Regardless of your organization’s business calendar, the annual audit is never far from being top of mind for financial manager. If you had a December 31 calendar year end, how did your audit go? If you are preparing for a June 30 fiscal year end, will you be ready? This blog will provide an evaluation of the keys for successful audits. Does your organization have the tools it needs to be successful?
Financial managers must navigate the regulatory and compliance environments that creating new demands on the organization. This is true for nonprofit organizations as well as for commercial businesses. Nonprofits must deliver clear statements to their stakeholders such as donors, board members, auditors, and even watchdog groups. This accountability creates several due diligence questions required by board members or the auditors.
The Financial Accounting Standards Board (FASB) has issued the Accounting Standards Update (ASU) no. 2020-07 The purpose of this change is to improve generally accepted accounting principles (GAAP) by increasing the transparency of contributed nonfinancial assets for nonprofit organizations. Read the full ASU report, no. 2020-07.
This new FASB guidance requires additional information that could result in increased costs to track as well as an increase in audit fees resulting from changes in the presentation and quality of the data required.
The financial manager, in conjunction with the organization’s audit committee, should be continually reviewing the impacts of external pressures. In many cases, new compliance requirements may require the collection of data over a period of time and the allocation of resources. It is important to have the right tools in place to satisfy the increasing compliance requirements and respond to the evolving reporting landscape.
Nonprofits need data analytics capability more than ever before. This is evident in the growing evolution of data analytics being moved to the core of operations by successful organizations as well as becoming part of the external and internal audit process.
CFOs and financial managers use data to find patterns in behavior and identify trends to plot the best course for their operation. Analytics can provide a complete view of the organization, with the appropriate level of detail easily available through drilldown features. Auditors use data analytics to support their processes. Analytics can provide higher quality audit evidence, reduce repetitive tasks, and better correlate audit tasks to risks and assertions.
Financial managers must respond to the increased demands for more real time data from donors, the Board, auditors and constituents of the organization and institution the organization supports. A periodic report is no longer going to be sufficient. Analytics can allow for web dashboards to share with the public.
The financial manager of a nonprofit organization must continually evaluate the tools available to their teams to support the audit and operations. The size and complexity of these organizations continue to grow at a rapid pace with many nonprofit organizations branching into new relationships. It is critical the financial team has the tools needed to respond to an evolving environment and support the growing demands of an audit. These tools should include:
- An enterprise approach to business operations with a centralized database acting as the system of record
- The ability to drill down to underlying data in reports and dashboards
- Oversight to changes made to data, setup, users, and permissions
- Integrated allocation and budgeting processes
Serenic Navigator provides for a seamless approach to budgeting and allocations. Manual allocation of investment activity and indirect costs are no longer necessary. For example,, Serenic Navigator provides an embedded workflow process that restricts access across the data as well as requires appropriate review. Serenic Navigator provides the financial manager the ability to assign access, define process approvals and define user permissions to the finest detail, such as:
- Flexible nomenclature that can evolve with the organization
- Dimensional reporting
- The collection of financial and non-financial data to support the new reporting and 990 filing requirements.
Does your organization have the tools it needs? Maybe it’s time to evaluate your software and operation before the auditors knock at your door.