Wednesday, July 19, 2017

How your board can provide effective financial governance for your organization?

In the nonprofit community, board members don’t typically provide effective financial governance.
A key difference in the nonprofit sector is that the board focus in on the nonprofit’s mission and not the finances or profits.

The following are some essential financial governance areas that your board should be performing for your organization.

1.    Financial tracking by funds and program.  It is not good enough just to know if your organization has a surplus or a deficit for the organization.  You should know if your funds and programs are generating a surplus or deficit.  It is impossible to perform your financial stewardship role if you don’t know which funds or programs you are overspending or underspending.
2.    Financial reports need to be produced monthly.  It is imperative that you receive financial reports at least monthly.   You can only perform your financial governance role if you can help the organization to anticipate and plan for changes based on financial results.  It is important that these financial reports are timely and accurate to avoid making the wrong financial decisions.  The financial reports should be goal oriented to allow the financial governance to focus on its accomplishments.  Best practices financial reporting would include both budget and historical variance financial analysis.
3.    Financial health is priority.  Poor financial health usually results when no one knows the financial condition and when one person controls all financial information.  Significant comments from the annual audit and staff turnover are also indicators of poor financial health.  It is important that the board pays attention when these conditions exist and work towards increasing financial expertise and capacity.  Financially healthy organizations hold themselves accountable, understand roles, and maintain compliance with adequate and qualified staff.  Effective board and management practices are essential for segregation of duties and internal controls.   These board financial practices should promote communication, expectations, and operating efficiencies so the organization can be monitored efficiently and effectively.
4.    Proper Accounting Software.  Many nonprofits use manual or commercial applications to perform nonprofit accounting.   It is important that you provide the finance staff with the right tools and accounting software to do the job properly.   It is important the you ask question regarding how you track financial information.  Some financial questions to ask might be like do you track financial information by funding source, by program, and by accounts.  You should review accounting software and tools annually to see what additional software modules or needed including whether you have outgrown your current software.  It is important that organizations review software that is designed for nonprofit organizations.   Nonprofit accounting software typically allows you to integrate third party systems like fundraising and payroll to increase efficiencies of various systems.
5.    Financial stewardship.  All board members need to act as financial stewards not just the treasurer for the nonprofit’s that they govern.  Unfortunately, board members don’t take this role seriously enough and thus organization’s fail financially which significantly reduces public trust.  Board members must understand financial stewardship and make it a priority for the organization that they govern.  Board financial practices should include financial policies and procedures that promote stewardship and accountability.
6.    Budget Management.  Board members need to work to enable management to know when to modify programs and operations.   It is important the budgets be realistic and revenue based to anticipate any shortfalls.  Budget management should include budget projections and cash flow management to insure stable nonprofit operations and programming.
7.    Financial Reserves.   Board member financial stewardship roles should include establishing financial reserves for the organization.   Financial supporters would rather support well established and financial stable organizations.   It is important board and management are committed to generating an operating surplus and positive cash balances.   It takes a lot of financial discipline to establish financial reserves.   A nonprofit is typically financially stable once it can generate financial reserves of several months of operating reserves.  The financial reserves are essential to shield the organization from reductions or delays in funding.
8.    Financial Plans.  Board members need to have financial plans for the organization.   Just as an individual has a financial plan that changes as the individuals needs changes, the nonprofit needs financial plans that are reviewed and modified as needed.  Financial goals and strategies should change and anticipate the future.
I challenge you to review these financial governance areas within your organization to see how you are performing your financial governance role.  As a board member, it is important that you help the organization perform its financial role and not just rely on the Treasurer or Executive Director to perform this role.   It is important that you don’t just assume financial governance is occurring, but verify that it is actually taking place.

We need to equip board members with the tools and abilities to perform the financial governance roles.  Board members need to verify that management and staff has the proper capacity and expertise to perform the finance function for the organization.  If the organization does not have the proper internal resources, then they may need to look for outside expertise.

Board Financial Reports and Other Governance Issues-MIP Spotlight

  1. Statement of Revenues and Expenditures 
  2. Combining Statement of Revenues and Expenditures
  3. Statement of Revenues and Expenditures by Period
  4. Balance Sheet
  5. Combining Balance Sheet
  6. Statement of Cash Flows
  7. Statement of Financial Position
  8. Statement of Activities
  9. Statement of Functional Expense
Let us help you to maximize your use of the MIP financial reports writer application.   Our firm and staff use MIP Fund Accounting on a daily basis so let us help you maximize the use of this powerful application.

These financial reports can be customized to meet specific needs of nonprofit organizations.   The financial reports for board's typically include budget or historical information to allow for financial analysis.

Wednesday, June 7, 2017

Form 990 Key Reports-MIP Spotlight

  1. Form 990-Part VIII-Statement of Revenue
  2. Form 990-Part IX-Statement of Functional Expenses
  3. Form 990-Part X-Balance Sheet
  4. Form 990-Part XI-Reconciliation of Net Assets
  5. Form 990-Part 1-Summarized Statement of Revenues and Expenses
  6. Form 990-Schedule A-Schedule of Support
  7. Form 990-Schedule B-Schedule of Contributors
Let us help you to maximize your use of the MIP Form 990 report writer application.   Our firm and staff use MIP Fund Accounting on a daily basis so let us help you maximize the use of this powerful application.

The MIP worksheets are for Form Form 990, Part 1, Part VIII, Part IX, and Part X.  While this supporting documentation is preset, it does require you to assign the proper setup during the chart of account setup.   Another more flexible option is to use the financial and transaction reports to setup whichever tax form you need and use the report writer.

Monday, May 1, 2017

Abila MIP Fund Accounting Report Writer - Application Spotlight

  1. Setup Grant specific reporting formatting
  2. Group chart of accounts segments
  3. Board and Management Financial Reporting
  4. Date and Formula based custom columns
  5. Setup report formats to produce graphs and charts
  6. Produce financial reports for auditor including statement of functional expense
  7. Product trend reports by month, by quarter, and by year
Let us help you to maximize your use of the report writer application.   Our firm and staff use MIP Fund Accounting on a daily basis so let us help you maximize the use of this powerful application.

The grant specific reporting would be to setup a custom statement format.   The report group feature allows you to group the various chart of accounts segments.   The balance sheet and statement of revenues and expenditures are typically used to produce board and executive management reporting.  The custom column feature on certain report templates allows to to setup custom columns.  You can setup chart and graph formats directly from within the report writer.   We typically provide the statement of functional expense and schedule of federal awards for our clients including numerous other auditor reports.  The revenue and expenses by period report allow you review trends based on different historical periods.

Contact us to see what we can do to help your financial reporting using MIP Fund Accounting.

Tuesday, December 20, 2016

Nonprofit Forum 2017 Dates and Agenda

Monthly Online Forums Cover Best Practices 
for Nonprofit Organizations

Financial Technologies & Management (FTM) has released the dates and agenda for 2017 Nonprofit Forum monthly online event for nonprofit organizations. 

Financial Technologies & Management’s Jim Simpson, CPA will host each forum. Mr. Simpson is a nonprofit financial leader and trainer, CFO, Controller, and software advisor for over 25 years.

Upcoming Nonprofit Forum events include:

December 28, 2016, 11:30 – 1:00 Eastern

Building a Better Budget

January 25, 2017, 11:30 – 1:00 Eastern
Year End Tax Compliance

February 22, 2017, 11:30 – 1:00 Eastern
Developing Effective Dashboards and Key Performance Indicators

March 29, 2017, 11:30 – 1:00 Eastern
Effective Grant Management

April 26, 2017, 11:30 – 1:00 Eastern
Why Your Nonprofit Should Consider the Cloud

May 24, 2017 11:30 – 1:00 Eastern
Nonprofit Financial Reporting Including New FASB Reporting Requirements

All nonprofits are welcome to attend the Nonprofit Forum sessions.  There is no charge for participation, but registration is required:

Previous Nonprofit Forum topics, such as ‘How to Protect Your Organization from Fraud,’ ‘Do You Know Your Full Costs and How to Recover Them?’ and more are available as on demand videos.

“FTM has and continues to serve nonprofit organizations throughout Indiana and the United States,” said James Simpson, CPA.  “We are proud to serve the nonprofits who enhance our communities, cities, and the world.”

The Nonprofit Forums are designed to educate and help nonprofit organization build stronger organizations that foster healthy financial management so that nonprofits may serve their constituents and communities for years to come.

About Financial Technologies & Management

Financial Technologies & Management offers financial Management for nonprofits in Indianapolis, Indiana. FTM offers the resources to improve nonprofit accounting with nonprofit accounting services, nonprofit accounting software, and financial management training classes.  Nonprofit organizations turn to FTM for improved financial operations and assistance in increasing capacity.  Focusing exclusively on financial management for nonprofits, FTM has helped more than 350 nonprofit organizations in providing solutions to help their internal, community, and regulatory needs.

Friday, November 4, 2016

IRS Issues Reminder That Forms W-2 and 1099 Are Due Earlier for Employers

Under a new law, the Protecting Americans from Tax Hikes (PATH) Act, enacted last December, the new filing deadline for employers to submit forms W-2 to the Social Security Administration, is January 31. The new January 31 filing deadline also applies to certain forms 1099-MISC reporting non-employee compensation such as payments to independent contractors.

In the past, employers typically had until the end of February, if filing on paper, or the end of March, if filing electronically, to submit these forms. However, the gap between that due date and the beginning of the filing season made it difficult for the Internal Revenue Service (IRS) to match up forms W-2 with tax returns requesting refunds. The result? Room for fraud. The new deadline, which has long been on the wish list for the IRS, will make it easier to verify the legitimacy of tax returns and properly issue refunds to taxpayers. The IRS says that, in many instances, this will enable them to release tax refunds more quickly than in the past.

Monday, May 2, 2016

Nonprofit Accounting Software Review

Nonprofit Accounting Software Review

Accounting Software for Nonprofits

We have taken several hundred clients through the nonprofit accounting
software evaluation process.

Our solutions focus on finding the best nonprofit accounting software to meet
your specific software needs.

We help our clients by providing software advisory services to include
planning, implementation and training services.

We are providing the following 2016 Review of Nonprofit Accounting Systems
from CPA Practice Advisor to let you know the current nonprofit accounting
systems that are available.   We suggest you contact us first to help you through
this important and complicated process.  Generally, we provide our software
evaluation for free and as an investment in our clients to help plan and insure
a successful software implementation.

Here is the link from CPA Practice Advisor's 2016 Review of Nonprofit
Accounting Systems and hope you find it helpful.