Many organizations rely on accounting professionals to make sure their books are balanced, their files are properly organized, and their reports accurately reflect their financial activities. Accountants do important work, no matter what type of organization they work for. Some professionals take their good efforts one step further by applying their technical skills and industry knowledge to causes they care deeply about.
Accounting for nonprofit organizations
The world of not-for-profit accounting can be exciting. There are whole sets of laws that apply exclusively to nonprofit organizations, giving accountants in this space unique challenges that their for-profit counterparts may not face. Additionally, many civic-minded professionals find that contributing their accounting skills to a worthy cause or organization provides them enjoyment and fulfillment.
However, being a good not-for-profit accountant isn’t always easy. It takes dedication and close attention to detail, as well as a good understanding of relevant laws to succeed in this role. Many nonprofit organizations seek accountants with prior experience in the not-for-profit space, as well as for professionals with distinctions such as Certified Management Accountant or Certified Public Accountant credentials, or a Master of Accounting degree.
The University of Alabama at Birmingham’s online Master of Accounting degree program can aid aspiring accountants who hope to break into accounting for nonprofit organizations. Students who are considering pursuing careers in accounting for nonprofit organizations can especially find value in the Master of Accounting Core class, AC 514: Governmental and Not-for-Profit Accounting. This course explores specific budgetary and fund accounting needs for nonprofits, giving students a sound understanding of the type of skills needed in nonprofit accounting jobs. A few of those skills include:
Strong budgeting abilities
The Governmental and Not-for-Profit Accounting course emphasizes the importance of sound budgetary practices in nonprofit organizations. Much of the funding for nonprofit organizations may come from donations or grants from corporations, endowment funds, or governmental organizations.
Since the money that supports a nonprofit’s programs or efforts comes from well-intentioned people and organizations, it’s important to make good use of incoming funds, allocate them to the correct department if the money was earmarked for something specific, and ensure that an organization’s efforts don’t cost more than its funding allows.
Accountants regularly need to know how to draft reports and records to be compliant with certain laws. However, financial spreadsheets are easily read by a select few — mostly those who also have an accounting background. To the average person, it’s hard to decipher accounting terms and reports. In for-profit accounting, this may not present many problems, but in not-for-profit accounting, some people like to have a clear idea of what the organizations they care about are doing with their donations and other funds.
When public perception doesn’t align with reality, it can spark confusion and sometimes even anger. If donors, volunteers, or other individuals think an organization isn’t handling their funds properly, it can be a challenge to explain otherwise. The ability to clearly report how an organization uses its funds in layman’s terms is a good skill for not-for-profit accountants to have. The same is true for professionals working in governmental accounting because it’s important to clearly demonstrate to taxpayers that public funds are being put to good use.
Though you may work with an external auditor to complete the annual audit for your nonprofit organization, it’s important for not-for-profit accountants to have a sound understanding of the process and requirements. This is especially true during times of standards updates, such as those implemented by the Financial Accounting Standards Board, according to the American Institute of CPAs.
Having a good line of communication with your external auditor can help you prepare in advance, AICPA pointed out. Additionally, when you have a good understanding of the auditing process, you can more easily prepare for your annual audit and make it less stressful and time-consuming.
Prepare for a career in not-for-profit accounting at UAB
Becoming a nonprofit CPA or another accounting professional in not-for-profit or governmental work can be highly rewarding. However, it’s important to pursue this career path armed with the knowledge you need to do well in it. Earning a Master of Accounting through the University of Alabama at Birmingham’s online program is a good first step. To learn more about what the University of Alabama at Birmingham’s Collat School of Business has to offer to aspiring nonprofit accountants, reach out to an enrollment advisor today.