Your Nonprofit is Only as Strong as Your Bookkeeper– February 07, 2017

Although volunteers can fill many important roles, some jobs, such as bookkeeping, are best handled by paid employees. Your nonprofit’s financial integrity is simply too important to leave to an unpaid, and possibly inexperienced or worse — potentially devious — bookkeeper.
 
A bookkeeper doesn’t have to be full-time; many smaller nonprofits hire part-time or contract individuals for the position. But before starting your search, consider what the position will demand. Most nonprofit bookkeepers are tasked with entering income and expense data into an accounting system (which an accountant will then use to create financial reports and prepare tax documents). Depending on the size and nature of your nonprofit, your bookkeeper may also be asked to:

  • Track income and expenses by program;

  • Pay bills, make bank deposits and process credit card payments;

  • Record accounts payable, accounts receivable and cash receipts;

  • Reconcile bank statements;

  • Post adjustments to the general ledger;

  • Help with year-end financial audits and tax preparation; and

  • Send donor acknowledgments, order supplies or engage in other clerical duties.

Although bookkeepers don’t need accounting degrees or a CPA qualification, they should understand accounting terms and principles, be comfortable working with computers and accounting software, be detail-oriented and be able to meet strict deadlines. And while a qualified bookkeeper with only for-profit experience could be a good candidate for your organization, make sure he or she understands that there are differences between for- and nonprofit accounting. Any hire will need to get up to speed quickly on recording such items as pledges, donated goods and services, and restricted donations.
 
Prospective bookkeepers should also be carefully screened for ethical violations and criminal activity. Many nonprofits are defrauded by bookkeepers who have been given free access to financial records with little staff oversight. Your bookkeeper may be handling cash, depositing checks, entering donors’ credit card numbers and viewing other sensitive information. So be sure to conduct thorough background and credit checks — including following up on references — and always provide proper supervision by a trusted manager. There are some simple internal controls that can help with oversight.
 
At the end of the day, if you wouldn’t let just anyone manage your personal finances, it probably doesn’t make sense to let just any volunteer or staff member keep your nonprofit’s books.
 
Contact Marie Brilmyer mbrilmyer@cohencpa.com or a member of your service team for further discussion.
 
Cohen & Company is not rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances.