Welcome to Lesson 11.6! Preparing for an annual audit and ensuring regulatory compliance can be a stressful time for any nonprofit. However, FastFund Raising is built upon strict accounting principles and internal controls specifically designed to make this process as smooth and transparent as possible.
In this lesson, we will explore how FastFund helps you adhere to Financial Accounting Standards Board (FASB) guidelines, maintain compliance with IRS regulations for donor substantiation, enforce segregation of duties, and generate pristine audit trails.
1. FASB and GAAP Compliance
FastFund is a true nonprofit fund accounting system. All FastFund modules comply with the requirements of FASB-116 and FASB-117, and adhere to strict Generally Accepted Accounting Principles (GAAP).
- Net Asset Classes: To comply with FASB Not-for-Profit Entities (Topic 958), FastFund allows you to properly present your statement of financial position by net asset classes, clearly separating net assets with donor restrictions from net assets without donor restrictions.
- In-Kind Contributions: FastFund enforces GAAP rules for non-cash gifts. As per FASB-116 regulations, the system requires you to assign a fair market value to donated goods and services, debiting a specific In-Kind Transfer holding account to ensure these gifts are properly recognized in your financial statements.
2. IRS Compliance for Donor Receipts
Nonprofits have a legal obligation to acknowledge contributions properly. To comply with IRS Publication 1771 regarding charitable contributions, organizations must provide written substantiation to taxpayers who make tax-deductible donations.
FastFund automates this compliance by allowing you to easily generate both individual Donor Receipts and Cumulative Year-End Donor Receipts. To prove to your auditors that these acknowledgments were successfully distributed, FastFund automatically creates an “Acknowledgment Sent” Action Code on the constituent’s profile the moment a receipt is generated, tracking the date, the method of delivery (printed or emailed), and the specific user who sent it.
3. Internal Controls and Segregation of Duties
Auditors heavily scrutinize a nonprofit’s internal controls. FastFund protects your financial data using several proactive security measures:
- User Groups: Access is strictly limited to authorized users who log in with secure passwords. To ensure proper segregation of duties, administrators can set up User Groups (such as Accounts Payable or Fund Raising Volunteers) so that users are only granted the specific permissions necessary for their departmental role.
- System Locks: FastFund utilizes critical system controls—like Closing the Books (Soft and Permanent closes) and defining the normal Transaction Posting Range—to completely prevent users from accidentally altering historical data or posting transactions into closed accounting periods.
4. Maintaining a Flawless Audit Trail
A transparent audit trail is your best defense during an audit. FastFund Online employs strict double-entry accounting principles, meaning your books will never be out of balance.
- Transaction Editing Rules: Instead of allowing users to alter cleared or linked transactions without a trace, FastFund enforces strict editing rules. If a major mistake is made on a posted receipt (such as a bounced check), you can use the “Reverse” option to post a new transaction that perfectly offsets the original, preserving the complete history of the error and its correction.
- The Audit Log: Behind the scenes, every single entry entered into the FastFund Online system is tracked. Because of the sensitive nature of this data, access is limited strictly to the Company Administrator. The Audit Log tracks every addition, modification, and deletion in the system, stamping each action with the exact Date, the User who performed it, and the exact IP Address where the user logged on.