ACC 405 DB1 Accounting Challenges
.docx
School
Southern New Hampshire University**We aren't endorsed by this school
Course
ACC 405
Subject
Accounting
Date
Jan 4, 2025
Pages
2
Uploaded by PrivateBearPerson539
1ACC 405 DB1 Accounting ChallengesNon-Profit: https://www.cpajournal.com/2023/05/15/top-challenges-facing-not-for-profit-cfos-today-2/Chief financial officers (CFOs) of non-profit organizations face numerous challenges and the pandemic brought unique circumstances. The article discusses four challenges NFP CFOs face: inflation, third-party outsourcing, risk management, and the changing responsibilities of the position. NFP CFOs are dealing with inflation, pandemic changes, and the continuously changing nature of their jobs. While inflation has resulted in increased costs without raising prices, the pandemic has disrupted reliable historical data and created increased financial pressures (West & Carey, 2023). Due to these uncertainties, CFOs must consider factors like remote work, interest rates, stock market performance, donor behavior, and government contracts when forecasting, budgeting, and planning. The challenge is doing more with fewer resources. As explained by West and Carey (2023), risk is the possibility of harm or loss and can be categorized into four categories: strategic, operational, reputational, and compliance. The CFO also has to spot threats to sustainability, failing aspects of the business model, declines in funding, and macroeconomic forces that could hurt the company (West & Carey, 2023). For the CFO to plan mitigation strategies, he or she needs to think about these risks. Their job is to anticipate changes in the environment and respond quickly to any changes that could affect their operations.An operational risk is associated with processes and systems that are at risk of failure or disruption. Reputational risk pertains to the potential damage to an organization's image and stakeholder trust. Compliance risk deals with the possibility of legal or regulatory violations that could result in fines or other penalties.CFOs now play a crucial role in strategic planning and decision-making, beyond just managing finances. They are also responsible for overseeing technology initiatives, ensuring data security, and fostering innovation within the organization (West & Carey). Also, the CFO is getting more involved in stakeholder communications, emphasizing transparency and building trust.Public - https://link.gale.com/apps/doc/A727193001/STND?u=nhc_main&sid=ebsco&xid=1427d2acA survey of audit partners conducted by the Center for Audit Quality (CAQ) shows that US public companies are shifting their strategic priorities due to rising inflation, labor shortages, and supply chain disruptions (Audit Partners See US Businesses Adjust Cost Management and Labor Strategies in Response to Economic Challenges, 2022). Companies are focusing less on mergers and acquisitions and hiring, instead focusing on maintaining and improving cash flow. The shift in priorities aims to maintain financial stability as the economy struggles. As labor shortages increase, leaders are investing in their existing workforce rather than hiring more workers.
2Government – https://www.journalofaccountancy.com/news/2020/jul/coronavirus-issues-for-government-preparers-and-auditors.htmlAs a result of the pandemic, state and local governments face significant challenges in their financial reporting, including operational changes due to remote work, altered tax revenue timing, and economic downturn impacts (Tysiac, 2020). The AICPA issued guidance to address these concerns that include topics such as: management discussion and analysis, noncompliance with contractual provisions, tax revenue delays, termination benefits, and operating versus nonoperating for proprietary funds. ReferencesAudit partners see US businesses adjust cost management and labor strategies in response to economic challenges. (2022, November 16). Premium Official News. https://link.gale.com/apps/doc/A727193001/STND?u=nhc_main&sid=ebsco&xid=1427d2acTysiac, K. (2020, July 14). Pandemic issues for government financial statement preparers and auditors. Journal of Accountancy. https://www.journalofaccountancy.com/news/2020/jul/coronavirus-issues-for-government-preparers-and-auditors.htmlWest, A., & Carey, T. (2023, May 15). Top challenges facing not-for-profit cfos today. The CPA Journal. https://www.cpajournal.com/2023/05/15/top-challenges-facing-not-for-profit-cfos-today-2/