Keeping Current on Account Reconciliation & Financial Reporting
Studies show that NFPs have one of the highest turnover rates of any industry, and roughly three out of four NFPs have had difficulty filling positions. This, combined with the staffing shortages across the accounting industry, leaves many NFPs struggling to fill critical roles in their accounting and finance functions and keep up with day-to-day accounting.
Audit Preparation, Support & Project Management
Even with longer timelines to issuance than other industries, many NFPs are still often rushing to meet deadlines. It is increasingly common for NFP organizations to become chronically delayed in financial statement and/or compliance reporting. These issues can lead to financial penalties and negative reputational impacts with funders and the public and cause financial statement information to be less valuable to users.
Maintaining NFP Accounting Expertise
A recent study by the AICPA indicates that 75% of today’s CPAs will retire in the next 15 years, and NFPs are already feeling the effects of this. Additionally, NFPs find themselves struggling to compete with for-profits to attract and retain talent. Many NFPs risk losing decades of institutional knowledge without a sufficient pipeline to replace them. Often, organizations need assistance developing documentation to capture this knowledge, helping their current teams deepen their technical expertise, and maintaining the expertise during transition periods.
Furthermore, in recent years, Accounting Standards Updates relating to Contributed Nonfinancial Assets (ASU 2020-07), Leases (ASU 2016-02), and Current Expected Credit Losses (ASU 2016-13) have required NFP finance and accounting teams to invest significant energy and time into understanding the new requirements, both during and subsequent to implementation. Down the road, NFPs will need support in understanding additional ASUs to bring their expertise up to date and stay in compliance.
Assistance With Accounting for Contributions, Grants & Net Assets
Grant management is commonly known as a high-risk area in an organization’s financial management system and reflects the internal control efficiency and effectiveness of the entire organization. While most NFPs are familiar with the basics of donor restrictions, accurately tracking and reporting these gifts, distinguishing restrictions from conditions, and appropriately recognizing releases from restrictions can challenge even seasoned NFP finance teams. Additionally, contributions like multi-year pledges, bequests, or in-kind donations all require additional technical skills and financial statement disclosures that demand considerable resources to report accurately. Add to that the challenges of endowment accounting, and it comes as no surprise that net assets require significant technical expertise.
Process Efficiencies & Best Practices
When organizations are spread thin, and demands are high, keeping effective records of control activities may falter. The same goes for organizations that have experienced rapid growth or recent turnover. Sometimes, too, organizations lack resources to perform a thorough review of stale or obsolete control processes and need help aligning with industry best practices. On top of all of this, sometimes accounting and finance teams need help determining the best course of action for remediating deficiencies in internal controls identified by auditors, especially recurring material weaknesses or significant deficiencies.
Board Governance Reporting & Recommendations
NFP boards have a unique role in oversight of financial operations, and yet, results may lack the resources or perspectives to design processes that enable effective governance. With new appointees, changing committee assignments, or evolving organizational needs, board members can struggle to stay on top of best practices. Similarly, members of committees may lack the NFP experience or language to interpret financial results and thus provide less effective oversight.
