7 Deadly Sins of Nonprofit Accounting – The seven issues that are depicted on our infographic are really all from the same root cause: an inadequate financial accounting solution. Inadequate in that it can’t generate needed reporting. Inadequate in that it can’t integrate with other systems to provide a more complete view of the organization, campaigns, and programs. Click here to download the 7 Deadly Sins of Nonprofit Accounting Infographic How do you avoid the 7 Deadly Sins of Nonprofit Accounting? Very simply by honestly assessing the current state of systems and processes.
How many spreadsheets are currently in use in the organization? Don’t forget to count the spreadsheets in use outside of the accounting department. It’s not uncommon for program managers to create and maintain their own spreadsheets to track program expenses against the program budget.
Spreadsheets serve as evidence of an inadequate nonprofit accounting system. They are powerful and handy, there’s no denying it. But they serve to address system deficiencies. They are a symptom of a larger problem. Statistics indicate that 88 percent of spreadsheets have errors. It’s unsettling to consider the number of decisions that have been made using flawed data.
You can’t obtain optimal accountability and transparency with incomplete or erroneous data. The solution is to work from an adequate accounting solution that has the features and functionality necessary to handle the reporting requirements of a nonprofit organization. Access to system generated reports not only ensure accuracy and audit trails, but can be generated directly from the system and displayed on user-defined dashboard giving you real-time accuracy.
How delayed are your reports?
When month-end comes, how long do you wait for your reports? The longer it takes for the reports to be generated and distributed, the more stale the information is. You are not ideally equipped with information for decisions. Often, the process for creating reports is so all-encompassing and time-consuming that there is little time for meaningful analysis of what’s being reported.
There is another negative that comes with much delayed reporting – people stop asking for needed reporting. The more dependent the organization is on spreadsheets, the more difficult it is to respond to requests for special reporting. Special requests can only be addressed after the routine period-end reporting is completed. If your routine reports are delayed, any additional request for information will be even more delayed – that is if they aren’t denied outright. This is the scenario which leads to people outside of the accounting department creating their own spreadsheets. Another scenario that is all too common is the wild scramble to assemble needed information for board meetings.
It doesn’t have to be this way
It doesn’t have to be this way, but candidly if it continues this way it puts your nonprofit organization at risk – at risk in obtaining grant awards, at risk in losing donor confidence, at risk in optimally serving constituents and the community. It’s probably been a while since you’ve evaluated nonprofit accounting solutions.
Technology is changing fast – in fact it always has been. But what is most revolutionary about the changes of the past few years is how accessible and affordable technology innovation has made nonprofit accounting solutions. The old model of licensing (large upfront payment) a powerful nonprofit solution with server and desktop requirements has new competition in the form of cloud-based, SaaS (Software as a Service) subscriptions and device agnostic access. (It doesn’t matter if you’re using a MacBook Pro in the field and someone else is using Windows on a PC in the office, you can both access the system via an Internet browser.)
We urge nonprofits to evaluate Intacct. It’s AICPA endorsed and provides the most powerful and flexible reporting capabilities we’ve seen in a long time. Intacct reporting is based on a dimensional reporting design. Not only can you generate and distribute period-end financial report packets directly from the system, stakeholders can be equipped with user-defined dashboards to monitor their areas of interest in real-time. The results are powerful and the change is pain-free. User surveys repeatedly highlight ease-of-use as one of the most compelling benefits of Intacct. Xanegy can assist you in evaluating and implementing Intacct.
Simply contact us and we will guide you through the process. And don’t forget to download the ‘7 Deadly Sins of Nonprofit Accounting’ infographic.