Do you have enough staff members with the appropriate skills to handle all of the responsibilities involved in efficiently running your nonprofit?

If yours is like many other small/mid-size nonprofits and charities, this is an ongoing challenge. And it can be particularly challenging when it comes to accounting duties. Even the smallest organizations must address substantial bookkeeping and accounting requirements on a daily, weekly, quarterly and annual basis. There’s recording transactions; tracking income and expenses; reconciling bank statements; preparing charts of accounts, journals and general ledger; analyzing accounts; preparing and updating financial statements and reports — and so on and so on.

Addressing the quantity and diversity of bookkeeping and accounting tasks is a challenge for many small organizations; however, separating these duties is also a critical issue to be addressed. To protect a nonprofit from fraud and theft, for example, activities related to authorizing, executing and recording transactions and holding assets should be segregated among different individuals.

For reasons like these, many small organizations rely on the receptionist or other general administrative staff and volunteers to help with some of the bookkeeping and accounting duties. Given the importance of these duties in safeguarding assets, anyone with such responsibilities should have the appropriate training and assessment.

Also, because accounting standards continually evolve, these individuals will require ongoing professional development. If your nonprofit is fortunate to have an accountant on staff who is professionally accredited (such as a Chartered Accountant, Certified Management Accountant or Certified General Accountant), this individual’s professional accounting body requires them to participate in a minimum number of hours of professional development each year. This mandatory continuing education ensures their knowledge and skills remain current.

Yet for many small nonprofits, a part-time bookkeeper who reports to the executive director is more the norm. So how do you ensure this staff member has the appropriate training and skills? Here are five basic guidelines:

1. Recruit someone who has experience in a similar role and is familiar with basic accounting programs. It’s also important to find someone who is eager to learn and who will take the initiative in asking questions of the executive director, treasurer or audit firm as issues arise throughout the year. Having the executive director or auditor find discrepancies at year-end because the bookkeeper assumed something incorrectly can lead to budget, audit and tax problems.
2. Document accounting processes and procedures. This ensures consistency when a number of people share duties and when new staff members join the organization. An accounting procedures manual describes how the various financial functions should be handled and who is responsible for which tasks. If you have a capable treasurer on the board of directors who sets financial policies and monitors the financial performance of the organization, this individual can guide the development of the manual. If there are no qualified staff members or volunteers, consult with a professional accounting firm or, if your year-end financial statements are audited, with your organization’s auditor.
3. Establish a refresher training program and ensure the relevant personnel participates on a regular basis. Again, if you don’t have anyone on staff with the appropriate expertise to develop this program, ask the treasurer, auditor or a professional accounting firm to assist.
4. Be vigilant regarding any significant internal or external changes that may affect accounting functions. Revisions to nonprofit tax rules or accounting standards, for example, might have an impact on your procedures. Internally, major software or hardware upgrades can do the same. It’s important to assess the impact of such changes on accounting processes. Ask your treasurer or auditor for recommendations of professional development sessions that address accounting and tax updates for the nonprofit sector.
5. Regularly assess accounting personnel to ensure they have the necessary up-to-date skills to effectively carry out their responsibilities.

As a nonprofit grows and financial activities increase in volume and complexity, the organization may need the expertise of a more experienced financial professional, such as a controller or director of finance. Ideally this person will have a professional accounting designation to ensure the requisite skills and experience to handle complex transactions and financial management.

Until that time, if you need the receptionist to help with accounting duties, be sure to provide the necessary training and assessment to keep your nonprofit safe and sound.

Frances Napoli, CA, is a manager with BDO Canada LLP who works with nonprofits, charities and owner-managed businesses. You can reach Frances in the Mississauga office at 905-270-7700 x7837 or fnapoli@bdo.ca.