Tag Archives: Governance

Mission Statement or Mission Story?

missionMission statements are considered a necessary component of any nonprofit operation, not just a start-up organization. How often have you come across a mission statement that leaves you wondering what it meant? All organizations want an inspiring, detailed and informational mission statement, but does a lengthy mission statement with a dozen buzzwords convey the point efficiently? A clear and concise mission statement is as vital for an organization as its marketing plan or financial budget.

Verbose, lengthy, and intricate mission statements not only conceal  true meaning, but also hinder the community’s awareness of the organization. Just like solid business, marketing and financial plans are required to achieve success and steady growth of an organization, a clear, concise and relevant mission statement is necessary for the sustainability of the organization. It can aid in increasing market share, raising community awareness, or simply informing constituents of the organization’s goals.

Ideally, a mission statement should not be longer than two to three sentences, and must be actionable and quantifiable.  A good mission statement uses inclusive language. It has to describe the following aspects of the organization in layman’s terms:

  • The organization
  • The products or outputs
  • Their nature and quality
  • The key clients or target population
  • The vision of the organization going forward

The major don’ts:

  • Avoid excessive use of buzzwords and superlatives.
  • Shorten and clarify long and complex sentences.
  • Own your statement. Don’t hire a writer.

The mission statement of Liberty’s Promise demonstrates the art of writing mission statements quite remarkably. The statement explains what the organization does, how it is done, and what impacts it has on the community.

 “Liberty’s Promise works to sustain and support young immigrants while encouraging them to be active and conscientious American citizens. Our programs of direct assistance and research aim to make the immigrant experience an affirmative one for young newcomers while instilling in them a sense of pride and support for American ideals of democracy and freedom. By doing so, Liberty’s Promise seeks to reaffirm our fundamental egalitarian and democratic traditions for future generations.”

Believe in your organization’s mission statement. Make sure the employees agree with the statement, and the values emphasized in it. State your cause, the actions you are taking for it, and the difference they are making. A few sentences alone will bear no significance if they are not backed by belief, enthusiasm and hard work.

For more information on business topics affecting nonprofit organizations, contact Aronson’s Nonprofit & Association Industry Services Group or Sadia Tariq at 301.231.6200.

5 Questions to Foster Tone at the Top

An important component of a strong internal control environment is the idea of “Tone at the Top,” which refers to the ethical behavior and example of integrity that management and key employees set for the rest of the organization to follow. When tone at the top is lacking, the likelihood of fraud occurring is increased, because these individuals have a strong influence over internal controls and the internal control environment.  When assessing the example that management and key employees set, here are five questions to keep in mind:thumbs up people

  • Do one or two key employees appear to dominate the company?

If control is centered in the hands of one or two key employees, extra effort should be made to create internal controls that create checks and balances to avoid management override and ensure compliance with policies and procedures. It is important to remember that good controls protect the individuals as well as the organization when it comes to fraud.

  • Do any key employees have friends or relatives reporting directly to them?

Management should be above board in appearance and in fact. Even the appearance of nepotism could create mistrust within the organization. Organizations should prohibit key employees from having friends or relatives report directly to them.  Aside from the message it sends, also note that opportunities for collusion increase the risk of fraud and increase the difficulty of finding such fraud.

  • Do any key employees have outside business interests that might conflict with their duties at the company?

Key employees should be required to provide annual financial disclosures that list outside business interests.  Interests that conflict with the organization’s interests should be prohibited. Management and key employees should place the mission above personal interests in both appearance and in fact in order to set good tone at the top.

  • Have any key employees failed to take vacation?

While being so dedicated to work that one forgoes vacation may look good, it can actually be a serious red flag. Requiring key employees to take annual vacations can aid an employer in detecting an ongoing fraud scheme because schemes tend to fall apart and become obvious when the perpetrator is removed from the scene.

  • Are any key employees experiencing financial pressures, such as debts, gambling, medical bills, or divorce?

It’s a touchy subject, but key employees who are experiencing financial pressures represent a potential fraud risk to the organization and should be monitored by management.  Employee assistance programs can be made available to help employees with alcohol, drug, and other problems with compassion and help alleviate some of the pressure these issues create.

For more information on business topics affecting nonprofit organizations, contact Aronson’s Nonprofit & Association Industry Services Group or Brandon Williams at 301.231.6200.

What is a Cyberincident Response Plan and Do We Need One?

Network SecurityWith today’s cybersecurity threats, companies need to not only defend their perimeter, but also mitigate the effects of inevitable breaches or other cyberincidents.  This can be done through an effective incident response (IR) plan which identifies risks, and has clear points for decision making and escalation paths.  The objectives of a good IR plan should be to limit damage, increase the confidence of external parties, and reduce recovery time and cost.  A good plan will be pervasive across the whole business.

A deficient plan usually has the following:

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Is Your Business Susceptible to Cybercrime?

cybercrimeThere are many forms of cybercrime that can affect a small-to-medium-sized business.  The AICPA recently released a study of the top five cybercrimes in virtual environments.  They include:

  1. Tax refund fraud
  2. Corporate account takeover
  3. Identity theft
  4. Theft of sensitive data
  5.  Theft of intellectual property

While all are to be taken seriously and need to be considered, corporate account takeover and theft of sensitive data are particularly important concerns for businesses.

In a corporate account takeover, network login credentials are

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BIG NEWS: Bill Prohibiting Mandatory Auditor Rotation Passed By House

boxerJust yesterday, July 8th, the House of Representatives passed a bill that would prohibit the PCAOB from requiring auditor rotation for public companies. The Reps voted in overwhelming favor, 321 to 62, to pass H.R. 1564, the Audit Integrity and Job Protection Act. One of the stunning factors involved in this latest stage of the ongoing battle is that this was a bi-partisan bill sponsored by Reps. Robert Hurt, R-Va., and Gregory Meeks, D-N.Y. Kudos to these guys for showing everybody that working together can be productive.

The President of the AICPA, Barry Melancon, testified in front of the House in March 2012, stating that mandatory rotation is actually a detriment to audit quality. [The House Gives PCAOB a Smackdown]

The PCAOB itself has not been able to provide evidence of the rotation being beneficial and admits that there are hurdles there.

The bill would amend the Sarbanes-Oxley Act and still needs to pass the Senate and the President’s desk before it becomes official. Read more about it here.

The reason this is big news for nonprofit readers is that many boards, in an effort to show good governance, wanted to implement SOX at their organizations to the level it was practical. The thing is, not much of it is all that practical for small nonprofits and none of it is easy. The easiest part? Implement auditor rotation policies. Many accounting staff (on both sides of the audit) suffered the inefficiencies and increased audit risk that this caused but convincing the boards to change the policy hasn’t been easy. This bill provides more oomph to the argument.

 

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