fbpx

< Back to Thought Leadership

The Importance of Budgeting

By Greg Heitkamp, CPA – Senior Accountant

Management team members of not-for-profit organizations are frequently asked questions such as the following: Are we meeting our budget? Do we have enough cash? What is the budget for this project?

These questions are posed by employees determining their individual spending limits, board members examining the organization’s progress, or members of management reviewing the internal financial statements in an attempt to answer all of the other questions related to budgeting and the organization’s financial well-being.

The ability to budget effectively is crucial to maintaining a successful nonprofit organization. An effective budget should accomplish the following:

  • Ensure that the organization has appropriate staffing.
  • Provide a framework for decision making. An effective budget assists managers in choosing between multiple projects. Management should be allocating funds and resources to the projects highlighted in the budget(s).
  • Inform the staff and the board what the financial goals are for the year ahead. Budgets are excellent communication tools.
  • Monitor the financial activity of the organization. On a monthly or quarterly basis management should compare actual income and expenses to their budgets to ensure that spending is in line with revenues. If expenses exceed revenues then steps can be taken to prevent financial losses including reduced spending. If income exceeds expenses then management can determine an appropriate use for the excess funds, such as investing the funds or making additional capital expenditures.
  • Identify fraud by determining unusual gaps between planned spending and actual expenses.
  • Assist the organization’s plan for capital expenditure projects. A comprehensive budget will set the organization’s financial goals for the year in order to fund designated projects.

Management and the board of directors should carefully prepare and track budgets to ensure that the organization is staying on track with its mission and vision.

Blue & Co., LLC acquires Alerding CPA Group

Blue & Co., LLC acquires Alerding CPA Group

Carmel, Ind. (November 23, 2022) – The accounting and consulting firms of Alerding CPA Group (Indianapolis, Ind.) and Blue & Co., LLC (Carmel, Ind.) have announced their merger. The combined firm will operate as Blue & Co., LLC (Blue & Co.), effective December 1, 2022. This acquisition will provide Blue & Co. with greater market […]

Learn More

Not-for-Profit Single Audit Requirements – Evaluation of Revenue Sources

By: Holly Fields, CPA, Senior Manager Not-for-profit organizations (NFPs) that receive federal financial assistance over certain levels, either directly from a federal agency or indirectly through state or local agencies, may be required to have a single audit performed under Federal Uniform Guidance. Single Audit Requirements A single audit includes not only an audit of […]

Learn More

Occupational Mix Survey: What You Need to Know

Every three years, the Centers for Medicare and Medicaid Services (CMS) requires any Hospital that is subject to the Inpatient Prospective Payment System (IPPS) to complete an Occupational Mix Survey (OMS). This data is then used to calculate an Occupational Mix Adjustment Factor (OMAF). The occupational mix adjustment impacts a hospital’s average hourly wage and […]

Learn More