Question

need and importance of NPO organisation in accounting

Answer 1

It has long been sound practice for nonprofit organizations to have a member or members on their Board of Directors with accounting or financial experience. Legal, governance and ethical responsibilities are such that at least one person on the board should have more than a passing understanding of budgets, financial statements and nonprofit tax law. Applying for grants, implementing capital reserve funds, fundraising—all require good financial judgment if the nonprofit organization is to run efficiently and effectively.

In addition, new financial statement reporting requirements and the expanded IRS Form 990 nonprofit tax return make it even more important for accounting and financial literacy to be part of a nonprofit board’s makeup. So does the increasing public demand for transparency in all organizations—especially those we donate money to.

If you’re a new organization or if you’re considering bringing new members on your board, you might be thinking you need high-profile individuals who would add prestige to your board. That is all well and good, but what about also inviting someone who isn’t well known but has sterling financial/accounting credentials? Here are five key reasons why financial/accounting experience is so important.