Signs Your Nonprofit May Need A New Accountant

Posted on Wednesday, May 22, 2024

Recognizing when it's time to hire a new accountant for your nonprofit organization is crucial for maintaining financial health and compliance. Here are some signs that it may be time to bring in a new accounting professional:

1. Frequent Errors in Financial Reports

Indicator: Consistent mistakes in financial statements, misclassified expenses, or discrepancies in reports.

Impact: These errors can lead to incorrect financial decisions and compliance issues.

2. Missed Deadlines

Indicator: Regularly missing important deadlines for financial reports, tax filings, or grant applications.

Impact: This can result in fines, loss of funding, and damage to the nonprofit's reputation.

3. Lack of Knowledge in Nonprofit Accounting

Indicator: The accountant is not well-versed in nonprofit-specific accounting standards, such as fund accounting or reporting requirements.

Impact: Inaccurate financial management and reporting can jeopardize the nonprofit’s compliance and credibility.

4. Poor Communication Skills

Indicator: The accountant fails to explain financial information in a way that is understandable to the board or management.

Impact: Poor communication can lead to misunderstandings and uninformed decision-making.

5. Inadequate Financial Controls

Indicator: Weak internal controls or lack of proper financial oversight.

Impact: This increases the risk of fraud and financial mismanagement.

6. Unresponsiveness

Indicator: Slow or no response to inquiries from staff, board members, or auditors.

Impact: This can hinder the organization's ability to address financial issues promptly and effectively.

7. Inability to Provide Strategic Financial Advice

Indicator: The accountant only focuses on basic bookkeeping and does not offer insights or strategic advice on financial planning and sustainability.

Impact: The nonprofit may miss opportunities for growth or fail to navigate financial challenges effectively.

8. Outdated Technology or Methods

Indicator: Reliance on outdated software or manual processes for accounting.

Impact: This can lead to inefficiencies, errors, and increased workload.

9. High Turnover or Burnout in the Finance Department

Indicator: Frequent staff changes or signs of burnout among finance team members.

Impact: This can disrupt continuity and negatively impact financial operations.

10. Negative Audit Findings

Indicator: Repeatedly receiving negative feedback from auditors regarding financial practices or record-keeping.

Impact: This suggests significant issues with financial management that need to be addressed urgently.

Steps to Take

Assess Needs: Evaluate the specific needs and challenges of your nonprofit to determine the qualifications and experience required for a new accountant.

Recruitment: Develop a clear job description and recruit candidates with nonprofit accounting experience and a solid understanding of relevant regulations.

Due Diligence: Conduct thorough background checks and verify credentials to ensure the candidate’s reliability and expertise.

Onboarding: Provide a comprehensive onboarding process to familiarize the new accountant with your nonprofit's financial systems, policies, and goals.

By recognizing these signs and taking proactive steps to hire a qualified accountant, your nonprofit can ensure better financial management, compliance, and overall stability.

Contributed by: Carrie Minnich, MAcct, CPA | Partner | DWD CPAs & Advisors

Posted in Mission Minded Nonprofits

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.