With unique regulatory, governance and compliance requirements, it's essential that not for profit organisations (NFPs) are demonstrating best practice when it comes to not for profit accounting. Without this expertise, the NFP can quickly become non compliant or their financial performance may suffer.
Most NFPs will seek to delegate their not for profit accounting to outsourced accounting services. The benefit of this approach is that you can keep costs down, scale up and down as required, access specialist NFP expertise and benefit from multiple experts working on your account.
Here are some of the ways the right outsourced accounting services can add value through specialist not for profit accounting.
Establishing an NFP
The administrative burden of establishing a new NFP can be overwhelming. New NFPs will need to engage with regulatory bodies such as the Australian Charities and Not-for-profits Commission (ACNC), Australian Taxation Office (ATO) and the Australian Securities and Investments Commission (ASIC) to establish a not for profit legal entity, register the entity with the ATO, apply for charity status, apply for deductible gift recipient (DGR) status, apply for a fundraising licence and much more. Your accounting partner should understand the legal requirements at the establishment phase in addition to the financial requirements.
NFPs have more detailed reporting requirements than many commercial companies including year end accounts, NFP financial reports, general and special purpose reports, reduced disclosure requirements, board reports and annual reports. Your accounting firm should be experienced in preparing these reports and be available to attend board or committee meetings or answer any questions the board may have along the way.
Most NFPs will need to be audited at some point. Medium sized charities (with annual revenue of more than $250,000 but less than $1 million) are required to submit financial reports that have been either reviewed or audited to the ACNC each year. Large charities (with annual revenue over $1 million) must submit audited financial reports each year. NFPs may also need to be audited as part of a grant process.
Your accounting firm should be able to assist with selecting an auditor and work closely with the auditor to provide the right reports and financial information as required.
For NFPs that have received a grant, there will generally be tight controls on how the money is spent, subject to detailed reporting. Your accounting firm will be responsible for the financial management of your grants and should be able to walk you through the process of governing the numbers, as well as help you manage various key aspects such as revenue recognition, unexpended funds as well as repayable amounts.
Job reporting is essential for NFPs managing various projects and project grants. Your accounting firm should be able to help you carefully set up jobs so that they meet the needs of your business and can track the performance of your projects.
CFO Services & consulting
Despite not operating with the purpose of seeking a profit, the financial landscape for NFPs can be incredibly challenging. It’s a highly competitive environment with only so many donor dollars available. Having the right strategy to remain financially sustainable is essential.
The right outsourced accounting services won’t just handle your day-to-day not for profit accounting, they will also be able to advise and consult on high level financial issues.
Your accounting firm should be able to operate as an outsourced CFO, helping you establish strategies for recurring revenue, manage cash flow, establish budgets and create forecasts. They should also be able to advise you on business strategy, operations, business structure, governance requirements and succession plans.
At Keeping Company, we’re not just accountants, we’re business people too. With our counsel, your business can reach its full potential.
We have a team of experts; Cloud Accountants, Business Advisors, Finance Specialists working together and ready to help, contact us today.
For all media enquires please contact Tracy Miller, CMO, Keeping Company 0414 898 452.
The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.