Posts by Mark Van Benschoten, CPA, Director of Not-for-Profit Services:
- Too many directors lack a deep understanding of the organization
- Most lack formal governance structure and processes
- Many directors are not engaged, do not understand their obligations
Some organizations switch auditors regularly — that can mean going to a new firm or just getting a new lead auditor — but there can be both advantages and disadvantages to this practice.
Although the Securities and Exchange Commission regulates how often public companies need to switch lead auditors, there’s no requirement for anyone else to do so. It’s individually determined by the organization.
Mark Van Benschoten recently sat down with Smart Business to discuss the pros and cons of an auditor rotation and also best practices. To read the full article, check it out on Smart Business’s website.
By Mark Van Benschoten, CPA (Dublin office)
Want to read more articles about best practices for business audits? Check these out:
For the same reason you wouldn’t expect your eye doctor to repair your tooth, you shouldn’t depend on your annual audit to detect occupational fraud in your business. A financial statement audit validates your financial records and provides reasonable assurance that they are materially accurate. It does not look for fraudulent activity.
Of course, if your auditor comes across suspicious transactions or questionable information, they will certainly share their findings with you. In addition, a good auditor will be able to recommend a fraud detection expert to help you dig deeper into the questionable activity.
So, if your audit won’t detect fraud, how will you know if it’s happening in your organization?
According to the Association of Certified Fraud Examiners’ Report to the Nations on Occupational Fraud and Abuse, only 3 percent of the nearly 1,500 reported cases of occupational fraud were detected by an external audit. According to the study, employee tips continue to be the most common way in which fraudulent activity is reported – usually through a fraud reporting hotline.
Your employees are likely honest, hard-working individuals who would never do anything to jeopardize your business. But until you empower them with a secure, anonymous outlet to tip off this behavior, you will never truly know for sure.
This article was published in the September 2015 issue of Columbus Business First – Ask The Expert.
If you had to guess, how strong do you think your nonprofit organization’s policies are? If you’re unsure or have that gut feeling they’re not strong, you’re certainly not alone. After surveying more than 900 directors of nonprofit organizations, the Stanford Graduate School of Business, in collaboration with BoardSource and GuideStar, reported some concerning findings in their 2015 Survey on Board of Directors of Nonprofit Organizations.
You may know that it’s important to have good governance when it comes to ensuring the stability and strength of your organization. Without having the right procedures in place to help govern the board of directors and the institution as a whole, the entire organization risks collapse.
While securing sources of revenue and recruiting new members are critical elements of every nonprofit, the real backbone of your organization is your board’s governance. Without the proper structure in place to help shape and reinforce your vision, mission and objectives, your board will not have the tools needed to lead – making your funding and membership objectives less effective.
According to Stanford Graduate School’s survey:
“Over two thirds (69 percent) of nonprofit directors say their organization has faced one or more serious governance-related problems in the past 10 years. Forty percent say they have been unable to meet fundraising targets. Twenty-nine percent have experienced serious financial difficulty. A quarter (23 percent) have asked their executive director to leave or had to respond to unexpected resignation [and] sixteen percent say they have had extreme difficulty attracting qualified new board members.”
Furthermore, the study found that:
While the shortcomings underscored by this report highlight a widespread problem throughout the nonprofit industry, the solution may be as simple as writing (or reevaluating) and implementing a variety of key policies. Enacting proper policies throughout the organization will not only help rectify problems that stem from a weak system of governance, they will help solidify the connection between the directors and their organization while putting a solid structure in place for streamlining the nonprofit’s central objectives, such as fundraising, budgeting and lobbying. Policies can, and should, be in place to help manage the organization’s advisory council, board member orientation, ethics, confidentiality, donor relations, performance, and sponsorship activity – among many others.
Not sure what policies you should have in place? Take a look at this comprehensive Not-for-Profit Policy Checklist. Here are also a few examples of sample policies to give you greater insight into what you should be striving to accomplish.
By Mark Van Benschoten, CPA (Dublin office)