Americans gave unprecedented sums to charity in response to the devastating hurricanes last year. Large organizations, such as the American Red Cross, were equipped to handle the huge influxes of donations. However, some smaller charities were overwhelmed. Although it may seem like an unlikely problem, your not-for-profit needs a plan to handle a potential outpouring of support. Know what’s normal Perhaps the biggest lesson to learn from recent disasters is to always have an expansion plan in place. When the influx of online giving reached critical mass, many organizations found that their websites overloaded and went offline. Their sites had to be moved to more powerful servers to handle the increased traffic. Keep track of “normal” website hits, as well as the numbers of calls and email inquiries received, so you won’t be caught off guard when you start to surpass that amount. Also, know your systems’ ultimate capacity so you can enact a contingency plan should you approach critical mass. Mobilize your troops Having an “early warning system” is only one part of being prepared. You also need to be able to mobilize your troops in a hurry. Do you know how to reach all of your board members […] Read More
Complex accounting estimates — such as allowances for doubtful accounts, impairments of long-lived assets, and valuations of financial and nonfinancial assets — have been blamed for many high-profile accounting scams and financial restatements. Estimates generally involve some level of measurement uncertainty, and some may even require the use of outside specialists, such as appraisers or engineers. As a result, examining estimates is a critical part of an audit. Companies that understand the audit process are better equipped to facilitate audit fieldwork and can communicate more effectively with their auditors. Here’s what you need to know about auditing the use of estimates as we head into next audit season. Audit techniques Some estimates may be easily determinable, but many are inherently complex. Auditing standards generally provide the following three approaches for substantively testing accounting estimates and fair value measurements: 1. Testing management’s process. Auditors evaluate the reasonableness and consistency of management’s assumptions, as well as test whether the underlying data is complete, accurate and relevant. 2. Developing an independent estimate. Using management’s assumptions (or alternate assumptions), auditors come up with an estimate to compare to what’s reported on the internally prepared financial statements. 3. Reviewing subsequent events or transactions. The reasonableness […] Read More
Tyler, Simms & St. Sauveur, CPAs, P.C.
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