Harrington Group Blog

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As we roll into a new year, we are very excited to be underway remodeling our new building in Pasadena. We have made the jump from renting out an existing building to making a new building our own. This has allowed us great creative freedom in the design process, and it opens the gates for cultivating an environment that is perfect for our workflow and company needs. Since construction does not happen overnight, we are taking what we learned from 2020 and 2021 and continuing with our newfound work from home skills. I mean, it’s kind of second nature at this point, right?

We are very excited to keep you updated on this journey as it progresses and as the building continues to come together. As a start, here is a look into our construction process. We hope you are just as pumped as we are!!
















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This year we were so happy to resume our in person holiday party with our entire Harrington Group family. The Northern California office flew down to meet the Southern California office in Pasadena. We would usually pick a venue and have everyone meet there but this year we had an extra surprise in store for our employees. A tour of our brand new Pasadena office space (still under construction)!! Each person received their own HG branded hard hat and we took a group tour through the new office building that landed on the back patio for our Holiday Party.

We had a taco vendor, an open bar, a dessert station, a photo booth, lots of good company and of course our annual spinning of the wheel. It was heart warming to experience each others full company once again, to celebrate making it through another year together and to do it in our new office space. All the friendly faces were lit with Holiday cheer and breathing the fresh outdoor air. We wanted to share some highlights of our Holiday party in photos...we hope you enjoy!!



























We hope you had happy holidays and we wish you a wonderful New Year!!

xoxo,
The HG Family
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It’s that time of year again…the decorations, the holiday spirit, the hot chocolate, the festive activities, the extra time with friends and family AND of course…the gift shopping. The spirit of giving is a big part of the holiday season, and it feels wonderful to spread cheer through gifts for your loved ones. Yet, it can also be stressful for your bank account. Little gifts, big gifts and the amount of people who you may want or feel the need to give gifts to…it can all really add up. So, how do you maintain a reasonable budget for holiday gift shopping?

Don’t Procrastinate

There are two types of moods during holiday shopping: “I have plenty of time” and “oh no”. What happens when you let yourself get to the “oh no” stage? Well, panic first, followed by a (likely) big blow to your budget. Procrastination is not a budget friendly move. When you wait until the last minute, your gifting is less intentional, less thoughtful, and less cost-effective. Start thinking about the type of gifts you want to give earlier in the season.

Make A Plan

Make a list and check it twice…okay actually you should check it several times. I would even recommend an ongoing list that you can add to throughout the year. It should include the names of your closest family and friends, as well as bullet points of ideas for gifting to each of them. This list can double as birthday gift ideas or gifts for any occasion. Try really listening to your loved ones when they talk and mark down ideas as they come up. This takes the pressure off thinking about everyone in such a small window of time, once the holidays hit. It also allows you to give more thoughtful gifts and gives you more time to budget accordingly.

Handmade Gifts

Although we may think of traditional holiday shopping as fighting crowds at a chaotic mall or shopping center, gifts don’t need to be store bought. Handmade gifts are not only budget friendly, but they are often more meaningful and intentional. It shows that you put in genuine effort to create something for the person who you are gifting. You can even make a large batch of one or a few particular items and give that same item to multiple people.

Some budget friendly handmade gift ideas include:
• Christmas Tree Ornament
• Face Scrub
• Essential Oil Roller
• Cookies
• Candle
• Bath Bomb
• Scrapbook
• Macrame Plant Hanger
• Bar Soap
• Soup Mix in a Jar
• Cookie Mix in a Jar
• Hot Chocolate Mix in a Jar
• Artwork/Drawing
• Potted Plants
• Gift Basket
• So much more!!! Just be creative and use your talents 

Set A Limit

As with any other instance of budgeting, setting a limit for how much you want to spend and sticking to it is crucial. Choose an amount that you do not want to exceed, count the amount of people that you want to gift to and then divide up an average spending amount per person. This will help give you guidelines when selecting gifts.

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The Holiday season provides us with an opportunity to slow down, spend time with our loved ones and reflect on all of the reasons to be thankful. It also provides us the opportunity to give back to those who may be less fortunate than we are. If you have some time or would like to make the time this Holiday season to give back, here are some ideas for you!

• Run for a Cause

You can kill two birds with one stone this Holiday season by running for a cause. There are Holiday marathons and races all around the country that you can participate in, many of which provide the opportunity to raise money for a good cause. The calorie burn to help offset all the Holiday eating is an added bonus.

• Visit a Nursing Home

There are residents in nursing homes who don’t have family to come visit them during the Holidays. One of the greatest gifts you can give is your time. Spending time with these residents would help to provide companionship during a season where it is of the utmost importance.

• Give Presents

For many kids, the Holiday season comes with gifts in the form of a delivery from Santa Claus or a series of Chanukah presents. This is unfortunately not the case for all children. There are families in need, foster children and children who have parents in prison. Angel Tree is an organization that helps to provide gifts to these children whose parents are absent. One Simple Wish and SantaCAN are organizations that allow you to connect with children in the foster care system and find out what gifts they’re asking for.

https://www.prisonfellowship.org

https://www.onesimplewish.org

• Make Blankets

Donating money to an organization is always helpful but may feel less personal. Alternatively, you can choose to use your own hands to make blankets for needy children. The organization Project Linus can help you to facilitate this donation. Named after the Peanuts character, this organization was founded to help underprivileged children find a sense of warmth and security through gifts of handmade blankets.

https://www.projectlinus.org

• Help Serve Meals

Volunteer work is an excellent opportunity to give back. Volunteering to serve meals to the homeless and underprivileged during a time when most are enjoying holiday meals with their families, provides these people with an opportunity to receive the gift of a kind gesture. Look for a food bank near you and inquire about volunteer opportunities and scheduling.
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In the world of nonprofit organizations, adaptation is a necessary skill for survival. Change is an inevitable aspect of life and there are a variety of factors that may cause a nonprofit organization to change. Some of these possibilities include leadership changes, a shift in the demand for specific services, world events (such as a pandemic, a weather disaster, ect) or even just an extended length of time. With the evolution of an organization should come a refreshed mission statement. A mission statement outlines the purpose or goal of a business or organization, what they intend to do for the community and whom they intend to serve.

One reason a nonprofit organization may need to change their mission statement would be to better articulate the goal of existing programs. It’s possible that not much has changed about the organization and the programs themselves have not changed, but there was a realization that the mission statement does not accurately or fully reflect your current operations. During this change, there are some factors you will need to consider:

1. Once the refreshed mission statement has been approved by the nonprofit board, the bylaws and articles of incorporation should be evaluated to determine if they need to be updated. There should also be a full “rebranding” launch of the website, social media and any marketing materials.
2. All changes to the mission statement must be reported to the IRS on Form 990 annual information report.

Another reason an organization may need to update their mission statement would be to reflect any changes to a program or the development or a new program. Steps one and two above will need to be taken. Furthermore, if the mission statement needs to be updated because the operations of the organization are changing in some way, you have two options on how to communicate with the IRS.

3. Tell the IRS directly (if you are confident that the changes are in line with your approved tax-exempt status as specified in Section 501 (c)(3)). This can be done by answering “yes” to Part III Line 2 of the Form 990, which asks if the organization undertook any significant program services during the year which were not listed on the prior Form 990. Fill out an explanation on Schedule O.
4. Ask for approval from the IRS (if the changes are not within the scope of the original tax-exempt purpose). You can request a private letter ruling in accordance with IRS rules and formatting.

If you are considering changing your mission statement, we hope this is helpful to you. When in doubt, consult your CPA!!
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When companies engage in activities that are dishonest or illegal, it is referred to as corporate fraud. Corporate fraud comes in many forms and ranges from falsified accounting to misrepresenting services or products. Without a system in place, it can be challenging to prevent and difficult to catch. Every business should have a strategy in place because avoiding fraud is much simpler than recovering damages after the fact. Creating proactive policies, implementing a system of checks and balances and through physical security, a company may limit the extent to which fraud can take place.

Some of the most common types of corporate fraud include asset misappropriation, falsified accounting, misrepresenting services or products, corruption and cyber fraud.

ASSET MISAPPROPRIATION

This type of fraud is internal and occurs when employees abuse the company resources. This type of fraud is extremely prevalent and can be very sneaky. It may include filing fraudulent reimbursement claims, directly stealing money or directly stealing company property (non-cash assets). The incentive here lies with individual employees and usually has to do with employee satisfaction or their own personal financial situation.

FALSIFIED ACCOUNTING

This type of fraud is also internal and often takes place at a higher level. A company’s financial accounting records may be altered to present an image of high revenue and profits. This false image might be for a variety of reasons, including to hide shortcomings such as a net loss, slow revenue, declining sales, or hefty expenses. The incentive may come from a company’s desire to look good for their investors or potential buyers and/or to protect stock or valuation from dropping.

MISREPRESENTATION OF PRODUCTS/SERVICES

This type of fraud is also internal and often takes place at a higher level. A company with faulty product may aim to disguise flaws and defects. This will happen because the company does not want to invest in repairing or redesigning the product, so instead they deflect. The incentive may come from a lack of finances to correct problems or the worry of driving customers away by admitting a mistake.

CORRUPTION

This type of fraud is internal and occurs when employees engage in schemes to leverage their influence in commercial transactions for personal gain. This action infringes their responsibilities as an employee of the company. Corruption includes bribery, extortion and conflicts of interest.

CYBER FRAUD

This type of fraud is external and employees at all levels should be on the lookout for this type of scam. It may show itself as an email or a call that looks to be from a reputable source but with the ultimate goal of convincing an employee to share sensitive information. As more transactions move to an online system, the risk for cyber fraud increases.


With the risk factor for fraud being so broad, it is important that companies set themselves up for protection. A fraud prevention strategy is critical for any business, large or small. Organizations can lower the risk of fraud by establishing certain procedures and controls.

1. Evaluate Your Employees

The quality of employees who you hire is a very important factor in preventing internal fraud. Constant employee evaluation and monitoring is highly recommended. Managers should connect with their employees and spend time getting to know them. Unethical people tend to exhibit behavioral characteristics that may reveal their disloyalty. It is advised that any employee in a position dealing with money or managing private clients undergo background checks.

2. Internal Controls

Internal controls refer to plans, programs or processes used to manage assets and detect fraud. Implementing internal controls is the easiest way to prevent fraud. These controls allow you to easily detect wrongdoing while also making it harder for the employees to commit fraud. Think of this as checks and balances. Segregation or tasks, and documentation review are essential components of internal control that can help to decrease the risk of fraud.

3. Have a Reporting System

Employees should be trained in the area of fraud prevention. They should also be made aware that management is monitoring any potential fraud. Sometimes just knowing that you are being watched can prevent an employee from committing an unethical act. In addition to this, set up a reporting system so that employees may report suspect behavior or activities by coworkers and customers.

4. Regular Auditing

This one is simple, the more regularly you audit the books, the less likely fraud is to slip through the cracks. Cash, refunds, product returns, inventory management and accounting activities should all be audited on a regular basis. Non-scheduled audits can also aid in the detection of fraud.

5. Trust Your Business Partners

Before entering a commercial partnership with another company or person that demands some amount of trust, make sure you have done your research on that potential business partner. Having references and knowing their name and actual address will be a big barrier to fraud. Research before committing should reveal enough information to determine whether they are an ethical business or not and how long they have been in operation.

 
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Here at Harrington Group, we see ourselves as a little family unit. We each play our own role and we come together as a strong team. This week, we are shining the spotlight on managing partner Carlos Davis.

Carlos was born and raised in Lima, Peru. By belonging to a family of accountants, his exposure to the accounting profession started early by performing physical inventories during his school breaks in the summer. After graduating from high school, Carlos tried to break the family cycle and was accepted into the Arts Program at the Catholic University in Lima. After two years, Carlos decided to follow his genetic calling and transferred to the Universidad San Martin de Porres’ to focus on accounting. After his first semester, Carlos began his auditing career by joining the CPA firm Pizarro, Coloma & Asociados. As a Staff Auditor and later Audit Manager, he worked on financial and operational audits of governmental agencies on behalf of the country’s Comptroller General.

Carlos A. Davis joined Harrington Group in 1999 from JLV Home Health Care Agencies, a nonprofit organization in Los Angeles, where he worked as an Accounting Manager. At JLV Carlos embraced the passion of working in the nonprofit sector and it is where he first encountered the need for individuals to receive services and closely witnessed the outstanding work that nonprofit organizations perform in order to fulfill those needs.

At Harrington Group, Carlos works closely with many of the firm’s government-funded nonprofits. His client areas include residential programs, foster family agencies, mental health service providers, non-public schools, vocational training agencies, child care agencies and legal services corporations. Fluent in English and Spanish, he especially enjoys interacting personally with people at all levels within his clients’ operations, and building relationships that extend far beyond the engagement at hand.

Since arriving in Los Angeles many years ago, Carlos has always been a big Lakers fan. Lakers paraphernalia is always guaranteed to be displayed by him during the season.  Carlos’ additional passions include attending soccer matches and Formula 1 racing events. Carlos’ perfect vacation is traveling to coastal cities with his wife, daughter, and son while relaxing on the sand “doing nothing” as a way to break from his daily routine.

Carlos is a member of the California Society of Certified Public Accountants and the American Institute of Certified Public Accountants (AICPA).






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The term empathy defines the ability to identify with or understand another’s situation or feelings – which helps to recognize and relate to another’s perspective. At first thought, some might assume that empathy doesn’t have a place in business. Unending to-do lists, tasks and projects tend to overshadow the emotional well-being and personal needs of employees and employers alike. However, integrating empathy in business has many benefits, both internally and for customers and clients.

The most important factors in communication, business or otherwise, are obviously talking and listening. So, how often do we pause and think about how well we are using our listening and communication skills? Let’s look at some details.

Listening may seem straight forward and like it is the easier half of the communication scenario. This is not always true. There are multiple levels of listening that we all experience.

(1) Ignoring – the lowest possible level of listening. The absence of paying attention. We do this to others, as well as ourselves.
(2) Pretending to Listen – A small step up from ignoring. A missed opportunity to connect and make another person feel seen and heard.
(3) Selective Listening – We hear only the parts that we want to hear. We pick up on the parts that reconfirm our own existing bias.
(4) Attentive Listening – Giving full attention but only paying respect to the intellectual. We miss the subtle levels of body language and tone. Our mind is bust thinking about how we will respond once there is a pause.
(5) Empathic Listening – The highest level of listening. We listen with our whole self. Goes beyond just listening to words to a place where we feel there is not much difference than the person speaking and us. A pure connection.

In a healthy communication scenario, we always want to strive for empathic listening. Now let’s think about responses. First of all, most people don’t want pity, we want to be intellectually, emotionally and energetically understood. Sympathy divides and empathy connects because sympathy creates a hierarchy between the speaker and the listener. Empathy is about pure connection and relating to the speaker, without pity. Unfortunately, many of us have learned and practiced some certain autobiographical responses (old ways of listening) that kill the spirit of empathy. Let’s have a look:

(1) Advising – Jumping in to fix someone’s problem. By doing this, you’re making it about you at that point and talking away someone’s ability to find their own solution, which is more empowering for them.
(2) Evaluating – Passing a judgement on what the speaker is sharing with us. Comparing their experience(s) with our own, which devalues and discounts the speaker’s experience.
(3) Probing – You ask the speaker many questions to get more information. The speaker may just shut down and go into a shell.
(4) Interpreting – We start jumping to conclusions, which can make the speaker feel misunderstood. We try to put the speaker in a box of what we assume they’re experiencing.
(5) The Empathic Response – We show the speaker that we truly understand them. We reflect back two key things, (1) that we intellectually understand what they’re talking about and (2) we empathetically understand the emotion that goes along with that intellectual content.

An empathic response is what we strive for. This may be as simple as “I understand how that scenario could be very difficult for you and that it may cause you a lot of stress.” Your goal is to make someone feel heard, in a judgement free environment. Along with this empathic response, ensure that your body language is also communicating your engagement. Keep your feet and body faced in the speaker’s direction. Try not to shake your leg, fiddle with your hands, scribble on paper or make any other distracting motions of movements. Maintain eye contact and a soft face. Keep your full engagement with the speaker.

Now that you have some information on both empathic listening and responding, what are some ways that you can integrate empathic communication in your day-to-day business scenarios? Let’s look at some tips:

Connect. For empathy to be successful in business, is must be prominent. Having genuine connections within your company is integral to forming bonds with clients and customers. It is apparent to clients when employees are happy with their work environment and when they are not. Make employee satisfaction a priority.
Understand Personality Types. Not everyone communicates in the same way. Some people may feel more comfortable opening up in one-on-one settings and others may thrive in groups. Your employees and clients are likely a mix between introverts and extroverts. Having a variety of options/methods for clients to reach out and give feedback will make the customer feel valued and like they have personalized options. The same goes for employees. Make sure you create space for a range of personality types to thrive, so that your business is inclusive.
Ask for Feedback. In order to increase transparency, you can ask for feedback from both customers and employees. This ensures that everyone is heard. You can achieve this through questionnaires, surveys or regular check-ins with employees and customers. When receiving less than positive feedback, avoid a defensive response. You want to learn from the perspective of others.
Respect. This one is simple. Treat everyone with equal level of respect. Whether they are a janitor, an intern, an exec, a client or a employee. See everyone as human and treat them accordingly.

Empathy belongs in all aspects of life and definitely has a place in business. Improve your business communication by incorporating empathy.
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Do you have an idea for a nonprofit organization and are you interested in bringing this idea to life? The best and most needed nonprofit organizations begin with a founder’s vision to do something good for society. A budding concept that can serve a need not being met and hopefully change the world for the better. From the first moments of conceptualization, these types of philanthropic ideas can be magical and inspiring.

A founder may start out by riding the high of their initial vision. Ready to dive in and bring their concept to life. However, what many founders don’t realize is that founding a nonprofit organization is very different from starting your own for-profit business. Probably the most difficult thing to realize is that once you launch, you will no longer be in control, and you will not be the owner of this organization. As a tax-exempt organization, there is no technical owner - you will be accountable to the donors, the board members, the people that you serve, the attorney general and the general public. This lack of control can be a challenging aspect for some founders, as they feel deep passion for their mission and want to nurture and guide the direction in which it moves.

A founder is an important figure in the organization, as the passion and mission for the nonprofit starts with this person. So, as a founder, how can you best place yourself within the organization? You can choose to either be a part of the staff or a part of the board. If you are interested in being part of the daily activities and want to be super hands on in the evolution of your idea, you may want to be the first chief executive responsible for operations, management, and administration. This would place you on staff and would require you to report to the board, who will assess your performance and give you strategic direction. In a sense, you would act as a non-voting member of the board, providing a shield against conflict of interest. Although not receiving a vote on the board, you would work closely alongside them and would have a consistent opportunity to express your ideas and opinions.

On the other hand, if you want to ensure that you have a vote and therefore a direct say in the future of the organization itself, you may want to become a board member and decide to be the first chair. Although you will only get one vote as a board member (even as first chair), you will be able to form the initial board with members who are aligned with your thought processes and the direction that you would like the organization to move in. This ability to curate the board will allow you to connect with others who are able to devote their time and energy to serve your initial mission. The board must always speak with one voice when addressing the public, so if you curate wisely, this voice can be strongly influenced by your mission.

Regardless of which side of the organization the founder chooses to be involved in, passion for the concept is crucial. The more passionate you are for your vision and the better you are able to relay that to others, whether fellow staff and board or the general public and donors, the better your nonprofit organization will do.
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Accountants are professionally trained to help others manage money. So, it’s safe to say there are some wonderful financial habits to be learned from those who have chosen this career path. Now, we may be tooting our own horns here but we’re okay with that. We’ve gathered some of the best financial tips from the Harrington Group team members to share with you. So, if you’re ready to get your finances in order and have your money working for you, try adopting some of these healthy habits TODAY!

BUDGET BUDGET BUDGET

Managing your money without a budget is like cleaning a house in the dark. You can’t really see what’s going on and you may or may not be making an impact. It’s not completely worthless but it’s definitely not going to end up in optimal condition. Creating a monthly budget is like shining the lights on your spending and the breakdown of what happens with your money.

A budget is all about wants verses needs. Once you understand exactly how much “extra” money you can allot to things like eating out at restaurants, buying clothes, purchasing tickets to concerts, or engaging in any other recreational activities that cost money, you can combat the common issue of overspending on things that you “want” but don’t “need”. You should prioritize paying bills, getting gas, buying groceries, and saving some extra funds for unexpected expenses such as car troubles or medical bills.

COMBAT IMPULSE PURCHASES

An accountant is always cautious about expenditure that wasn’t budgeted for. A budget should help tackle the financial downfall that is impulse purchases, but it may not be enough. As humans living in a heavy consumer society, we are constantly bombarded with advertisements that act as temptation to spend (unnecessary) money. We get an urge that feels much like an itch, to buy something that we didn’t even know we wanted, until the second it is presented to us. So, how can you stop yourself from giving in to these urges??

Try setting up a procedure for yourself to follow each time you get the urge to impulse buy. A good rule of thumb is to wait it out. How about 24 or 48 hours to think about your potential purchase? This should allow enough time to let the initial allure ware off, so that you may come back down to earth. After your waiting period, if that purchase is still on your mind and feels equally as important as the initial urge, then go for it. As exciting as a purchase can feel in the moment, it can frequently turn out to not be all that important.

OUTSIDE ACCOUNTABILITY

An accountant’s job is to work with people and/or businesses to help manage their money and keep them on a good track. This outside accountability works for a reason. A budget is a wonderful place to start. However, the issue with budgeting is that it relies on individual accountability, and no one is perfect. In the same way that we hire personal trainers or link up with work out buddies to keep our physical fitness on track, we can benefit from hiring an accountant or using the buddy system to keep our finances in check. If you are not in a place where you can afford an accountant, try using to this buddy system to secure a source of outside accountability. This person could be your significant other, a close friend, a family member or even a business partner. You share financial information with each other, run large purchases or impulse purchases by one another before pulling the trigger and generally watch over the other person’s financial goals to make sure they are moving towards them. Sharing the excitement of getting closer to your financial goals with someone you are reciprocally supporting is a big motivational factor.

AUTOMATE YOUR FINANCES

Do you often forget to pay your bills on time? Do you get hit with late fees, even if it’s just a little here and a little there? These can add up over time! Enabling automatic bill pay for monthly recurring bills came be a game changer. We all have hundreds (at least) of small decisions to make each day and so many things to keep track of. Give yourself a break and take this task off your plate. It’s one less thing to think about and it saves you money on pesky late fees.

USE CREDIT WISELY

Credit cards are a double-edged sword. You may think, don’t I need to use credit cards to build my credit score? To a certain extent, yes. Although your score will also be built in other ways – paying off a car loan, paying off student loans, paying your bills on time, etc. Responsible credit card use will benefit you, but it must be managed wisely. Keep it to a minimum. Maybe you only have one credit card. You pay it off ever month and don’t use it for big purchases that you know you cannot pay off. Avoid racking up high-interest debt by avoiding purchases that you can’t financially handle in the moment.

Even better, switch from credit to debit. Debit cards have a natural stopping point for your spending. A more realistic sense of finances. When your account runs out of money, that’s it!

START INVESTING

Does your money just sit in your bank account(s) every month, doing nothing for you or your future? You would benefit from taking care of your future self by investing for retirement and other future needs. Many employers will offer employees a match on their contributions to an employer-sponsored retirement plan. If this isn’t an option for you, you should still be investing. Open up on IRA or Roth IRA and make contributions regularly.
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