NFP New Year’s Resolution: Get to Know Your CPA
It is time for NFP organizations’ New Year’s resolutions. I am proposing a novel one: Get to really know your CPA, and see what help she can provide!. You might ask, Why? Let me give you a few key reasons:
- The IRS is requiring more and more tax forms used by NFP organizations to be filed online. For instance, see this article from the Accountingtoday Daily Briefing. As reported in this article, the IRS has experienced problems in keeping its systems up to date, causing frustration with many NFP organizations. The IRS is also experiencing a backlog in processing returns. Your CPA is better equipped to deal with electronic filing requirements and the IRS (if needed) than you may be.
- Implementation of the new lease accounting standard is required for fiscal years beginning after December 15, 2021. This accounting will fundamentally change your balance sheet if you have a lot of leased equipment or premises. Do not underestimate the amount of work required for this effort. Interim financial statements beginning one year later will also need to be converted to this accounting, so you don’t have much time. Additionally, the impact of the new lease accounting on prior years’ financial statements will also need to be calculated and reported on. A CPA will be able to estimate the impact of and implement the new accounting. Additionally, your CPA can help your organization negotiate any debt modifications with lenders if you have outstanding debt or a credit line from a financial institution.
- NFP mergers and acquisitions continue apace. One strategy for an NFP organization to grow quickly is by acquiring another organization. To say this is complicated would be to understate that complexity, especially when the NFP acquires a for-profit entity. Your CPA can help guide you through the acquisition process. For instance, a CPA can provide financial modeling, due diligence, and strategic advisory services if you are considering an acquisition.
- Your CPA can advise you about the level of attest services your organization may need. Audits are expensive. A lesser level of professional accounting service may be appropriate. Stakeholders understand this has been a rough spell for NFP organizations. Perhaps they do not need audited statements. Reviewed or even compiled financial statements may be adequate for their needs at a much reduced cost. Your CPA can advise you on this issue.
- Lax internal control can lead to the potential for serious frauds and some bad press. In the current economic climate, news of squandered resources lost through lax internal processes or defalcations can cause donations to dry up quickly. This could cause a great deal of disruption to your mission, if not catastrophic. Your CPA can provide information and advice about internal control best practices.
- Your CPA can be a source of volunteers. Professional accounting organizations encourage CPAs to “give back” to their community and volunteer to work at worthwhile causes. CPAs not only make excellent financial officers (treasurers, controllers and internal auditors) and board members, but often have a large network of clients that also want to volunteer. In effect, your CPA can act like a volunteer clearinghouse for your organization
These are just a few of the reasons why it makes sense for you to get to know your CPA in 2022!