No one becomes a board member or leader in a non-profit because they like bookkeeping or accounting (besides the fiscal staff). But careful money management is critical for a successful organization.
If no one is watching, you can run short of funds before the end of the year. If no one is watching, it can be easy for mistakes to be missed and money to go missing. Few organizations have people knowledgeable about fiscal management, so many just rely on their bookkeeper or Treasurer and hope for the best. Reading financial reports requires some training, but once you know what to look for, they can be easy to read, and very informative as a management tool and an internal control.
Organizations that are audited, often rely on the auditor to tell them how they’re doing. There are several problems with this. By the time the audit rolls around you may have overspent your budget or had someone help themselves to your funds. Also mistakes made during the year complicate the audit and increase the cost. Sometimes, when auditors present their reports, it can sound very confusing! According to them, an “unqualified audit” is better than a “qualified one”. (But they agree that a qualified auditor is better than an unqualified one!) They spell GAAP all in caps and with an extra A. They talk about FASB and they aren’t talking about a new type of honey bee.
Many managers and board members are unsure what questions to ask to clarify the auditor’s report… and important questions go unanswered. To make matters worse, auditors now need to be “independent”, meaning even if you understand them, they cannot advise you on how to fix the problems they’ve identified!
Most non-profits have limited funds and lots of demands for those funds. Developing and successfully managing a budget is an important skill. While it does not have to be complicated, it does take some knowledge and attention to set up a useful system.
Most people in your organization are honest and ethical… but sometimes, under pressure of personal problems, people can shift. Mistakes also happen. While you want to be able to trust your team, you have to trust AND verify. That doesn’t mean redoing all the work. It involves setting up and monitoring internal controls that can help you ensure accurate and safe accounting of your funds. This doesn’t have to be expensive or complex, and it is critical to put a good one in place.
Once an effective fiscal system is set and people commit to following it, you should be in good shape. It’s important to be sure you have a system that works and that it’s being followed appropriately. If you have any doubts, or have trouble bringing your budget in on target, or don’t understand the reports your system generates… it’s time to seek assistance. Give us a call for a free consultation to discuss how we can assist.
We speak in plain English, not accounting jargon and explain things clearly and simply. In most cases this shouldn’t be complicated and shouldn’t be expensive to develop or implement.