Recently, we were engaged by a nonprofit organization to help them during a significant finance team staffing shift. In addition to replacing their CFO to complete their 4-person finance team, they were also in the middle of a very rigorous Single Audit and needed an outsourced CFO to step in and help get them through the transition.

What we found – The most urgent matters were overseeing the Single Audit, continuing to make timely federal draws, and submitting required reports based on accurate information. This is where we hit several roadblocks. The audit was delayed because the auditors found issues including expenses that should not have been directly charged, timesheets that were corrected on paper but not in the system, and grants that were overspent on budget line items. These same problems were clouding the organization’s ability to support their federal draws and as a consequence, they had cash flow problems. The uniting thread with these issues was the lack of clear and efficient systems.

First changes – Once we got through the audit, with several findings and material weaknesses, we improved the organization’s core accounting system. We switched them to an online accounting platform that gave necessary access to the program directors to detailed reports on their grant spending as compared to their most recently approved budgets. Before the switch to the online bill payment system, vendor bills were regularly changed to grants without the director’s approval and they would only find out about these changes if they asked for a detailed excel spreadsheet. After the transition, directors could drill down to expense line items to understand the individual transactions that made up the totals, and could use the reports to monitor spending as they reviewed and approved vendor bills. The initial result was that a lot of vendor bills were denied because they had not been approved in the budget. Finally, we migrated the organization’s excel spreadsheet timesheets to an online timekeeping system that tracked the hours each person had budgeted under each grant and how much time they had left after charging their time to the grant. This helped the directors monitor who charged the grant so they could plan to end the grant within their approved budget. These initial changes organized and clarified the flow of financial information. It gave access to the directors so they could properly manage the financial side of their government grants.

Organizing the flow of programmatic compliance – As we navigated the financial system transition, we noticed inefficiencies and roadblocks in programmatic compliance as well. The program directors and the executive director had a sense of this, but there was a lot of finger-pointing and critical project tasks were not being completed on time or at all. Our second step was to create programmatic systems and processes and expand policies and procedures to make sure everyone knew what needed to be done, the date by which it needed to be done, and who was responsible for doing it. With basic adjustments and comprehensive training, the organization was better able to meet project deadlines and complete project deliverables.

Training – The program directors play a very important role in ensuring that the organization is complying with the programmatic and financial requirements of each award. Once updated systems, policies, and procedures were developed, we crafted simple yet comprehensive training for program directors.They responded well to established order, a clearer sense of their responsibility, and consistent accountability. Once we set clear expectations, gave program directors the tools and support needed to meet those expectations, not only did the program directors deliver, they appreciated having more control over the entire process of the grants they were managing.

Running smoothly – These changes take time, particularly when you are dealing with initial fires to put out. After a year and a half, the systems were producing consistent results, budgets that were being met, not exceeded, reports sent in timely and accurately, and Single Audits that listed no findings or weaknesses. The program directors were better equipped to manage their grants and apply for new grants.

How we saved them money and gave them peace of mind – Initially, the financial team consisted of four staff, including the CFO. Within a few months of our engagement, the two finance team members left their positions. The staff accountant had been eager to get back to his real estate roots. The accounts payable and payroll clerk was much more interested in the community work that organization was engaged in and was moved to another position where she flourished. The accounting junior was ready to take on more responsibilities so she was trained in the more efficient online bill payment system, with time remaining to learn payroll and continue working with receipts and deposits. Our firm took over the comptroller and CFO work saving the organization 30% of the total finance department cost and adding the unforeseen benefit – their operations would no longer be disrupted by sudden changes in personnel. For any executive director who has had the unfortunate situation of finding qualified personnel to replace their finance team, that confidence can provide much needed peace of mind.