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Nonprofit organizations receive many different types of revenue. Some nonprofits are government funded, while others receive funds from donors and foundations. Most nonprofit organizations conduct fundraising events to raise money for operations or for certain programs. Often nonprofits have annual fundraising events such as mailing campaigns,marathons, golf events, dinners, galas, and other events to raise funds for general use. Proceeds and expenses associated with these types of events are booked in the unrestricted/general fund. If the fundraising event is for a specific program or for something to happen in the following year, then money from the event is restricted.

Usually big fundraising events raise money for unrestricted use. This money raised is reported separately in the Statement of Activities in the unrestricted fund column. It’s also reported separate on the 990. Many times donors get something for their donation. This is known as a “quid pro quo” and may be a dinner or auctioned items. Someone makes a donation and gets something in return, such as the value of food, entertainment, or items bought at an auction, etc. This is also called “exchange value.”

Donors’ receipts must specify how much of a donation is a “real” donation, and how much is not. Donors may be able to deduct only the donation part of the gift. If a person gives $200 for a dinner fundraiser, and the ticket says “Value of the meal: $50,” then donor can deduct only $150 in his taxes, not the entire amount. In an auction, if something is valued at $1,000 and a donor gives $1,500 for it, the difference of $500 is the real donation.

When a donor makes a donation of $1,000 (or other amount) for a dinner fundraiser and doesn’t show up for whatever reason, he or she can deduct the entire amount. Beware that organizations are not supposed to determine the real deductibility of an item, which can change by person and circumstances.The IRS offers workshops to nonprofits about this topic. It also has a site just for nonprofit organizations at http://www.irs.gov/charities/index.html

Many times organizations combine fundraising activities with programs or with management and general administration. When that happens, a reasonable allocation of expenses may be used. Why? Because GAAP and an additional financial report, Schedule of Functional Expenses, require this allocation. (All expenses need to be allocated to the three major areas– general/management, programs, and fundraising.) Special events are shown separately in the Statement of Activities (Income Statement of nonprofits). If the event is not that important, revenues and “Direct donor benefit costs” can be shown as net. “Direct donor benefits costs” are direct expenses associated with the event.

The line for direct donor costs could also be reported as part of expenses. Another option for reporting major events is to use the exchange value and to divide the income between contributions and special event revenues (see quid-pro-quo discussion earlier). The fair market value is shown as special event revenue; the rest is shown as regular contribution.

This article is an excerpt from Sheila Shanker’s course Non-Profits Operations and Accounting.

Anyone who has been hired into the controller position for the first time may feel overwhelmed, since the job description involves an enormous range of responsibilities. Where to begin? The answer is simpler than you may think. Always focus on the ability of the business to survive. Thus, if there is not enough cash on hand to pay the short-term obligations of the business, all other controller responsibilities are insignificant, because the company will no longer be in business. Thus, you should address the following issues first, and in the order presented:

1. Create a short-term cash forecast.
Develop a simple cash forecasting model on an electronic spreadsheet that tells you the expected cash balance at the end of each week for the next month. The initial results may not be that accurate, so compare actual to forecasted results, and adjust the forecast model to increase its accuracy over time.

2. Understand receivables.
Review the accounts receivable aging report with the collections staff, to understand which customers pay on time (or not), and which receivables are likely to be delayed or uncollectible. Also, review all non-trade receivables to determine which ones are collectible, and when they are likely to be collected. Adjust the cash forecast based on this information.

3. Understand payables.
Review the accounts payable aging report with the accounts payable staff, to learn about the payment terms associated with each supplier, the relations with each one, and which supplier invoices are likely to arrive during the cash forecasting period. Adjust the cash forecast based on this information. Refer to the Accounts Payable Management chapter for more information.

4. Understand debt payments. Review the schedule of debt payments. These payments are sometimes taken out of the company’s bank account automatically by the bank (if it is the lender), so you can reliably estimate in the cash forecast when these cash deductions will occur.

5. Reconcile accounts. If no bank account reconciliations have been completed recently, do so now. This adjusts the company’s recorded cash balance for any bank fees and other adjustments imposed by the bank. Adjust the cash forecast based on the revised current cash balance.

The preceding steps allow you to generate a preliminary cash forecast almost immediately, and one that should rapidly increase in accuracy. Over the longer term, you might also consider reviewing any supplier contracts to see if there will be scheduled payments that should be included in the cash forecast. Also, talk to other departments to determine when they may want to purchase fixed assets, so that you can build these expenditures into the budget. Irrespective of these improvements, please note that the cash forecast will never be entirely accurate, even over a period of just a month, because cash inflows are subject to the whims of customers.

This excerpt was pulled from CPE Link’s instructor Steven Bragg’s course The New Controller Guidebook.

By CPE Link instructor Mary S. Schaeffer

The accounts payable policy and procedures manual is more than a static document with little value. Truth be told many organizations either don’t have one or have one that hasn’t been updated in years. This is a real shame. For if the right approach is taken towards the accounts payable policy and procedures manual, it can have many uses and can help ensure best practices are used throughout the accounts payable organization.

Many problems that arise from the accounts payable process occur because there is a lack of uniformity among processors in the way they handle invoices. If the exact same process is not used by every single processor, duplicate payments and other errors are likely to creep in. The only way to ensure that the same processes are used across the board is to have them written down with detailed instructions on how each task is to be accomplished.

This is the primary goal of the accounts payable policy and procedures manual. For it to be a true guide, it must be reviewed and updated on a very regular basis. Otherwise, it will quickly be come out of date and not serve the goal it is intended. What’s more, a detailed manual can serve as a reference guide to your processors. So, when they come across an issue that does not come up every day, they won’t have to guess on the right way to handle the problem. They can simply pull out the policy and procedures manual and verify.

A good policy and procedures manual can also serve as a training guide for new employees. Each one should be given a copy when they are hired and the manual should be referenced throughout the training process.

A few managers think it is a good idea to keep the manual short. This is a terrible idea because without a detailed manual, errors will creep in. You just can’t have too much detail in the manual. Sometimes a manager will think, “oh, we don’t have to put that in. Everyone knows the right way to do the task at hand.” Unfortunately not everyone thinks the same way and this is a sure fire way to guarantee that errors will creep in.

When it comes to accounts payable policies and procedures, there is no room for creativity. This is one time when everyone has to perform tasks exactly like their colleagues. Should someone come up with a better way, they should bring their suggestion to the supervisor. If the approach is better, everyone can start using the new approach and there will be no concern for variances. Unfortunately, sometimes what looks like a good process improvement for the accounts payable department, is something that is not good for another unit within the organization. Thus, it is imperative that the employee share the new idea with the manager who can evaluate the idea and if it is workable, adjust procedures for everyone as well as updating the department’s policy and procedures manual.

This article is an excerpt from Mary S. Schaeffer’s An Effective Accounts Payable Policy & Procedures Manual.

By its very nature as a spreadsheet, it’s easy to create a series of numbers in Excel. For instance, you can enter the number 1 in cell A1, hold down the Ctrl key, and drag the fill handle in cell A1 down to create an instant series of numbers. For the uninitiated, the Fill Handle is the little black notch in the right-hand corner of the active worksheet cell. Regardless, most users don’t realize that you can configure Excel to create a series of letters in a similar fashion. Continue reading at AccountingWEB.

This article is written by one of our esteemed Instructors, David Ringstrom. David is a CPA and owner of Accounting Advisors, Inc., an Atlanta-based spreadsheet consulting firm that he started in 1991. Throughout his career David has spoken at conferences on Excel, and written dozens of freelance articles about spreadsheets. He presently writes for AccountingWEB.com, and offers Excel training and consulting services nationwide.

The economy is slowly but surely making its way towards recovery: Now is the time to plan for the next step in your career. Below are a few tips that will help you along the road to success:

Know your industry
According to the Department of Labor, accounting firms are expected to see an average of about 27% growth each year between now and 2014. So what are some of the causes and the effects of this increasing demand? As the economy continues to grow, so will many businesses—which means that the need for accounting and finance will continue to increase as well. With so many available opportunities approaching, it’s good to take a step back and look at the big picture of your industry.

Know your tools
Since technology is constantly changing and improving, staying updated with the latest functions and plug-ins for your everyday tools is essential for optimal productivity. Whether it is a new interface, latest app, or just a strong grounding in excel for accountants, be sure to take the time to brush up on your software skills.

Know your material
Things like financial statements are more impactful if the users of the statements can make better decisions. Yet many financial statements land in a file somewhere and that is the end of it. Adding analysis of ratios, trends and comparisons allow accountants to gain more actionable knowledge, and communicate them to other departments.

Know your people
Those who aspire to be leaders in their company (CFO or Controller position) must  know beyond the numbers and programs; they must also be able to communicate with the people they work with. This includes people outside of the accounting and finance department, who require more explanation of numbers.    So in order to obtain a leadership role, develop your emotional intelligence and communication tactics as well as your financial and technical skills.

To provide you with the tools you’ll need to advance in your career, CPE Link has designed a special CFO Success Package complete with courses on excel, financial statements, and leadership training.

In our previous post, we talked about the core competencies for interviewing. In the following post, we apply those compentencies in a step-by-step break down of how to conduct a successful interview.

1.
 Break the ice
One of the biggest mistakes you can make as an interviewer is to immediately sit down and start hammering the interviewee with questions. Everyone needs a little time to get used to each other; you need to feel out the personality of the interviewee and he needs a moment to acknowledge that you aren’t that intimidating after all. So, start with something non-threatening and build common ground with the interviewee.

2. Brief the interviewee
Tell the client the objective of the audit and the purpose of the interview. Tell him what you hope to accomplish with this meeting. Then ask him if he has any questions. This makes sure he is clear on what you are doing and establishes more equal footing—more of a peer-to-peer relationship. Also tell the client about your status on the audit. Are you the in-charge or the staff person? Who do you answer to? This is another equalizer and folks always like to know the status of the person they are communicating with.

3. Obtain background information from auditee
Here is the interviewee’s chance to show his feathers—or establish his status. Giving the interviewee a chance to tell you more about himself goes a long way to reducing his fear. Sharing about his role in the company slowly levels the playing field and makes him feel more confident and trusting. Ask him to tell you about his:

  •  Job title
  • Scope of responsibility
  • Tenure

4. Ask interviewee if he has any questions
Before you begin with your questions, it is a good idea to ask the interviewee for his questions. Get all that baggage out of the way so you can have a clear, focused conversation. How you phrase this makes a difference. Ideally, you ask, “What are your questions?” This has a much more welcoming and non-judgmental tone than, “Do you have any questions?”, “Do you understand?”, or “Is there anything you need to say?” Each of the last three questions could be construed as mildly condescending.

5. Questioning
Here is where you get down to business. It is time for you to get answers to your most pertinent questions.  Instead of using a questionnaire filled with closed-ended yes/no questions, try using some open ended ones. It will make your interview more conversational and less like an  interrogation.

6. Summarize and paraphrase
Paraphrasing does several powerful things:

  •  It lets the interviewee know that you respect him enough to listen.
  •  It makes sure you “got it”.
  • It allows him to change his mind and save face by saying, “Oh, no. You misunderstood. What I meant to say was…”

The response to each significant question should be summarized or paraphrased as well as the results of the entire interview.

7. Close
After you have asked your questions and summarized the results verbally—basically parroted the main points of the interview back to the interviewee—you are ready to leave. But don’t just stand up and walk out the door. A little ritual is necessary here to maintain happy client relations.

Before you leave, you need to:

  •  Explain what happens next
  • Leave the door open for follow-up
  • Ask if the interviewee has any questions
  • Leave your business card
  • Say “Thank you”

8. Documenting the interview
Write down everything from your interview before you forget.  Don’t worry about formatting it or grammatical correctness, just write it all down. You can go back and edit it after your coffee break.

The information in this list was pulled from Leita Hart-Fanta’s  Essential Skills for the Government Auditor. To learn more about the role of the Auditor, be sure to check out her course.