We sat down with Lisa Johnson, CPA, and Richard Wolf, CPA to solicit a few tips from their experience working with nonprofit organizations.
Meet Lisa & Richard
Lisa Johnson, CPA is an audit partner and the co-director of Gross Mendelsohn's Nonprofit Group. She has 20 years of experience in nonprofit audit and accounting. Her board roles have included Richcroft, Inc. (president) and Community Law in Action (CLIA).
Richard Wolf, CPA, CGMA, CFE, CVA is a partner at Gross Mendelsohn and has worked with nonprofit organizations for 25+ years. Richard's board roles have included Collaborative Professionals of Baltimore (treasurer), University of Baltimore Accounting Advisory Board, Loyola University Maryland’s Accounting Advisory Board, Maryland Association of CPAs and Beth Tfiloh Dahan Community School.
Panel Q&A
What’s one easy fix most nonprofit CFOs can implement right now?
Richard: Think before you act. A lot of times we get calls after a grant has been issued or after the fact, and it becomes a lot more complicated and complex for us to unravel and unwind how to approach something.
What’s the costliest mistake you see nonprofits make in their accounting?
Lisa: Not developing and approving a budget for the year. It’s so important that nonprofits follow a budget, that it is prepared as accurately as possible, approved by the board and that the staff buys in on it as well.
Richard: Not investing enough. A lot of times we’ll see an RFP goes out and the organization will just select the lowest cost provider without really evaluating whether that organization has the right experience and knowledge needed to do a good job.
Where do nonprofits get tripped up in the audit process?
Richard: The biggest area that nonprofits get tripped up in an audit tends to be documentation. It’s extremely important that you retain and make all documentation available.
Lisa: Be prepared. In the audits that go smoothly for us, the client really spends a lot of time, weeks ahead of the audit, to go through the books and records, clean everything up, reconcile the accounts, go through the client assistance list and prepare all the documents for us.
Preparing For An Audit
Learn the basics of the nonprofit audit process, including what you should expect from the audit, how to understand a management letter and your responsibilities if you get a negative comment in this free eBook, Demystifying the Audit.
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