Do you need to find a new accounting firm for your nonprofit or charity?

If so, this comprehensive guide is for you.

We offer candid advice on how to select an accounting firm for your not-for-profit organization or charity.

You’ll hear from industry expert Laura Gay, CPA, CA, LPA. Laura is a Partner at Stern Cohen in Toronto and she leads Stern Cohen’s Not-for-Profit Specialist Team. You can read more about Laura and her credentials on her profile page here.

Before we dive into our five recommendations, let’s cover some important background info.

WHO should read this article?

Anyone tasked with finding a new accounting firm or auditor for your not-for-profit or charity in Toronto. You could be a board member, executive director, CFO, treasurer, or CEO. Quite commonly, your organization may have a policy to tender an RFP (Request for Proposal) every 3-5 years for a new auditor or accounting firm.

WHEN do you need an audit? As opposed to other accounting services

Charities:

If your registered charity is federally incorporated and has revenues over $250K you are REQUIRED by law to have an audit.
Charities are also required to annually file the T3010 Charity Information Return.

Not-for-profit corporations:

If your not-for-profit corporation is federally incorporated and has annual revenues over $250K you are REQUIRED by law to have an audit.
Not-for-profit organizations are also required to file a T2 Corporate Income Tax Return annually.
Not-for-profit organizations may also be required to file the T1044 Non-Profit Organization Information Return annually.

Not a Canadian NPO or Charity? If you’re looking for an audit for your business, check out our business accounting page here.

Ok, now to our insider recommendations…

5 tips to help you select the best accounting firm for your nonprofit or charity

1. Fit & personality

This is a big one. And you probably didn’t expect to see it on our list. After all, personality is something one does not always associate with accountants. LOL. All joking aside, it’s very important to take “fit” into consideration when you pick an auditor or accountant because you will be working with them on a regular basis. In many cases, nonprofits and charities don’t have the budget or funds for a large internal finance team. As a result, your new accountant will be a trusted advisor and key resource to your organization. You’ll be spending a good deal of time speaking with them and working with them. In fact, the Accounting Standards for Not-for-Profit Organizations in Canada place a strong emphasis on the importance of good communication. Your accountant will need to have frank discussions with board members and management. Find someone who will gel with your organization and who understands and respects your organization’s goals.

How can you determine fit? We strongly recommend a zoom call or phone call to speak one on one with any new provider you are considering. Don’t just blast out your RFP and select based on price.

You might also want to take a deep dive into the exact services that the firm provides. In many respects, nonprofit accounting and reporting is more complicated than for-profit accounting. Find out if the accounting firm you are considering has industry expertise. Do they also have experience with the accounting software and apps you currently use or can they help you upgrade to a new and improved cloud accounting platform? These are all things to consider when selecting the best provider for your accounting needs.

2. Service and responsiveness

Here’s something you did expect to see in this list! We know that service level and timeliness is important to you. So getting a service guarantee is key. Ask them questions like:

Are you available to answer my questions throughout the year (or just at audit time)?
Will you bill me for phone calls and emails?
What kind of response time can we expect when we call or email?
Do you regularly survey your clients to find out if they are happy with the service you provide?

Of course, everyone says they provide excellent service. But how do you know they’ll live up to it? One way to uncover their commitment to service is to ask for some proof. At Stern Cohen, we have an independent third-party firm survey our clients annually. And we use a popular metric called “Net Promoter Score” to rate our level of service. We also make our results publicly available for anyone to scrutinize here. We have received world class ratings for the past 9 years!

3. Specialization or industry expertise

When selecting an accounting firm, it’s important that they have a solid understanding of your industry, its specific risks, processes, systems and operations. The deeper the understanding the better. If possible, you’ll be looking for a nonprofit industry specialist. A specialist is someone who can effectively explain and zero in on auditing and accounting issues that your organization may be facing. Is there a litmus test to determine industry specialization? In fact, there are a few techniques you can try worthy of a great detective. Try the following:

Check out their online profile (on their website and LinkedIn). What kind of experience do they have in the not-for-profit world?
Do they exclusively service nonprofit clients or is that only a segment of their “book” (accountant lingo for client base).
Do they serve on a nonprofit or charity board?
Do they speak on industry topics and issues at conferences? Hint: These might be areas you would love insight and knowledge on!

These are all easy ways to check their credentials.

4. Testimonials and reviews

To learn more about your prospective accountant ask to see testimonials from similar clients or check out their online reviews. Testimonials are often posted on the accounting firm’s website or available upon request. Reviews can be found on Google or other third party sites. They validate your prospective accountant’s services and value.

You can also contact a reference for peace of mind at the final stage of your search for a new auditor. At Stern Cohen, we have great respect and consideration for our clients. So, when one of our clients is willing to be a reference for our services, we want to protect their generous time investment. As a result, we suggest that you only check a reference to confirm your “final choice” of a new auditor or accounting firm. Please don’t waste the time and goodwill of a client reference unless you are truly interested in proceeding with that provider.

5. Value and advice

This could also be described as “What’s in it for you.” Accounting services are in the “Your Money or Your Life” category. Your accounting firm should add value. If the only thing they provide is an accurate financial statement, then you are missing out on a lot more! Chartered Professional Accountants are, as CPA Ontario says: “On the right side of change.”

Your accountant should be able to introduce you to trusted industry resources, tools, share trends and best practices with you. They should help ensure you are compliant and not incurring any penalties, and provide you with strategic recommendations and the much needed guidance that you may not even be aware you need. They will generate and make sense of your financial reporting. These advisory takeaways are high risk and reward.

Conclusion

Selecting a new accounting firm for your nonprofit is a very important decision with far reaching consequences for the survival and financial health of your organization. Select your new auditor carefully, taking into consideration all of the factors shared in this article.

For more information about working with Stern Cohen’s Not-for-Profit specialist team, we invite you to contact us today.

Disclaimer: This article is intended to inform readers in general terms. It is not intended to provide any tax or business advice. Please consult your Stern Cohen advisor if you have any questions about your unique situation. While we have tried to ensure the accuracy of the information in this article, we accept no liability for errors or omissions.