Tag Archives: webinar

Be Prepared for FASB’s New Standard for Exempt Organizations

road-sign-663368_1280In August 2016 the Financial Accounting Standards Board (FASB) announced the long anticipated Accounting Standards Update (ASU) “2016-14—Not-For-Profit Entities (Topic 958): Presentation of Financial Statements of Not-For-Profit Entities”.   These new guidelines, the first changes to be made to financial reporting in over 20 years, will have a big impact on exempt organizations and their financial reporting. The updated standard is effective for fiscal years beginning after December 15, 2017, and has been released now to give organizations time to prepare.

This new ASU will impact all exempt organizations, and is the result of a determination by the FASB that financial statements of exempt organizations could be improved to provide more useful information to donors, grantors, creditors, and others.  The amendments in ASU 2016-14 are the first of a two-phase project intended to make short-term improvements that address many of the issues identified by the FASB, including:

  • Complexities in the use of the required three classes of net assets
  • Deficiencies in transparency and utility of information in assessing an organization’s liquidity
  • Inconsistencies of reporting expenses by function and nature
  • Presentation of cash flow information

Net Asset Classification Requirements

There are currently three classes of net assets—unrestricted, temporarily restricted, and permanently restricted—that will be combined into two. Unrestricted net assets will become “net assets without donor restrictions,” while temporarily and permanently restricted net assets will collectively become “net assets with donor restrictions.” The notes to the financial statement will include expanded information so the user will be able to understand the timing and nature of the restrictions and the composition of net assets with donor restrictions at the end of the period.

The update will also require the enhanced disclosures about the amounts and purposes of governing board designations, appropriations, and similar actions that result in self-imposed limits on the use of resources without donor-imposed restrictions as of the end of the period.

Underwater endowments will now be classified in net assets with donor restrictions instead of the current classification in unrestricted net assets. Expanded notes will also be required to disclose amounts underwater and to present plans for reducing or not spending from these funds.

Investment income will now be reported after deducting external and direct internal investment expenses. The disclosure of investment expenses is permitted but will no longer be required.

Transparency and Utility of Information in Assessing Liquidity

New disclosures will need to be made regarding the management of liquidity and the financial assets available to meet near-term demands for cash. The disclosure will include both quantitative and qualitative information, including factors that may impact the financial availability such as the nature, imposed external limits, or imposed internal limits. Quantitative disclosures should include total assets, total liabilities and amounts that are not available to meet cash demands within one year of the balance sheet date due to restrictions.

Reporting Expenses by Function and Nature

Reporting of expenses by both function and natural classification in one location will be required for all organizations on a separate statement, on the face of the statement of activities, or in the footnotes. The updated reporting may require changes in internal procedures to ensure that this level of detail is tracked to accurately comply with the requirement. Additional disclosures will also be required regarding methods used to allocate costs among program and support functions.

Presentation of Cash Flow Information

Under the new standard, exempt organizations may present operating cash flows using either the direct or indirect method and will no longer be required to present or disclose the indirect method of reconciliation if the direct method is used. This is intended to provide greater flexibility and the freedom to choose the method that best serves each entity’s informational needs.

Next Step

The FASB has stated that the overall expected benefits of the improvements justify the perceived costs that they may impose. A future second phase of the project will address additional issues surrounding whether and how to define a measure of operations and aligning measures of operations in the statement of activities with measures of operations in the statement of cash flows. There is currently no expected timeframe for the completion of the second phase.

Adoption of the standard will result in significant changes to financial reporting and disclosures. With early adoption permitted for future year ends and the final implementation deadline quickly approaching, we encourage exempt organizations to begin preparing for the transition.

We are here to help you navigate these changes.  Experts from Aronson’s exempt organization team will come together to discuss the impact this new standard may have on your organization.  We are offering a free webinar on Wednesday, October 26th, 2016 to explore some of the main issues and help participants begin to address compliance questions.

Current Matters Affecting Nonprofit Organizations – Your 2015 Update

Hard to believe that 2015 is right around the corner, but this is a great time to brush up on critical business topics for the coming year. Join Aronson LLC nonprofit experts Carol Barnard, Kathy Cuddapah, Rob Eby and Craig Stevens for a webinar that will get you up-to-date on important technical updates for year-end 2014 engagements and beyond. Topics will include:

  • Significant changes to the single audit environment – what you need to know going forward
  • Important tax and Form 990 changes to be aware of
  • New FASB updates affecting nonprofits
  • The status of potential large-scale changes to financial reporting

RSVP today for this informative free webinar.

Fraud Considerations in Nonprofits

00385446Fraud can be devastating to nonprofits because of the impact it has on the public trust and perception. Learn more about what the warning signs of fraud are, where the highest risks are, and what to do about it in our recordered webinar offered through Lorman Education Services available on demand here: http://www.lorman.com/training/ondemand-webinar-fraud-considerations-in-nonprofit-organizations-394415EAU

Updates to A-133 and the Single Audit

checklistAs I’m sure you’ve all been hearing, there have been some changes to A-133 and the Single Audit environment. Some of it is confusing and some raise more questions than they answer. Undoubtedly, more will be revealed as more trainings and more guidance becomes available. In the meanwhile, here is some key information to know:

  • The OMB Circulars have been codified and are now all included in 2 CFR Part 200.
  • The short-hand to refer to this is “Super Circular” but we’ll see if that sticks or if we just keep calling it A-133.
  • The changes are effective for years *beginning* after December 15, 2014.
  • The changes apply to new grants after that time. Continuing grants that cross that threshold fall under the old guidelines.
  • The threshold for needing to obtain a Single Audit is increasing from $500K to $750K.
  • The threshold for determining Type A vs. Type B programs is increasing from $300K to $750K.
  • The Single Audit report – including the Schedule of Expenditures of Federal Awards and the Schedule of Findings and Questioned Costs is available to the public now through a searchable database on the Federal Audit Clearinghouse website located here: https://harvester.census.gov/fac/dissem/accessoptions.html
  • There will be an option to go with a flat 10% indirect rate instead of negotiating a rate.
  • The term “vendor” has gone away and has been replaced by “contractor” to hopefully reduce confusion about what applies to who in the vendor vs. contractor debate.
  • Procurement documentation is more stringent – the wiggle room of only seeking competition “to the maximum extent practical” has gone away and the threshold for needing to document price comparisons is now $3,000. “Micro-purchases” of less than $3K don’t need competitive bids or price analysis. This particular point has raised a lot of questions and hopefully there will be more explicit instructions available on this.
  • The 14 areas of compliance will be whittled down to 13. The Real Property and Equipment section will be removed but likely the points will be included elsewhere.
  • The best place to see the compliance requirements is still the compliance supplement available at http://www.whitehouse.gov/omb/circulars/a133_compliance_supplement_2014

If you’d like to hear more about these points and more on general compliance, check out my latest webinar available on-demand at http://www.lorman.com/bookstore/393861EAU?discount_code=X2993284&p=13389

 

 

Gifts of Stuff: How Nonprofits Can Benefit from Non-Cash Donations

While traditional cash gifts are the primary donation source for any nonprofit organization, non-cash assets can be more advantageous in many instances. Join Aronson LLC and guest speaker Jay Steenhuysen of Steenhuysen Associates on October 7th for a webinar that will help charities understand the finer points of these underappreciated and potentially substantial gifts, including:

  • Tax Implications of Property Gifts
  • Common Asset Categories used for gifts
  • Case studies of actual gifts

Jay will share real-world examples of donor-centric strategies created for nonprofit and charitable organizations seeking to improve their gift planning and major gift outcomes. RSVP today to reserve your spot at this revealing presentation!

 

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