Sharing Your GiftsPosted: September 24, 2018
CPAs tend to be involved in their communities and often serve on school, church and other small service organization leadership boards. Your fellow leaders may bring an abundance of gifts from community contacts, the ability to fundraise or a deep understanding of how to provide the services to the community in the right way. As CPAs, we bring our own unique gift of understanding how financial results are presented, so we are often trusted as the financial eyes and ears of the organization. Such a service can prove invaluable in enabling the long-term viability of the organization, but as CPAs I think it is incumbent on us to do more.
The more is teaching others how financial reporting works and why it is important. The reason to do this is not just for the organization you serve on, but for the benefit of all the other organizations your fellow leaders serve on, as well.
I had a recent example of being a teacher in one group I work with. In addition to producing a profit and loss statement and a balance sheet, the organization produced a cash flow projection for the coming months. The cash flow projection was not very sophisticated. It simply assumed the revenues would be cash inflows and the expense would be cash outflows with no regard to potential changes in the balance sheet. Such a cash projection worked well for an organization that had already paid off its debt from a previous building campaign and tended to have small changes in other assets and liabilities from month to month.
The projection, however, became less useful when revenues were deferred for the first time because a program was delayed until the next fiscal year. Payments to participate in the program were received in one month, but (properly) deferred and recognized as revenue in the next month. The cash flow projection, however, did not take the deferral into account, so in the next fiscal year when the revenue was recognized (and budgeted), the cash flow projection missed by a significant sum because the cash was already in the cash balance and recognizing the deferred revenue did not result in any new cash inflow. This problem turned into a great opportunity to teach the rest of the leaders about balance sheet impacts on cash flow. For example, an increase in a liability usually generates cash while a decrease in a liability uses cash. Now my fellow leaders had a better understanding of how cash flows work and can take that knowledge to other boards they serve on.
Community service is one of the things that makes our profession great, but performing community services doesn’t necessarily mean forgetting about your CPA talents. In fact, using your CPA talents, and teaching others what you know in support of your community, can be some of the best things you can do.