Non-Profit Archives - Page 6 of 6

Oct
14
2016

Nonprofit Organizations – Continued Information on New Financial Reporting Rules

shutterstock_450172513 On August 18, 2016, the Financial Accounting Standards Board (FASB) issued new rules for nonprofits: “Accounting Standards Update 2016-14 “Not-for-Profit Entities (Topic 958), Presentation of Financial Statements of Not-for-Profit Entities.” This is the first major set of changes to nonprofit financial statement presentation standards since 1993. The new rules take effect for fiscal years beginning after December 15, 2017

What organizations are affected by the new guidance?

Oct
11
2016

Changes to Not-For-Profit Financial Statements

The Financial Accounting Standards Board (FASB) introduced changes to not-for-profit accounting [Accounting Standards Update (ASU) No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities] on August 4, 2016, with the intention that these changes could more easily explain the purpose and mission of each organization via their financial statements.

The proposed changes will add detail to financial statement presentation and disclosure requirements that will deliver more value to not-for-profit stakeholders.

Apr
14
2016

Proposed Changes to the Minimum Salary for Exempt Employees

Between 1940 and 1975, the minimum wage for exempt employees was raised every five to ten years. In 1975, the minimum salary for exempt employees was set at $8,060 and $8,840 per year, depending on job duties. Roughly 30 years later, in 2004, the Department of Labor (DOL) updated the minimum salary for exempt employees to $23,660 per year. Now, the DOL is proposing an increase to $50,440 per year.

In general, an employee is considered exempt if all of the following apply.

Mar
07
2016

Revenue: Deferred v. Temporarily Restricted

An accounting issue that commonly plagues not-for-profit organizations is the proper recording of revenue that is received for a specific purpose. There are two ways to record this type of revenue, either as deferred or temporarily restricted, but the decision can cause much confusion.

While there are many factors that go into determining which is the appropriate method, the most important factor is to determine the type of revenue source. Is the revenue received in an exchange transaction,

Jan
26
2016

Contributions v. Exchange Transactions

When a non-profit receives grants, awards, membership dues or sponsorships, the organization needs to make a determination to the treat the transaction as an exchange transaction (earned revenue) or a contribution. In an exchange transaction, each party receives and sacrifices something of approximately equal value; whereas in a contribution transaction, transfers of assets are nonreciprocal and the value, if any, returned to the resource providers are incidental to potential public benefits.

Below are some tips to help determine whether a transaction should be treated as a contribution or as an exchange transaction.

Nov
11
2015

Functional Expense Allocations

Non-profit organizations are required to report expenses by functional classification. The allocation of expenses is presented within the Statement of Activities or related notes to the financial statements. The functional expense reporting gives the donors more information about the types of programs and activities the organization has completed during the year to fulfill their mission.

The functional expense classifications are listed below:

Program Services – expenses relating to goods and services being distributed to beneficiaries,

Oct
07
2015

Federal Grants: Subrecipient v. Contractor (Vendor)

How does an organization determine if federal funding is received under a subrecipient vs. contractor (vendor) relationship?

As the controller at a non-profit organization that receives federal grants, have you ever been asked the following question by your auditors, “are you a subrecipient or contractor (vendor) for this contract?” The accurate classification of subrecipients and contractors is critical to a program’s success and integrity. OMB requires subrecipients that meet established expenditure thresholds to obtain a Single Audit,

May
26
2015

An Auditor’s Perspective: Basics of Inventory Controls

For many organizations, inventory is one of the largest assets carried on a company’s books, and as a result, it is important to maintain appropriate controls over these assets. Inventory controls help your organization to maintain accurate records and to fulfill promises to customers. Risks specific to a lack of inventory controls includes the potential for lost, stolen, misappropriated, or miscounted items during routine physical counts. Below are some quick tips on maintaining appropriate oversight and prevention of unexpected inventory shrinkage:

Physical controls: Keep your inventories in a secure location.

Feb
26
2015

Keeping the Cash Safe – A Brief Control Overview

Whether you are a non-profit organization, a for-profit company, or an auditor, you have most likely encountered the need to understand what it means to have strong internal controls over cash, controls that are in place and operating effectively. So what exactly is an internal control (IC) and why does it matter?

An internal control is a financial process or procedure that enables the organization to safeguard its assets. When conducting an audit,

Feb
11
2015

Common Confusions on Net Asset Classifications

In the for-profit world, we use the concept of equity: “owner’s equity” in a sole proprietorship, or “stockholders’ equity” in a corporation. In the nonprofit world, we use the term net assets. Mathematically, net assets is total assets minus total liabilities, and is reported on the Statement of Financial Position. We think of net assets as the net resources available to the organization at any given point in time with which it can accomplish its mission.