 Welcome to the nonprofit show. We are thrilled to have you here. We have with us what we would consider family, but actually Deanna is having her initial appearance with us today. So Deanna Peterson, CPA with your part-time controller. Welcome to you. We are thrilled to have you as a guest to talk to us today about audits in a remote world. So before we dive deep into this conversation with Deanna, we of course wanna make sure that you remember who we are. Julia Patrick is here, CEO of the American Nonprofit Academy. I'm Jarrett Ransom, her trusty sidekick, non-profit nerd, CEO of the Raven Group. And we are honored to have the continued support from our very amazing presenting sponsors. So thank you so very much. I'm gonna give shout outs to Bloomerang, American Nonprofit Academy, Fundraising Academy with the National University, non-profit nerd, your part-time controller, staffing boutique and the non-profit thought leader. These companies have been with us day in and day out and they allow us to have these fantastic conversations. And if you've missed any of these fantastic conversations, you can find us on many streaming platforms. That would include Roku, YouTube, Amazon Fire TV, Vimeo and podcast. So if you joined us for our green room chatter, you listened a little bit about how the three of us consume information either reading in a hard copy book, digitally or also listening to podcasts. So go ahead and queue up the non-profit show wherever you would like to stream this entertainment. And again, we are so thrilled Deanna to have you back because we have actually met IRL and what does that mean my friend? In real life. Perfect, perfect. Again, right on queue. Just thrilled to have you here as a guest and also to have your part-time controller on with us. Honestly, for what has it been three years because we've had this partnership and ongoing relationship. So Deanna, you serve as a market leader for your part-time controller. Tell us a little bit about your role. So my role as market leader is I help kind of get staff, keep staff, get clients and keep clients. So pretty much the whole bit, we really focus on non-profits. We help with all accounting needs in different non-profits. And my market is Arizona and New Mexico. So we've got a great team, a growing team and across the nation, we've got different markets at YPTC that we help non-profits. So that's a little bit of what we do. Fantastic. It's really cool. Jared and I have this like inside joke about your founder, Eric Frank, because we were interviewing him. And yeah, I was gonna say, Jared, you have to do that. So we were interviewing him and he had traveled in from the East Coast, was hotter than hell, cause we're in Phoenix and he had this like beautiful suit on. And we were just like, oh God, it's so hot. You know, you're drink water. And we sat him down, we were in the studio, we started to film and he was great. And then all of a sudden he did this thing that transformed our lives. And he said, how do I get my logo on the screen? And he was like, yes, he really did. And that was what, Jared, four or five years ago? It was, yes. Cause that was the NPO talk show, which really was like the beginning of what this has turned into thanks to the pandemic. But Eric Frank, it is right here, my friend. But he did that. And we were both just like, oh, you know, and so I have, we always say, you know, Eric Frank did that. Eric Frank, right there. Yeah, so I just, I just had to share that with you cause he was a lovely man and really did some amazing things for us. But when we first met Eric and when we first talked about nonprofit accounting and the world of nonprofit accounting, we never talked about the remote world because this was about five years ago and we weren't even thinking that it was pre-pandemic. So can you catch us up to speed about what the word and the import of working remotely even means in accounting? Yeah, so basically a lot of our clients, we never set foot on their property. We just work remotely and it's available because of all the different technology. I know we're gonna talk about technology in a little bit with the remote audit. So basically we can work their accounting remotely but we don't do audits. We can help them facilitate their audits. So before the pandemic, most auditors wanted to fly if they were out of town, they wanted to be on site, see you IRL, before IRL was an acronym and actually like look at paper, right? So they wanted to look at paper, see your facilities, do all of this stuff on site. The pandemic hit and it really forced a transition to say, okay, all of these nonprofits and for-profits for that matter need to be audited but we can't go on site. How do we do this? And so out of the pandemic has come this whole thing where there are remote audits. And now even going forward, I think a lot of the audits are going to either remain remote or be kind of a hybrid, the auditor might come and take you out for lunch but most everything else is going to be remote. You know, I've got to have you step back because this is one of those things that I'm always mystified by. And that is that those organizations that you work with, so let's say your part-time controller, you're working with the nonprofit and helping them with their accounting, bookkeeping, all that. But when you talk about auditing, you're actually, you need to have a different organization. Is that correct? Yes, and it's because of independence. So an auditor has to be independent from who they're auditing, right? They can't really be auditing their own work that would be weird, right? It's a conflict of interest. So we purposely don't do audits because we really like to partner with the nonprofit. We want to be on their team basically to think through and strategize how best can you focus your accounting? How can you get this financial information to help you make decisions? That's our niche. But then the auditors come in and make sure that everything is going to general accepted accounting principles. We make sure it is too, but we're with them, right? We're partnered with them. And then the independent auditor comes in and has that outside set of eyes. So that's the difference. I cannot think of a better partnership to have because anytime I even do my taxes, I get nervous. So to have an auditor come in and do this, I would love to have YPTC on my team to help with this. How, you know, because this is really open the landscape of potential. So how are you seeing a YPTC and across the nation these audits really being accepted in this remote space now? Yeah. Yeah, I mean, I think it came out of necessity, right? When we also had to stay home to be safe and not get everyone sick, but it's so much more efficient, right? You can have a Zoom call, get right down to the issue. And then you can pull up, share screens if you need to. Then the tools that we'll be talking about allow the auditor to get all the information they need. In addition, by executing these tools, you're gonna have less issues in the audit. So what would happen, right? When they come on site, they're gonna go look at your invoices and they're gonna see if you have that little approval from the executive director, whoever's supposed to approve that expense. And if the executive director looked at it, but was really busy and forgot to put their little approval on it, you get kind of an audit finding if that happens too much, right? Well, with these tools, the systems make sure that that doesn't happen anymore. So we have automated approval systems with an audit trail. So it makes things go much more smoothly and the auditors can jump in, pull their selections, see everything. There's no filing. That's the other awesome piece about remote audits. Is the pulling and the filing back? You don't have to do any of that anymore. Yeah, so out of necessity, this really is here. And I have a feeling it's here to stay. So what are these tools? Can you help us better understand what the tools that we need to be successful in these remote audits? Definitely. So first, obviously an accounting system. All accounting systems are on the computer. Now we don't use the ledger paper anymore, thank goodness. But sometimes people have their accounting system on their own internal server. The pandemic has helped us help our clients get those into the cloud more, whether it's the server is hosted in the cloud and you can log in or it's just a total cloud-based accounting like Sage Intact or like QuickBooks Online, something like that. So the accounting system is key. In that accounting system, there are different features. So for instance, QuickBooks Online, you can attach all of your receipts and all of your invoices right in QuickBooks Online. You can create different approvals in QuickBooks Online Advance and you can sync it with third-party apps and that's really another key point. So these third-party apps can incur, expensify, build.com, Divi, all of these apps can help create that audit flow, can help make sure that your audit goes smoothly. For instance, okay, so you've got every, every single accounting department has to pay bills. That's kind of corpies, right? You gotta pay bills. Gotta do it. Gotta do it. Not always the most fun part, but you gotta do it. So when you pay bills, you can set up bill.com, for instance, import those bills, whether it's from an app, whether it's from an automatic forward from the email, it goes into the system. You've already set up who has to approve these bills and who gets to actually hit the, it's okay to pay those bills. Those get processed through, people get paid, the audit trail is already there and there's no filing. Fantastic. Amazing. I've gotta ask you two questions on this. One, it seems like, and I've heard other YPTC folks talk about this, but it seems like those apps and those interfaces are helping to reduce fraud. And is that, is that hard to guess? It is hard because you can have those internal controls. You don't have the paper checkstock sitting in a drawer. You don't have the ability for somebody to go ahead and just sign a check to themselves because that's set up in a system that it's not available. You don't have somebody stealing your checks that you've mailed to a vendor, washing those checks and making counterfeit checks, it happens. And that's not the case if you work through something like bill.com. In addition, it's an easier way, let's say credit cards. So credit cards are one of those risky areas, right? In when we're talking about fraud possibility and when we have expensify or divvy, something like that. Number one, people can take pictures of their receipts really easily on their phone as opposed to putting them in a pocket and losing them. Number two, you have those automatic approval streams. So everything gets approved through and it's less likely that somebody's gonna try and put their date with their husband on their credit card because they know somebody's gonna have to approve it. Someone else is gonna have to look at this. It's not just a pile that they're hoping is gonna get through without really a review, if that makes sense. Wow, it's really interesting because I've got to think, and Jared, you and I've talked about this in other ways, but the pandemic pushed us through these pieces more quickly than if we had just been going along. I mean, it's very interesting, very, very interesting. Well, and I'm curious about it is, and again, it's here to stay, but I'm curious about the adoption of it from the governing board, its fiduciary agents, like what are we seeing are some downfalls because everything you've shared, Deanna, like I'm just like, why haven't we done this before? Yeah, hello. And part of it, I think, is just people get used to doing things the way they've always done it, right? So you've got to have something to put the kink and get through that, oh, we've always done it that way and it's worked out so well. Well, has it worked out so well is the first question, but now the pandemic was that little like bend in the curve where it's like, no, we've got to kind of move forward and I think a lot of people, most all of our clients are seeing, oh, this is better, this is easier, it's reducing our overhead, the time that it's taking us, it's more streamlined, less fraud opportunities and our auditors are super happy. Well, it seems like all of these advances with technology also advances the internal controls. Is that an accurate statement? Very accurate and that goes to that audit trail, goes to that automated approval trail so that when the auditors come in, they know this type of expense is always approved by Deanna and they can look and see, yep, this one was approved by Deanna, this one was approved by Deanna, okay, I'm good, I don't need to pull any more selections because I know it's always approved by Deanna. So those are the types of things in internal control settings and you can separate the duties electronically, right? So the person, for instance, Deanna can't push pay on anything to Deanna, it would be a given, but when it's a paper check, how do you make sure that happens? When it's automated, it can actually happen for sure. Wow. So part of this, it makes me think about, we're doing things in a new way, but we're also communicating in a new way and it sounds to me like part of any process, we got to figure out how we're communicating. Could you talk to us a little bit about that? Yeah, that's one of those key issues with going remote and a lot of times kind of that roadblock that people say, oh, I don't really want to go remote, I want to see people, we have to have communication. How am I going to ask a question? So it really does make us be a little bit more intentional in our communication, right? So for our team, what we do is at the end of the week, when you're working with a client, you send maybe a summary email of, this is what we've done for you, please let me know if any questions and then having Zoom calls, like the face to face, it's not quite face to face, not quite as good, but you can see that face to face, you can build a relationship in Zoom and that's the key piece. So setting up those meetings to meet face to face and then setting up those check-ins and communication strings. How are you communicating the things you've gotten done, your questions and the strategy of moving forward? It just sounds like a no brainer to me, but I've also adopted quickly to some of these other technology pieces. How is, again, I'm going back to the board, how is the board seeing this? And as YPTC helps to prepare for these remote audits and I do believe that your YPTC members work with the board often. So how is this being brought about within those conversations? Yeah, good question. So that's a great question because for our clients that get us in front of the board, we can explain it to the board. We can explain and help them understand their fiduciary responsibilities. A lot of times maybe we'll even recommend that the board talk to another consultant. So it's not just us saying, yeah, you should go with us because X, Y, Z but another consultant can say, well, you should think about remote. You should think about these different internal controls. That's a good thing. So whether it's working with another consultant or teaching the board ourselves, that's really how it helps them understand, okay, yes, this new app, this new system is gonna cost a little bit more money, but it's overall going to benefit the organization. You know, it's an interesting piece of it because at the end of the day, it sounds to me like you're having to, dare I say, re-educate and situate people that are used to doing something the same way for a long time. And then you're kind of turning over the tables and you have to kind of figure out, okay, everybody get on board because we're gonna be doing some new things. So my question is, how do you plan and set those expectations so that everybody can buy in and participate correctly so that you're not, so that you are running in that new direction? So in my opinion, it's all about painting the picture. So I like to be, I'm kind of like that visionary accountant, even though I know that sounds like an oxymoron, because you can paint a picture, even in accounting of what they could see in this accounting nirvana we like to say, or how this can look for you and how this can help you as a board or you as an executive director. And then we can create the plan in writing to show them the steps that are necessary and we can use that for communication like we just talked about, that we could communication, here's our progress to get to the goal. So that's kind of, it's important to paint the picture even though we're just boring accountants. No, no, you're not, because we've met a lot of the YPTC team and you look way beyond your shoes, right? Like you really do have fantastic conversations. Deanna, we have a viewer that asked a question live and I'm just gonna read it aloud for you to answer. They wanna know if you could share some strategies to help get buy-in from management and staff who are tied to the paper and the old way of doing things. So what guidance would you share for this viewer? I guess again, I would just say, we've gotta paint the picture of how is this going to help their lives, right? What can they be doing differently for the organization if they don't have to file paper for 10 hours a week? What can they do to kind of move their mission forward faster and better if they don't have to, executive director, you don't have to look at paper and sign paper and do all of this busy work when really all you need to do is look at it quickly, push a button. There's so many more things that we can pull that mission forward faster. You can have more time to get more money for the organization. You can have more time to serve lunches if that's part of your programs, something else other than doing accounting paperwork. Well, and I think too, it also speaks to the maturity of the infrastructure, right? And so those internal controls that you mentioned, really having a higher check and balance for this system, that to me is, you know, taking the organization from perhaps, I'm gonna say an archaic way of doing things now into let's move into a more mature system and way of doing the audit. And you can also show, you know, without any audit findings with that automatic trail, you can show your funders or possible funders that you've got your stuff together, right? We all want to be able to show the outside world whoever were our constituents that we've got our stuff together. And this is one of those ways to do that. Well, and earlier this week, Julia, we talked about how important financial transparency is and this speaks to that as well. Deanna, I'm curious, and this might not be a question that you can answer, but actually it's two questions. One is a remote audit shorter in length than let's say, you know, the norm or the previous pandemic. And then the second question is now that they are remote and we're taking out that travel, are they also less costly? So have we condensed our time and also condensed our dollar mark? Can you speak about that? Those are great questions. And I think it goes to fold because if you halfway adopt remote ways and you still have these side papers, right? Or you still have, you know, you're still kind of doing things partially the new way, partially the old way, your audit can actually get longer and more expensive. Like you have to be all in, you have to adopt it in order to make things more efficient. If the auditor feels like, wait a second, you've got these internal controls, but you're not abiding by your policies all the time, that can cause problems. But if the auditor knows comes in, your books are clean, you've got audited, like auditable or automatic systems in place, they can audit it quickly, they can get your financial statements and it can hopefully reduce your costs. That's up to the auditors, but hopefully that's our goal is to reduce costs. And we have seen it with our clients that their audit cost has not increased over time. And then the travel cost is in addition to the audit fee. So auditors always charge, okay, this is your fee and then you also have to pay travel. So in that sense, if they're not traveling, you will save costs, you won't have to pay that extra travel. Yeah, all great things to think about. So I love that it's here to stay and I can only wait to see, you know, the evolution as it continues. So thank you. It seems to me, Deanna, that it's maybe a little challenging the first year or the first time, but then as everybody gets on like the same page and understands kind of how it works, that then you can really navigate this in a more efficient way. I mean, is that fair or is it gonna be different every time? It's totally fair actually because any system that you implement, right? It's the pain of that implementation, no matter what it is, whether it's, you know, a board structure and a change of staff, any kind of change implementing a new system is gonna take some time. But once you get that established, things can roll smoother and especially if you're streamlining and automating things, things will go smoother and you'll be able to reap that benefit. Yeah, I love that. And that's just general wisdom across the board. So really cool. Well, this has been wonderful to have you with us. Deanna Peterson, CPA, market leader of your part-time controller. You know, she's one of our peeps because we are in the same community. And if you joined us with the green room chatter, you know, we've worked with Deanna in IRL and we've been together and had lunch or, you know, this or that or see you at events. But we've never had you on the nonprofit show. And so... This has been fun. Yeah, it's been really great. And we're just really thrilled that we could get your wisdom and have you be a part of this conversation. Check out Deanna's information here. YPTC has a lot of information on their website. They have some really good training modules, webinars that they've taped, things that they do that it's not gated. You can access this information, whether you're one of their clients or not, which I appreciate Deanna because, you know, that knowledge can help people in so many ways, whether they ever establish a relationship with you all or not, but it helps our entire sector. But yeah, really a fun conversation. You know, Jarrett, I feel like we need to have this conversation again, at the same time next year to see how things have moved. The advancements, yeah. Well, and I also have to say, you know, the passion that comes through from all of the YPTC members is just astonishing. And that really speaks volume to the commitment and dedication, not only to the sector, but to, you know, the practice that you do day in and day out to strengthen our community. And Deanna, you just use this passion. So thank you. Thank you. It's been lovely. Thank you so much for having me on and I hope to do it again. Of course. So too. I'll give you a little hint. You know, when Jarrett and I first met Eric Frank five years ago and he did that whole thing and he's just a lovely man, we both were like, yeah, Eric's great, but all of his employees are gonna be duds because they're accountants. We can never work with him. And then we were like, okay, well, we'll give him a chance. And then one after one after one after another. Yeah. He's great. And then we were like, Oh, we love the world. Yeah. But we weren't so sure. And I witnessed that to you, which makes this sound terrible and very shallow, but it's kind of- I think you're not the only ones, which is why we like to be on these kinds of podcasts because we can let people know it's not, we're not just boring accountants, but we do live accounting. So- Well, Deanna, you know, I love a good nerd. So I mean, nerds unite. Exactly. We have to. Well, hey, this has been a lot of fun. Again, I'm Julia Patrick. I've been joined by my trusty sidekick, Jared Ransom, the nonprofit nerd herself. Again, we wanna thank all of our presenting sponsors. And we told that funny story about dear Eric Frank, the founder of your print time controller. And we apologize, but we did it. I did have to share that. It's endearing. Yeah. It's a great story, plus it's art. But again, we wanna thank Bloom Rang, American nonprofit Academy, fundraising Academy at National University, the nonprofit nerd, your part-time controller, nonprofit thought leader, and staffing boutique. Again, these are the folks that are with us, day in and day out, so that we can bring a great episode each and every day. We love them. Yeah. Yeah, it's really cool. Deanna, thank you so much. This was fun. Thanks. We've got to do lunch again. Yes, IRL. IRL. Exactly. I know. And then, yeah, we'll, off camera, we'll set that up. Everybody, as we like to end every episode of the nonprofit show, we want to remind our viewers and listeners and even ourselves to stay well, so you can do well. We'll see you back here tomorrow, everyone.