 and welcome back. We're so glad that you're here. I'm just making this assumption that you joined us yesterday for the kickoff of Nonprofit Power Week. We are thrilled to have Beth Farley, CPA, and partner at Ida Bailey joining us every day this week. If you joined us yesterday, you know she is such a whiz and expert in this sector. So thrilled to have you back, Beth, to talk to us more on Back to Basics. And today it's all about what is that critical information that we should be documenting. And for those of you watching and listening, this is really from that finance accounting standpoint. So every day, we are thrilled to have Ida Bailey supporting us for this Nonprofit Power Week. This is a dedicated, unique week. We don't do this very often, but when we do, it is special. So thrilled to have Ida Bailey with us the entire week this week. So here we are on day two, Julia Patrick. Thanks for being here. Of course, Julia is the CEO of the American Nonprofit Academy, and I am Jared Ransom, your nonprofit nerd and CEO of the Raven Group. We are so extremely honored to have the Nonprofit Power Week and also the continued support from our amazing sponsors. So a shout out of gratitude to our friends over at Fundraising Academy at National University. Also, thank you to Bloomerang, your part-time controller, American Nonprofit Academy, Nonprofit Thought Leader, Staffing Boutique, Nonprofit Nerd, as well as Nonprofit Tech Talk. These companies have been with us on this journey since March of 2020, helped us to produce over 900 episodes. In fact, Ida Bailey has joined us almost annually for a Nonprofit Power Week. So you can go back and listen to those episodes. If you have your smartphone with you, go ahead and pull that out because you can scan that QR code right in front of you, download the app. You can also still find us on broadcast platforms and podcast platforms. So wherever you choose to consume your entertainment, just speak into that device and ask to call up the Nonprofit Show and you will see more than 900 episodes, including this one that we are having right now with Beth Farley. So again, to reintroduce you, Beth, for those of you watching and listening, Beth Farley joins us. She is a CPA and a partner at Ida Bailey. Welcome back. Thank you. It's so nice to be here. We appreciate participating and we love serving the Nonprofit Community and everything. We don't do your programmatic work, but everything else we can help you out with. You know, I gotta believe though, given how we were talking yesterday, you know, the folks at Ida Bailey, when they come in to do an audit or to do whatever, they probably are learning and advising about a lot of things, not just necessarily the finance and the accounting, because it seems to me like you bring the expertise and the knowledge and experience from your other clients and it kind of amalgamates somehow and you end up sharing that. I mean, is that a fair assumption? I would agree. Yeah, we aren't boots on the ground for your program. So we've seen a lot of programs operating and how do those tie into your grant and your programmatic reporting and what requirements are there. So yeah, we've seen every type of non-profit out there, you know, manufacturing, food banks, service base, so lots of different things that we can talk about definitely. Lots of resourcefulness awards that is an annual award. We've been part of that. I was a judge a couple of years ago, such a great opportunity. So you're reading the programmatic proposals, the innovation that the organizations are providing. So that's always a fun one. If you're not familiar for those of you watching and listening, look up resourcefulness awards through Ida Bailey. It is an annual grant award that is given and it's really fantastic. And it's going to be announced this week, so the winner. So, you know, we'll keep that under wraps for now, but we're very excited about where we're at with that award. Yeah, you know, it is one of the coolest things that gets done. And I was really privileged to be on a board of a group that won in the very early years. And I went not because of my work with this non-profit, I went just because of, you know, it was a community thing. And I remember that when our organization's name was, um, you know, announced, I screamed. I like jumped up. I got, it was like the Academy Awards. And then I was so embarrassed because I was like, Oh my God. But it was, it was like, I want to say Beth, it was like $10,000 that we won. Yeah. And it was, you know, talk about it was, I think it was like 2008, 2009 when things were tough. That 10 grand was like a hundred grand, right? Yeah. At that time. And so, yeah, resourcefulness awards. Super cool. Great idea. Something that everyone can learn from. Okay. Well, Beth, now we got to get down to the meat and potatoes of y'all. Talking about documentation. Definitely. But what do we document? So we want to document. There's very specific things we want to make sure we're documenting. And I like to always say if it's not documented, it didn't happen in my world. I like that. It's kind of like photo or it didn't happen, right? So document or it didn't happen. Okay. That's, so you want, yes. You want to make sure that what you've got documented shows that what you posted into your accounting system or even what you put on your programmatic report, whatever it is, as you bring that information forward that it's, you've proved that it's accurate. So that supports the accuracy of the recording and the number. So say you're saying that you've serviced 600 clients. How did you collect the data for those 600 clients? So it's not just financial data. It's non-financial as well. What is that that you've got that documented? You didn't just guesstimate that you had 600 clients. You actually have something to show how you, you know, pull that information together. So does it support the accuracy of the information? Can you support that? That was reviewed because, you know, we all, we're humans, right? And so if you write down a number and then you don't double check it, I, every once in a while, I'm a little dyslexic and I'll write, you know, $21 instead of $12, you know, so you want to have a second set of eyes to make sure that the numbers are accurate that you're showing. And so was it reviewed and was that reviewed documented? And then can you support who's responsible for that? So if something doesn't happen, does your documentation procedures and policies show who was responsible to make sure it got done? So those are some of the key areas I'm really focused in to start with. I'm fascinated because you're talking about, and I didn't mean to interrupt you, Jared, but you're saying we need to actually almost document the protocol. Like how, not to your point, we just fed 600 people, but how did we, did we use a clicker when they came through the door? We counted the number of plates. Is that what you're saying? Go down to that level? Absolutely, absolutely. And the reason why is because you have individuals who change within your organization. And so, you know, when you have somebody new come on board, or maybe somebody, you know, didn't even leave that they just got promoted. Now you have somebody coming into that position. What are those things that they need to make sure they're documenting and recording so that at the end of the month, at the end of the quarter, they have the information to properly report it within the accounting system or within whatever, you know, non-financial data they need as well? Well, so my brain automatically jumps to grants. That's where I spend a lot of my time is fundraising. And so whether it's a grant or a government contract where there's a reimbursement, you know, tied to that. And I can only imagine having this supportive documentation would really help in all of the processes of compliance and reporting back through this grant process. So to me it sounds very tedious and exciting because having this, you know, information at our fingertips, I think would really strengthen the report and then the narrative for even a proposal in the future. Absolutely. And also when you're doing your grant applications and you go, okay, last year we had 600 that we served over the year and it costs us this much. We know that if we want to double that, what does that look like for us to get new grants for? What do we need to fundraise? And if you've not documented that, and you don't really know how many people you serve, then or how much it costs you to do that, then it's going to be really hard to determine. You're just kind of picking a number out of the air to try to guess how much you want to fundraise for. Right. And I know that happens, sadly. So let's just pick this random number. Let's go to a documentation policy because this is something that really caught my attention. And you talk about it from a 3C perspective and those 3Cs are concise, correct, and current. Tell us more about this documentation policy in the 3Cs. Yeah, definitely. You want it to be direct and to the point. You don't need to go on and on about various things and left and right and all these different things. So let's get to the point. We need to make sure that we're documenting how many clients we served. Okay. Step one, let's do this. Step two, let's do this. Step three. Don't make it overly complicated to where you're reading a paragraph and you're kind of getting lost in what you just read. Do one step, do step two, do step three, do step four, and that'll give you the end result. And make sure that it's accurate to what actually you can do or you are doing. So there's best practices, right? We say you need to have two signers on a check. What if you can't physically get two signers on a check? Let's look at something else that maybe is more correct of what you are, what you can and can't do. So make sure that it's something that the organization is actually doing and physically can do whatever that that may be. So that's kind of the correct piece of it. And then current, don't write it, and 10 years don't look at it again. So make sure that you're accurately looking at it currently on a regular basis, no less often than annually. Well, and Beth, yesterday you shared that, you know, I Bailey was going in and maybe it was you personally to do an assessment on some documentation and some policies. And actually the policy that was written was not even being followed. And so this current, like, let's sure it is current, if your process has changed, that's okay. But the documentation should also change. Absolutely, absolutely. Make sure people know what they should be doing in whatever position that they're in. And if you don't have that documented, they're just going to make it up as they go. You know, they're not going to have that information to do it. And they're going to do the best that they have. And if they don't have experience, they might not cover all the bases that they need to be covering. Yeah. And I really appreciate the concise because I can imagine, especially if someone's new coming in, they might want to be very verbose. They want to fluff the narrative. They want to make it like, I wrote two pages on this. And it's right. Okay, but in those two pages, there's six steps could have been bullet pointed. Right. So that's part and parcel to that. I mean, you come to us in these conversations as a CPA from a national, you know, accounting and finance firm, but within a nonprofit, who does this? You used that word champion yesterday, which I love that word. But is this an accounting and finance championed kind of concept? Or should this come from the CEO's office? Or who who is doing this oversight is the only word I can think Not doing the work but making sure that we are managing the documentation policy. I think it you can delegate it a little bit. Again, I think that there's one person that needs to make sure it's happening and driving it just to make sure that it's occurring. So if you don't have somebody who says, okay, annually, you need to go check in with all these people. But the CEO, the CFO, whoever you put as that champion to make sure it's happening, the CEO is not going to know necessarily the exact steps that the boots on the ground programmatic person is to count the clients that they're working with, or the accounts payable system that that maybe they're using, they have a general idea, but they don't always know the exact steps. So they can't do it alone. It has to be a team effort. And, and that's why the policies, you know, they're financial and they're non financial, it's not just the finance team that is looking at that. It's going to be your programmatic people, it's going to be your fundraising people, you've got special events, what are the policies over that? So it's going to be everybody in the organization. But I think one person who says, it's my responsibility to make sure that we've looked at these annually. And that can depend on the organization. And then one more follow up to that. Is there like a golden month or quarter where this gets done? I mean, is this like a end of the year beginning of the year? I mean, how do we Julia, are you asking where on the compliance calendars this should lie? Well, so my favorite thing. I even told him about it at dinner last night. He was like, Oh my God, that's brilliant. Yeah. So I didn't, I didn't want to add that in. But I mean, do you see what I'm saying? Like, absolutely. There's a seasonality to this, right? Or do you just do it in the middle of the year? Or how does that look? What does that look like? I love this word. These two words. It depends. Let's look at why it depends. You know, obviously I think at the end of the fiscal year or the calendar year, whatever you have as your year end is a good time to re look at all of these things because you're closing out the end of the year. But we have a lot of organizations with June 30th year ends. All of their grants end in June 30th. So you're looking at July and August is close out month. They're closing their fiscal year. They're closing their grants. They're starting new grants. You know, that's a very busy time of the year for them. Maybe you've got an organization with mostly summer programs. They do after school care and it's not as busy, but their summer programs are very busy. They don't want to be doing it during that time period. So you may choose a month where you're slower, that everybody has time to spend on it and get them updated. So it may not be your fiscal year end, but that's a good time to check in and maybe make sure you've done it during the year sometime. Yeah smart. And as you said, Jared, what you that's why you use that compliance calendar. Yeah, yeah, definitely leave that on there. And I think too, you know, when it comes to documenting, you know, you're right, it does depend, Beth, because we all have different fiscal, you know, whether we're fiscal, whether our fiscal is calendar, whatever that looks like, based off of, you know, the busy season, we're having an audit. We know that's a heavy lift as well, finding the right time to put that in there. So I appreciate all of this. And again, I just think this is a best practice that probably goes beyond the finance team, right? Documentation in all areas. Yeah, yeah, definitely. And I know we also are talking about the who, what, where, when and why, you know, they know that's kind of coming too. And so making sure that we understand why we're documenting that. This is where the concise part can come into play if you make sure you've addressed all of these things. What area are we documenting? When should it occur? So that also does your compliance calendar. But even though it's not on the calendar, you've got, you know, when are we paying bills? Are we doing this every as soon as the bill comes in? Are we paying bills only on Tuesday? So you need to make sure you get it to the AP department on Monday so that it can be paid by Tuesdays. And making sure that everybody in the organization knows when that's occurring. Where's it happening? Do you have a finance location? Do you have different programmatic locations? So where are the pieces happening? And most important, why? Why are we documenting this? Why do we need to know how many clients we're serving? Why do we need to know particular information? And if you put in there that we have to pull this report on this date and is being used for this, you're explaining the why so that people don't go, oh, well, that's not important because I don't need it today. Yeah. And I, you know, you mentioned something yesterday that I think is really important, you know, as we stand today. And that is this major change in labor. You know, we don't have the same profile of folks in our accounting and finance departments as we once did. I mean, they're not, they're coming in and going out and changing. And so we don't have this institutional knowledge with our department so that we once had. So I can see that it becomes even more and more important. And I like that you can boil it down to those five W's to say, what is it that we're doing and why to kind of navigate that forward? And I think it's, it's really a basic way to approach anything and it makes it easier. But also making something more complicated or more manageable is how we do this. And this is like my big question of the day. And I can't wait to hear your comments is like, how do we do this? Are we putting this, you know, in a notebook, in a three ring binder? In word, like what is the process? Well, when I started my career, we were definitely doing it in three ring binders and they were being printed out and handed out. But I don't know that we're there anymore. But I think what you want to consider is consistency. So there's some, there's some programs, accounting programs out there where you have your ability to upload QuickBooks online, you can easily upload an invoice. So that's where that documentation of maybe those invoices sit. There's a program called HubDoc that can kind of serve as a document server, right? And so you've got all your deposits in there, all your bank statements. The biggest thing you want to say is that you want consistency. And so if you're doing your bank reconciliation through your accounting program, once they're done, once you put them, they're in the same spot in the same format every single month. Are you doing a reconciliation of your prepates? Is that done in Excel? Is it called the same thing every single month in the same spot in the same location? There's some softwares that can help with this. Of course, Word and Excel. I mean, Word and Excel are, you know, especially Excel, it's accountant's best friend, right? So I tend to put a lot more things in Excel maybe than you even need to because you could do that in Word. But again, have that consistency. But you've got to also have it accessible to your whole organization. So are you guys all in the same place? Are you using a cloud-based system or do you have a server still? And making sure that it's very clear where those policies are and then where each documentation of the policies being followed are being maintained. Beth, this probably is a very juvenile question, but I'm curious if the accounting finance team has multiple staff members, are they all involved in this process or does it really reside within, you know, the CFO or the top person or maybe even the admin person? Like, is this shared amongst the team members? What is the best practice? Because I'm thinking of inconsistency, right? Like, how do we make this such a consistent documentation process and how much of that do we want to share within that finance team? Well, you want to share in the discussion about what's happening where because an AP person that is just across an AP or an AR person, they may know the program better than the CFO does. But in essence, the CFO is responsible for that for that department, right? And so maybe this, if you have a CFO and controller and then you're an AP person, so you've got three layers to do the accounts payable process. If they aren't all participating to make sure that it's updated correctly, maybe the AP person is doing something differently than what the CFO is thinking they're doing and they're not double checking. So if the CFO doesn't speak down to the controller and their role and the AP person is their role, then there might not be following what they think they're doing. Interesting. Yeah. And then the CFO has to, you know, have their responsibility to oversee what the controller is doing. The controller has their responsibilities to oversee what the AP is doing. And so you're kind of, there's that, that train to see, to make sure that that responsibility is being followed all the way down. And it starts with the board of directors. Let's not forget about them. Because even though you may have a board of directors who's not doing any of the actual recording because you've got a big enough staff to do all of it, they're responsible. They have a fiduciary responsibility to make sure that the organization is following best practices. So they have to be a little participative too. Yeah. So yesterday you brought up the, the accounting effort, my favorite effort, fraud. Is this a part of helping to manage that? I mean, does this kind of help mitigate some of those issues? Absolutely. Because if you don't have any documentation, so say you have an organization that has a legitimate, a lot of expenses that could be considered personal. Maybe there's a lot of travel costs. They, you know, they do protests. There's things that you would go by that would not normally, I had an organization who did protests and they would go buy big, funny hats, you know, or something like that. So that was legitimate. The board had approved it. But if you didn't have that supporting documentation that was reviewed by somebody, you go, why are you, why are you doing this? You know, why are you buying that? Was the travel legitimate? Did you really need to go? Who approved that? And if you don't have the documentation of the actual detailed receipt, the person who approved it and then it got paid and posted appropriately, then you would never know. Is that really fraud or not? And then it's just one person's word against the other without the documentation. Right. You know, as much as we don't necessarily like to think about fraud in our sector, we know that it happens, right? One of the questions, and it goes back to documenting, you know, the workflow, the process, but it also goes to our labor shortage. How much should we go in and change the documentation when we have a temporary absence? So we know that we are looking to hire team members that have recently resigned or been let go or for whatever reason. Like, do we still wait for that annual review, Beth, or should we make that change immediately so that we are sticking to those Cs and we have a correct policy even during that interim time frame? You may have a short-term policy that's being followed that you're not going to integrate into your long-term policy if you know you're about to hire somebody else and you're just waiting for that person. And the short-term policy would be like, if you had the AP person who entered it and then you had the check signer, you don't want that to become the same person during that time period if you had that segregation of duties. So you may just have, okay, during this interim until this person's hired, we're going to handle it this way. This person's going to step in and fill that role. But if you go, okay, we're three months in and we have not found this person, you know, we really can't find that. We're going to outsource now. You know, outsourcing is something that a lot of organizations are doing certain pieces of their financial accounting process because they just can't find that. You're going to have to change the policy at that point. Okay. You know, that's a big a-ha too because I'm just thinking we have one policy, but we, what I just learned from you, no, we might have a short-term policy, a long-term policy, you know, and how those really integrate with one another. Even though our best laid plans is to hire someone as quickly as possible, we know that it takes longer probably than what we would like it to take. So I think definitely. Yeah. And if you guys didn't talk about who is going to do it, it just doesn't happen, right? When you have a change in that person personnel, it just, this one person just takes on more work and doesn't say anything to anybody because they still got to get done. Right. We've all been there. You know, this, yet again, our time has flown by and it's amazing. But I have one more question. And again, get your catchers made up because it is somewhat of a curveball. When we're talking about all this, which I think everybody can agree that these are good ideas. But should we look at this in the perspective of budget in terms of the size of an organization? Where does this make sense? When does it make sense in terms of that piece? Or are you going to tell me start with good habits and they go with you as you grow? I mean, what does this look like in terms of a frame? Definitely. And best case scenario, you can go and address all of your different areas all at once, right? But that takes time and it takes, so if you don't have any written policies, you want to start with your riskiest area somewhere that you can see the most chance for misinformation to come through the organization, the highest risk for fraud, the highest risk for, you anything like that. So you're going to start with the biggest area, maybe your revenue or your expenses or your payroll. And you want to document that first and then get in the habit of doing that and then you can go to the next thing after that. And maybe you have a grant that you can hire out and do some of this documentation and determining best practices by having somebody assist you if you have some funding that would allow for that. But you can't ignore it just because we don't have time or money. It doesn't mean you just don't do it, right? And you need to make it a priority. I'm not getting you off the hook there. Even wondering, does this roll into performance reviews, like documentation, whether it's been done, whether they're accurate or current? Like, does this also roll into, do you see that, Beth, into performance reviews? Good question. I believe it does because if you've put a position out there that says you need to do XYZ and XYZ keeps not happening and then you can't report to your grantor, that does affect your organization. Those are important things. But if you don't tell them they need to do XYZ and they're not doing it, whose fault is that? And so it goes from both sides of it. In policies and procedures, I say protect the organization, but it also protects your employees. As a team member, you want to know what your role is, that you're not getting in trouble for something you didn't know you were supposed to do or not do. Right, right. I love it. Well, you have really helped us to figure out what we should be doing and what we need to be doing and how and why we should be doing it. Beth Barley, CPA, one of the partners over at iBailey joining us today as part of a really special non-profit power week. Beth, this is fun. I've learned a lot. You've kind of rocked my world in some areas. Things that I thought, things I had never thought about and things that I thought were, you know, just kind of part of what's getting done, but not really understanding why and how we can execute these ideas. You can get a lot more at the iBailey.com website. There's so much information specific to the nonprofit sector. So go ahead and check their website out. It's www.eidebaily.com. And there you can learn all about the things that your non-profit should be thinking about. Really interesting. Don't you think, Jared? It has been fantastic. You know, I witnessed yesterday. I will probably witness every day this week. Accounting and finance is not my jam. So I love when there are accounting nerds to join us here on the show. Of course, that's a compliment coming from the non-profit nerd. So this entire week is hacking a punch of back-to-basics, really to lend success to your organization, regardless of the size. So we have fantastic topics. Yesterday, documenting your way to success, setting up documentation protocols. We also have getting your staff on board with this documentation, which we touched on just a little bit. We're going to talk about even more. And then monitoring that documentation and the strategies that you're using. So, Beth, it's been truly fantastic. We are so grateful to have you. Again, for those of you joining, Julia Patrick is here. I'm also here. Jared Ransom thrilled to have this topic with us because we only do a handful of nonprofit power weeks every year. And this is a dedicated week to Ida Bailey. We want to say thank you to our sponsors that allow us these weeks to really go deeper in a certain topic. So thank you to Fundraising Academy at National University, to Bloomerang, to your part-time controller, non-profit thought leader, American Non-Profit Academy, Staffing Boutique, non-profit nerd, as well as non-profit tech talk. Cannot wait to have you back tomorrow, Beth, on Wednesday. Yeah, it's going to be another great topic. Thanks to all of you that have joined us. Remember to go back and watch the Ida Bailey Non-Profit Power Week from last year where we talked about cybersecurity. So, again, thank you for joining us. We hope you'll be back tomorrow. And as we end every episode, we want to remind all of you to please stay well so you can do well. Thank you, Beth.