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NON-PROFIT UPDATE May 2017

Learn about tax-exempt organizations, managing restricted funds, upcoming accounting standards changes, and more for non-profit success.

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NON-PROFIT UPDATE May 2017

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  1. NON-PROFIT UPDATEMay 2017 Presented by Joanne Montagner-Hull CPA of

  2. Non-Profit Organizations - ? • Should say, “Tax Exempt Organizations” instead • Why? Because they must make a profit to have and retain reserves • “NPO” herein…

  3. Recently… • Substantial increase in restricted funding, unrestricted is drying up • Expect more funding pressure; potential drying up of government funds • Minimal applicable new NPO accounting standards • No International NPO standards . . yet

  4. Restricted Funds • Need unrestricted funds for rent, copier, utilities, overhead • More grant funds are restricted – for time, for purpose • Donor “traction” • Must account for each grant to “release” the funds when spent

  5. Accounting for Restricted Funds • Less overhead coverage but you’ll need it to cover the accounting work! • Track by grant, by time/by purpose • Need quality tracking mechanisms in place • Need to track Net Assets and Cash • If significant, best practice=monthly

  6. Upcoming NPO Presentation Change • Years beginning after 12/15/17; interim periods beginning after 12/15/18 • Perceived complexities of current 3 classes of Net Assets • Perceived confusion in assessing financial position & liquidity needs

  7. Upcoming NPO Presentation Change • “Balance Sheet”-Net Assets – two classes: a. With Donor Restrictions b. Without Donor Restrictions 2. “P&L” – by those two classes 3. “Cash Flows” – Can use direct or indirect method; indirect’s reconciliation not required.

  8. Upcoming NPO Presentation Change 4. Disclosures enhanced; more to include board designations and other “clarifying..helpful” information

  9. New Lease Standard (applies to everyone) • Effectively stops one of largest forms of off-balance sheet accounting • Requires creation of asset & liability for ‘operating leases’

  10. New Lease Standards • Plenty of lead time to adopt; may early adopt • Public companies - years beginning after 12/15/18 • All others beginning after 12/15/19 • Interim periods within fiscal years beginning after 12/15/20

  11. Other New Standards.. No other broad, sweeping changes..but several re: • new revenue recognition standards for ‘customer contracts’ & earned income issues; • business combinations & intangibles;

  12. Other New Standards.. • derivatives; • deferred taxes; • consolidations; • certain defined benefit plans & defined contribution plans. If you have those, be sure to follow up.

  13. CPA Issuing Interim Financials.. • The updated presentation rules for not-audited, interim/monthly financials - • “No assurance is provided on these financial statements.”

  14. CPA Issuing Interim Financials.. • “Substantially all disclosures required by US GAAP are not included.”

  15. Form 990 - Update • More attention being paid to Public vs. Private entity (Schedule A) • Watch your organization’s funding streams: diverse? or captive? • Attorney’s say Restricted vs. Unrestricted means nothing for this analysis • Be complete, honest & thoughtful about your answers – More IRS NPO audits occurring; well documented files!

  16. Employee vs. Contractor • Continued IRS heat here • Has implications for anyone paying someone • 1099 – My personal gripe = • “Stipends” • “Honorariums” • Oh please! • Paying attention to proper process’; Form SS8; Revenue Rulings

  17. On Line Giving Resources • Far more use of GoFundMe • Guidestar.com • All Form 990’s found here • To get them – upgraded fee • Charitynavigator.org • Charityguide.org • Givewell.net • Many more – type specific • e.g. “green” vs green building

  18. NPO Update • Questions? • Comments? • Referrals? To you? To me? • Thank you for your attention • JoanneMH@yourbeancounters.com • 216-431-2202

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