The New England Not-For-Profit Accounting Advisor

Even though the pace of new standard setting has appeared to have slowed, not-for-profit organizations will have no shortage of accounting considerations in the next year. Entities with fiscal year ends will be implementing the changes to their financial statement presentation for the first time, and all organizations will be tackling changes to contribution and revenue recognition accounting. On the horizon are the changes to the leasing standard, which will require analysis of all existing lease agreements. It’s never too early to start working on accounting changes. Getting a jump start on these and other updates may make year-end reporting significantly easier.

Topics: Mark Winiarski, Financial Statement, not-for-profit

Now is the time for not-for-profit organizations to begin implementing the new changes to their financial statements. Changes issued under the Financial Accounting Standards Board (FASB) Accounting Standards Update 2016-14, Presentation of Financial Statements of Not-for-Profit Entities is effective for calendar year-end entities in 2018, and fiscal year-end entities in 2019.

Topics: not-for-profit, NFP, Michelle Spriggs, nonprofit, Financial Statement, Not-for-profit financial statement

After the first full year under the new tax reform law, one thing is clear: Several tax reform provisions may make tax reporting more difficult for not-for-profit organizations.

The tax law commonly referred to as the Tax Cuts and Jobs Act (TCJA) passed into law quickly, leaving ambiguities about how some of its provisions would be implemented. Not-for-profits received some more clarity at the end of 2018 around how to apply some of the TCJA’s changes, but little in the way of relief. Most organizations should still expect to spend more time with certain segments of tax-related reporting, including quantifying and segmenting their sources of unrelated business income (UBI) and evaluating their qualified transportation fringe benefits.

Topics: Amy O’Loughlin, Not-for-Profits, nonprofit, TCJA, Tax Cuts and Jobs Act, Tax Reform, Tax Reform Act, unrelated business income (UBI), UBI

Low unemployment, strong stock market performances, and increases in corporate profits made 2018 a stellar year for grant-making foundations and charitable trusts. The sector is primarily fueled by private contributions from individuals and corporations, investment returns, and capital asset gains, so when economic conditions are favorable, grant-makers do well, too. And when grant-makers do well, it benefits the not-for-profit organizations that rely on donations, grants, and endowments to support their programming efforts.

Topics: Donations, Grants, Endowments, IBISWorld

Recently, the IRS made several changes to the rules related to hardship withdrawals for not-for-profit organizations. The changes may be adopted by plan sponsors as early as Jan. 1, 2019 or, if later, the first day of the plan year beginning after Dec. 31, 2018.

Topics: not-for-profit, NFP, nonprofit, IRS, 403(b), hardship withdrawals

Data can say a lot about which processes work and which don’t, but with the volume of information a not-for-profit organization is collecting on a daily basis, that message can easily get lost in the shuffle. Robust data analytics programs help to separate the story from all the numbers.

Analytics programs help to do the heavy lifting when it comes to information processing, distilling volumes of data into real time, and actionable insights. When a data analytics program is properly constructed, it can support risk management efforts, budget decisions, and strategic planning. Data analysis helps identify areas of key risk and fraudulent activity. It can be used to evaluate a program’s ability to meet its targets and highlight any inefficiencies. Data analytics can also play a role in donor management, picking up trends in contributions and charitable giving that may not be immediately obvious to a not-for-profit’s board or management team.

Topics: non-for-profit, Non-profits, nonprofit, data analytics, analytics, Scott Moody

Not-for-profit organizations face a big question going into their next fiscal period: how will the revenue recognition standard affect the not-for-profit sector? The answer is: it depends.

If your organization uses a basis of accounting other than the U.S. generally accepted accounting principles (GAAP), such as a cash basis of accounting, then the changes to revenue recognition under ASC Topic 606, Revenue from Contracts with Customers will not impact your organization. Organizations that follow U.S. GAAP will have some evaluating to do, particularly if your entity receives a high volume of contributions, is a membership organization, or provides goods or services (such as by operating a gift shop). 

Topics: Not-for-Profits, NFP, Holly Perez, Revenue recognition, ASC Topic 606

The risk of significant financial fraud may be lower for not-for-profit organizations than it is for for-profit entities, but its impact can be just as paralyzing.

Not-for-profit organizations represented only 9 percent of the Association of Certified Fraud Examiners’ study of 2,690 fraud cases in its 2018 Report to the Nations. Regardless of the incidence, there’s an obvious financial impact from fraud. Total fraud cases in the 2018 Report to the Nations resulted in estimated losses of $7.1 billion, which the ACFE acknowledged is only a fraction of the true cost of global fraud. The study concluded that the median cost of fraud to not-for-profit organizations was $75,000, but these costs do not include the cost of attorneys, forensic accountants, and other specialists who will be called upon to assist with the investigation.

Topics: non-for-profit, Non-profits, nonprofit, nonprofit fraud, fraud, John Mulvaney

The effective date for the new leasing standard under ASC Topic 842 will be here before you know it. Not-for-profit organizations that issue or are conduit bond holders for securities that are traded, listed, or quoted on an exchange or over-the-counter market begin adoption for fiscal years beginning after Dec. 15, 2018 (and interim periods within those fiscal years), and all other organizations must adopt the standard for fiscal years beginning after Dec. 15, 2019 (Jun. 30, 2021 financial statements).

Topics: not-for-profit, NFP, tax-exempt, IRS, nonprofit, Leasing, asc topic 842, GAAP, Lease Standards

In the spring, we did a deep dive into the core Form 990 and provided compliance tips for Part I through Part XI. Keeping your supplementary schedules up-to-date is also critical to your compliance. Below are some tips for the Form 990 Schedule A, Schedule R and everything in between. If these schedules are applicable to your organization, the following information can help ensure that you are filing a complete and accurate Form 990 that presents your not-for-profit in the best light and helps avoid IRS scrutiny.

Topics: not-for-profit, NFP, Lisa Burke, Form 990, tax-exempt, IRS, Form 990 Roadmap, Form 990 Schedules, nonprofit