Scott Rodgville, Director at Gorfine, Schiller & Gardyn, shares insights on how organizations can continue to develop accounting processes and undergo a successful audit in a remote environment.
Q: What are some of the major areas of an organization’s accounting that have been impacted by working in a remote environment?
A: We may be tired of hearing the expression “unlike any other,” but from the accounting perspective, it really was unlike how organizations were accustomed to operating. Most organizations needed to pivot quite quickly to working in a remote environment or working in an environment where they were minimally in the office. As a result, they effectively implemented process changes in terms of how information was gathered and entered into a financial accounting package.
For example, most people open the mail on a daily basis. In this environment, employees were stuck largely opening the mail once a week or maybe twice a week, by different people.
The financial reality that organizations were facing was another major challenge. There was less fiscal certainty in terms of revenue sources, affecting budgeting and the way budgets were modified.
A third area with significant changes is programming. Most nonprofits are in the business of providing a service, and the service is generally doing something for the betterment of the community, including things that touch the community and improve them with person-to-person contact. Nonprofit organizations were forced to pivot on how they conducted those activities.
For instance, religious organizations pivoted by offering virtual weekly or daily mass, or services to protect the members of the community. Organizations providing services to individuals struggling with mental health issues, which we saw a rise of in 2020 and so far this year, pivoted those services from face-to-face to a virtual, or more spatially distanced, ability.
Those all factored into the accounting world by impacting us in a way that we saw different revenue streams develop. We saw adjustments for how revenue was to be recognized in terms of the way that the service was performed compared to the way it was in 2019, and now how it is in 2020, and maybe even through today.
We experienced different aspects of an organization’s accounting functions impacted in a variety of different ways, and all of it led to both direct service providers and administrative functions working in a remote environment. There was a huge increase in the rise and use of tools like Microsoft Teams or Zoom, and other similar video conferencing facilities.
Q: Whenever there is change, or something happens rapidly like this, it is a learning event. From your perspective, what have organizations learned, and how can they improve their processes, budgeting, and future programs now that we have operated for over a year in a remote environment?
A: More than anything, tax-exempt organizations learned they could accomplish hard things in this environment. They learned how to change their processes and adapt so that they would continue to be efficient. From an accounting perspective, organizations learned to create and implement new controls, put them in place, and protect the assets for which they are charged with guarding. They learned how to change their programming. One of the big takeaways is that they suddenly have new lines of business that will be available to them when we return to more normal times.
Prior to COVID, every day we experienced a new normal. We have always learned to evolve and implement change, and this is just accelerated change. The last 14 months have taught organizations how to implement remote tools and how to pivot where they are not working under regular conditions. We have learned how to program into the future for organizations and how to effectively implement internal controls. That is a wonderful evolution for the tax-exempt space, and, long term, it will prove to be an efficiency gained on their behalf.
Q: How have organizations had to prepare themselves for a remote audit?
A: There is a great deal of value in the human contact side of auditing. Most often, the assumption is that accountants do not like to engage in human contact, but I believe auditors enjoy this engagement. A face-to-face conversation is completely different from a Zoom-to-Zoom conversation. Your body language changes, and you are able to notice nonverbal communication, which may lead to other conversations. Clients are more apt to ask questions in an office setting.
Unfortunately, that was not the reality we faced last year. Our clients had to learn to prepare themselves differently. It meant taking advantage of tools that we have had in place such as ShareFile services, where clients have portals to upload information. We set up screen sharing sessions, where clients could walk us through their processes, particularly those processes that may have been impacted by quarantine circumstances. We both learned new ways to collaborate.
Q: Do you see remote auditing continuing in this post-pandemic world?
A: Aspects of remote auditing are here to stay on a more permanent basis. Clients appreciate some of the services and tools available to them, such as ShareFile portals. I expect what we will see into the future is slightly different from what we are going to experience in 2021. For 2021, most of our clients are still not ready for an in-person audit.
We are also going to improve our process, just as organizations are improving theirs. I expect that what we experienced last year in an emergent situation will be a much more comfortable process in 2021. However, as we move forward, maybe even into some of the later audits in calendar year 2021, some organizations will be ready for an in-person audit, which will involve spending less time that is more focused on client interactions when in the field. The quality conversations that we will have will be intentional and focused, in very positive ways.
Q: How does Gorfine, Schiller & Gardyn help nonprofit organizations that are still operating in a remote environment?
A: Gorfine, Schiller & Gardyn has helped organizations in a variety of different ways over the last 14 months. We have consulted clients through processes for outside grant support, the Paycheck Protection Program, along with offering assistance for completing grant applications, if appropriate, and walking organizations through government programs.
Generally, we have been available as a resource to continue to help organizations evolve in the way in which they have modified their behavior. For an organization still working in a remote environment, we plan to be there, virtually, with our clients and the community working through ideas to improve processes and identify any missing efficiencies to advance an organization’s functions.
Scott Rodgville has 25 years of experience in public accounting. He serves as one of the leaders of the firm’s Accounting and Auditing Practice group and is a team leader of the firm’s not-for-profit and employee benefit plan service areas. Scott’s experience involves financial statement preparation, audit and tax services, specifically in the areas of not-for-profit organizations, real estate, employee benefit plans including 401(k) profit sharing plans, labor unions and various other commercial industries. For more information, click here.
