Does Your Organization Need a Disaster Recovery Plan?

By Bob Swetz

Controller Consultant | Tier One Services, LLC

Many of us seem to think that a total disaster is something that happens to others, but not us.

Unfortunately, disasters can happen to any organization at any time, and we need to be prepared.

Disasters can also come in more forms than you might think. Many might think of a fire, flood or some sort of natural disaster, but they can be more subtle and unassuming. I have witnessed several “data loss” disasters over the last six months that could have been prevented with the proper planning.

Here are a few things to consider:

1. Do you back up your data on a regular daily basis?

2. Have you considered the types of data that need to be backed up?

3. Do you store your backups off-site?

4. Do you test your backup restore process?

5. Do you have an agreement with a third-party to restore your data in the case of an emergency?

This is not a comprehensive list by any means.

I do want to point out, however, that 4 and 5 are often overlooked. I have seen organizations that thought they were backing up every night, only to find that it wasn’t working. When disaster struck, they were 6 months behind on backups. I have seen organizations whose entire network was taken down by a virus. One of them was out of business for over a week.

Consider regular tests and off-site recovery as part of your plan so you can substantially reduce your downtime if your facilities or equipment are unusable.

Having the proper backup procedures in place and taking the next step to a full-fledged disaster recovery plan could save your organization someday.

If you have questions or want to dig deeper, feel free to schedule a 15-minute troubleshooting session with me at http://bit.ly/Scheduling_Troubleshooting or connect with me on Facebook at https://www.facebook.com/bobswetzonline.

Should I Seek a Fiscal Sponsor?

A fiscal sponsor is an organization that has already gone to the time, trouble, and expense to legally form a nonprofit, create a board, establish accounting records, establish operations, establish bylaws – all the admin stuff –

And when you do your fundraising, you have people donate to the sponsoring organization with those funds earmarked for your project.

That’s how their donations become eligible for being tax-deductible and also how donors have the experience of donating to a “legit” and accountable organization.

Then the fiscal sponsor passes the funds to you, minus an administrative fee. Amounts for this fee that I have heard are 6% and 10%. There could be other fee levels. It depends in part on what the organization is doing for you. The more they do (such as pay your vendors) the higher the fee.

A fiscal sponsor can either pay your authorized vendors directly or put the donated funds (less the admin fee) into a separate bank account that you have created for the exclusive use of this project. You’re required to report all of your project’s financial activities to your fiscal sponsor and you can get into h-u-g-e trouble if any of those funds are used for a purpose other than what was promised in your initial application for fiscal sponsorship.

A fiscal sponsor is obligated to report to you how much money has come in, and they are required to set aside those donations (less the admin fee) and they can get into h-u-g-e trouble if they use those funds for anything other than your project.

Fiscal sponsorship is an effective financial mechanism for good to be done in the world without red tape.

Q&A: Secure, Paperless Nonprofit Accounting

[1] When you have paper receipts do you scan them?
Hell no. They snap a picture of them with an app like Entryless or Expensify, where they get automatically classified and synced with the accounting system.

[2] How do you have staff code and authorize expenditures and keep that info with the digital receipt?
Staff don’t need to classify transactions. That’s the job of the Finance team. What the Finance team needs is a description of the expenditure and the grant it was for, if that applies.

Staff don’t authorize expenditures, either. That’s up to the ED, who sets policy and then reviews expenditures in the accounting system or an app. Some apps (like Bill.com) and some accounting systems (like Xero) have an Authorize button for bills.

[3] How do you store all these digital bits?
In the app and/or attached to the transaction itself in the accounting system.

[4] How do you pass on the receipt, coding, and authorization to the person signing checks?
In the app & accounting system. In Xero, for example, there is an in-program authorization button for payables.

[5] If there’s fancy software that does this all, what is it and how much does it cost?
It’s not fancy software. It’s cheap and zillions of people are using it. Times have changed. Thank goodness.
Check out Entryless ($22.49/mo), Xero ($30/mo for unlimited users), Bill.com ($19.95/mo).

[6] How much server space does 7 years of “paperwork” eat up?
Servers have evolved. First of all, in most cases you’re not using your own server but that of your cloud-based app, and (a) you don’t care how much space these documents take up, and (b) they’ve got such economies of scale that the space is dirt cheap. See pricing above.

But secondly, server space is cheaper now than it has ever been. So if you run out of space, you buy more. It’s not a big deal. Certainly cheaper than renting a bigger building to store more paper files, and because no one actually does that since that idea is ridiculous, I’ll mention that it’s still cheaper than renting a storage unit for your older paper files, which plenty of people do. And it’s less risky. Paper file can be so easily damaged. Flooding, fire, mold…stuff happens.

Two final points on questions that you didn’t ask:
[7] The risks are higher when everything is on paper:
[a] The savvy cloud-based providers have redundant servers in geographic locations with different natural disaster profiles (“we here at San Andreas Cloud Services store all of your data securely in a nearby warehouse!”)
[b] Paper is easily stolen, lost, or otherwise messed with. When everything is electronic, all you have to do is revoke access when an employee leaves, for example.
[c] You’re stuck with local auditors, whether or not they’re any good, whether or not they charge competitively, plus you have to pay more for all of the shlepping they have to do for the field work. Plus the audit takes longer. Which the Board really loves. Whee! Last year for a new client we cut the timeline from “year-end” to “board presentation of the financials” from 8 months to 4 months. So having everything available paperlessly gives you more leverage to shop around, and if you live in a major metropolitan area you can get an auditor in a lower COL area and pay less but without sacrificing the level of service.

[8] And lastly – this applies only to some organizations, but in those cases, the costs are outweighed by the revenues generated in the physical space that is now freed up. What does the org get to put there, in the entire office drowning in file cabinets? Another fundraising professional, perhaps?

Do You Import and Export QuickBooks Transactions?

Do You Import and Export QuickBooks Transactions?
By Bob Swetz
Controller Consultant | Tier One Services, LLC
Lately, I have been doing a lot of exporting data from one QuickBooks Desktop company and importing into another. Transferring complete and accurate data from Point A to Point B is critical to the integrity of your financial records. Here are some tips to help you complete this task with efficiency and accuracy.
Exporting Information from QuickBooks
There are 2 ways to export information from QuickBooks that have risen to the top as my favorites. First you can create a report and hit the Excel button to “Create a New Worksheet.” When using this method, I recommend selecting the last option to create a .csv file. It goes much quicker this way and you have fewer formatting issues to deal with. Although the file is more suited for import, you will still have to “play” with it so that it will be import-ready. For example, beware of any account numbers, items, zip codes and other number fields that may begin with zero. Chances are when you open the .csv file the zeros will be removed. There is a workaround for this, so feel free to get in touch if you have this issue.
The second method of export is a 3rd party app. I have really come to like Transaction Pro Exporter (TPE). TPE does a nice job of exporting all the information you will need in an import-ready format.
Importing Information to QuickBooks
There are multiple ways to get information into the new QuickBooks Desktop file, depending on the type of information that you’re moving. As with the exports, some importing can be done directly from within QuickBooks. In the Lists menu there is an option to Add/Edit Multiple List Entries. From here, you can import customers, vendors and various inventory items. Be careful though, because you may not be able to import all data fields using this method, so if you have a lot of attributes in each of those lists you may want to use another method. From the Accountant menu, which is not available in all versions, you can import transactions. By selecting Batch Enter Transactions, you can import checks, deposits, credit card transactions, bills and invoices. One thing I like about this method – especially for bills and invoices – is that you can import positive and negative transactions together and QuickBooks breaks them out for you.
Finally, you can import transactions and lists using a 3rd party app. For this I recommend Q2Q or Transaction Pro Importer (TPI). They both have their merits, but I would say Q2Q is better for less complex data. The drawback is you cannot manipulate the data before import, whereas with TPI you can make changes to the .csv or Excel file before you import which is sometimes necessary.
Do You Import and Export?
If you have questions or want to dig deeper, feel free to schedule a 15-minute troubleshooting session with me at http://bit.ly/Scheduling_Troubleshooting or connect with me on Facebook at https://www.facebook.com/bobswetzonline.

Attaching Receipts and Documents to the Transactions in the Accounting System

Consider:

  • the extent to which those records are organized and accessible outside of the accounting system
  • how much is at stake if a deduction is challenged
  • how easy it is to get the organization into an app like Entryless or Expensify or any one of a ton of others in which the spender snaps a photo of a receipt and sends it in for OCR and classification
  • the volume of transactions that could be material that could potentially be challenged, individually or taken as a whole
  • whether anyone is doing quality control on the data entry and needs quick access to the backup for classification
  • the likelihood of the organization to convert to a different accounting system
  • whether the organization has an annual independent audit

Our clients in the $1M-$10M range get us backup documentation for pretty much every transaction. And it comes in handy a LOT.

How to Segregate Duties with Only One Accountant

By Bob Swetz
Controller Consultant | Tier One Services, LLC
“Every business needs to be protected in order to survive and thrive.”
Part 2 of 3

What is segregation of duties and why is it important?
In Part 1 of my series on segregation of duties we explored why it is so important to have adequate segregation of duties in your organization’s accounting department. You can read about that in my article Why is Segregation of Duties Important in Your Accounting Department?
In today’s article, I provide an example of how you can achieve segregation of duties even if your accounting department has only one accountant.

How to make segregation of duties work with only one accountant
If your organization has only one accountant who does everything it may be time for the owner, manager or director to step up and pitch in to split some of the duties with the accountant or bookkeeper.

Let’s look at the bill payment function and assume that there is one accountant and an executive director as the next level of management. To start, don’t let the accountant open the mail. The director should open the mail and give the vendor bills to the accountant to enter. Once the bills are entered, the director can review them and approve which ones to print. It would be ok for the accountant to print the checks, then have the secretary match the checks up with invoices and seal the envelopes.

 

Next, the director can review which bills are ready to go out before returning them to the secretary for mailing. Ideally, borrow and train a staff member from another department to do the bank reconciliations. If your staff is too busy for an arrangement like this, consider outsourcing some of these duties to an outside accountant or bookkeeper. It’s just that important.

In Part 3 of my series on segregation of duties, How to Segregate Duties with Two or More Accountants, I will explore another example of how to make this vital control feature work for your organization.

The Fee for a Business Plan for a Startup

The price for a business plan depends on a few things:

  • whether the plan will be used to raise investment capital (higher) or to make decisions while creating the company (lower)
  • how large and how quickly the founder plans to grow the business (larger & faster = higher fee)
  • how experienced the founder is in creating & launching successful businesses (greater certainty for the client can be parlayed into a greater fee for you if you’re really good at this, adding value & not just documenting…but greater certainty for the client can also result in a downward price pressure if he is just looking for someone to document his thoughts that he’s already confident about and not looking to be influenced)
  • relates to the above point – whether this is designed to be a project documenting what’s in the founder’s head (lower) or a process in which the business design is in fact generated based on powerful, illuminating questions with a suite of the options presented (higher). This latter choice is a process in which language is treated as a generative act, not a descriptive act.
  • what the startup will be left with when the engagement is complete – something genuinely reference-able, usable, inspiring? Or a 100-page book that’s going to get stuck on a bookshelf?

Why is Segregation of Duties Important in My Accounting Department?


Part 1 of 3
By Bob Swetz
Controller Consultant | Tier One Services, LLC
“Every business needs to be protected in order to survive and thrive.”

What is segregation of duties?
Segregation of duties is the concept of splitting key duties within the same accounting function among multiple personnel. For example, printing, checks and signing checks are in the same accounting function. Ideally, these duties should be performed by separate staff members.

Why is it important?
Allowing the same staff member to perform all or most of the duties in the same function creates an opportunity for that person to cover up improprieties. Let’s take the case referred to above and say that one staff accountant enters vendor bills, writes the checks for those bills, mails them and then to top it off does the bank reconciliation. That staff member could easily write checks to themselves, cash the checks and mark them as cleared in the bank reconciliation without anyone ever knowing about it.
It’s important to remember that controls such as adequate segregation of duties are not intended to point fingers or suggest someone is doing something wrong, they are just good business practice to safeguard the organization’s assets.

I have a small accounting department, so what can I do?
Creating and maintaining adequate segregation of duties is probably the most difficult control challenge a small organization faces. Check out how to face this challenge with a one-person accounting department in Part 2 of my series, How to Segregate Duties with Only One Accountant.

Creating Financial Order in Small Nonprofit Organizations

A $100,000 organization is large enough to go under by blowing member trust and public reputation.

And it’s small enough to experience bookkeeper & Treasurer turnover…as well as difficulties in getting clear, complete, accurate, and timely financial information on an ongoing basis.

So about getting your org’s financial house in order, here is the quintessential problem:
* The stakes are high enough that the org *cannot* afford drama and waste in finance.
* But the org is too small to afford a high-end expert doing year-round bookkeeping AND board reporting AND internal controls (helping to protect organizational assets)
* So your org isn’t alone, a ton of $100K orgs rely on a volunteer Treasurer or a low-paid bookkeeper or even an intern. Result: Turnover, mess, or both. $100K is too large for a volunteer.

The solution:

[1] First, you get the books fixed by an expert. A one-time project. If you don’t do this, old incorrect balances will roll forward forever and haunt you (there should be no drama in accounting, remember?)

[2] Second, have the expert set up systems for automation of correct accounting and reporting. In accounting, never pay a human being to do what a computer can do. Let the computer run this thing on automatic.

Reserve the human beings for what we do best:
Exercising judgment, innovating, and creating connection with other living beings.

[3] Third, contract with an expert *just* for those functions. To exercise judgment (quality control), innovate by automating and streamlining processes, and to create connection with other living beings (preparing board-friendly reports, setting up financial information flows between key people), and to defend the organization’s assets and reputation (“internal controls” – jargon alert!).

Don’t have a CPA write checks and do the books; never have the same person write checks as doing the books. But there are ways to both automate/streamline payments and making the payments more secure than paper checks anyway. You handle the payments, or your Treasurer, and your expert makes it easy. Have the CPA or other qualified person monitor the quality of the books and prepare reports so YOUR board understands them and can make decisions based on them.

To create a success map, contact one of our team members! Start with (844) 844-3766.

How to Consolidate Financial Statements from Multiple QuickBooks Files

 

Two ways to consolidate are:

EXCEL TRIAL BALANCES

[1] Export all trial balances to Excel, position them on the same tab but each below the previous one, tag add a column to tag each account with the entity name, combine the DR and CR into one DR (CR) column.
[2] Create your financial statements with your desired accounts and headings
[3] On your tab with the trial balances, create a column called Balance Sheet and assign a B/S account from your B/S page by linking to it…for all line items. Add another column for Income Statement Accounts.
Be sure to skip all intercompany accounts.
[4] On your financials, use the SUMIF function to pull from the columns on the T/B tab using your mapping.

Pros: You can easy-to-update, professional-looking consolidated financials.
Con: It takes a while to set up the first time.

 

QUICKBOOKS ENTERPRISE

[1] Make sure the Charts of Accounts are identical across all 3 entities for any accounts that you wish to consolidate. Account number, spelling, parent/sub status.
[2] Also make sure that any intercompany accounts are all on the same line, i.e. if you have an asset in one and a liability in the other, change one of them to an asset before consolidating.
[3] Use the tool in the Reports menu to consolidate.

Pro: Doesn’t take a lot of time.
Cons: You have to set up those intercompany accounts each time so they get zeroed out, and you end up with consolidated financials that are in Excel and are very cheesy-looking.