nonprofit boards have a fiduciary responsibility to protect the organization’s assets and ensure that they’re used to further the mission. Often, an important part of the board’s responsibility is deciding how to invest the nonprofit’s cash. That requires implementing a sound investment policy that balances…
5 Keys to Develop Your Operating Reserve Policy Every nonprofit needs to have sufficient cash flow to meet obligations. Setting aside an operating reserve is a smart practice as it provides a cushion against unexpected events that could temporarily impact the cash flow. Following are five best practices to follow when establishing your operating reserve…
One of the fundamental decisions a nonprofit organization needs to make is whether to use the cash or accrual accounting method. The method you select will determine how you classify, record, and report on your income and expenses. What is the cash method of accounting? Under the cash method of accounting (cash-basis accounting), revenue is…
3 Keys to Being Prepared for Your Next Nonprofit Audit For many nonprofits, going through an annual audit is like undergoing a root canal—it’s a painful, stressful, and expensive experience. The good news is that it doesn’t have to be that way (the audit, that is.) Through advance planning, organization and knowledge of the audit…
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