You are running a non-profit and experience the unexpected departure of a long-tenured and valued accounting employee. How worried should you be? The complicated answer to this question depends upon many factors. However, without a doubt, the following tasks, if not completed, are serious signs not to be ignored.
Timely payment of payroll, especially remittance of payroll taxes, is a primary concern. It is little known that each nonprofit board director may be personally and individually responsible for unremitted payroll taxes. It is not enough to make sure employees are paid as the equally critical part is to ensure that withheld funds are quickly remitted in accordance with federal and state regulations. Another key function to watch is timely payment of obligations as unpaid bills can imperil an organization’s reputation and credit rating. Due to the fragile nature rightly or wrongly attributed to nonprofits, gaining the reputation of “late payer” may bolster the skepticism of vendors and contractors to continue offering goods and services. Remaining “current” on accounts payable is paramount.
The most overlooked task in a short-handed accounting department is bank account reconciliations, which best practices suggest should be completed monthly. While it may seem that one or more months of delinquent bank reconciliations pose little risk, monitoring cash and making sure all activity is authorized and recorded in the general ledger is critical. Moreover, financial reports generated from a general ledger with unreconciled bank accounts pose the real possibility of being materially misstated. Management would be justifiably hesitant in making important decisions based upon financial reports generated from incomplete materials.
While there are more indicators, these tasks are the minimum of what needs to be completed to keep an organization on track during a key absence. Unsure, contact us!