Functional expense allocation: what to include

As many of you may know, the Financial Accounting Standards Board (FASB) issued a new standard ASU 2016-14, Presentation of Financial Statements. One effect this standard has is that it creates consistency on how expenses are presented in the financial statements for all nonprofit organizations. Functional expenses can be disclosed in three different ways: 1. …

Keep Reading

New revenue recognition standard: nonprofit impact

As a nonprofit organization, have you given any thought to how the new revenue recognition standard will impact your nonprofit? Hopefully you have. This new standard is applicable for periods beginning after December 15, 2018, which means the deadline is fast approaching to make sure your organization is ready. Who’s impacted? How do you know …

Keep Reading

Should you consolidate your nonprofit organization?

Nonprofit organizations sometimes have relationships with other entities that are affiliated in some way. How do you know when you should consolidate two or more nonprofit organizations? Under accounting standards, there are two elements that are required to be present to consolidate: Control. Organization A must clearly have control over Organization B. To have control, …

Keep Reading

The Uniform Guidance and required policies

When the Uniform Guidance was issued, it brought with it several changes for entities that receive federal awards. The purpose of the Uniform Guidance was to reduce the risk of fraud, waste and abuse as well as to streamline the requirements for several different types of entities that receive federal funds. The Office of Management …

Keep Reading

Exchange transaction or contribution?

When your organization receives a grant, determining if it is a contribution or an exchange transaction can be very difficult. Even after reading the rules, it may still require some judgement. Deciding between the two will determine how the grant will be recorded and when the revenue will be recognized. If the wrong one is …

Keep Reading

Is your nonprofit ready for a rainy day?

As stated by Alan Lakein, “failing to plan is planning to fail.” As the government continues to threaten spending cuts, it becomes increasingly important to have the discussion of whether or not your nonprofit has sufficient operating reserves and liquidity. Operating reserve and liquidity First, let’s discuss what an operating reserve is and how it …

Keep Reading

Reminder: changes to fair value measurement disclosures

As you may recall, the Financial Accounting Standards Board (FASB) issued ASU 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) in May 2015. This ASU was issued as a continuation of the FASB’s ongoing initiative to simplify and improve accounting standards. This …

Keep Reading

Did you remember the changes to debt issuance costs?

In April 2015, as a part of the FASB’s initiative to simplify and improve accounting standards, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. Why should we care about an Accounting Standards Update issued two years ago? Because for privately held companies and not-for-profit organizations, ASU 2015-03 is effective for financial …

Keep Reading

Form 1023-EZ now available electronically

It is official! The Internal Revenue Service (“IRS”) just announced that Form 1023-EZ, Streamlined Application for Recognition of Exemption, is now available online for the public to see for the first time. “The new online availability of Form 1023-EZ data is an important step forward and will allow taxpayers to more easily research information on …

Keep Reading

Creating an Error-Free Budget

Alright, I’ll admit the title of this article is rather deceiving. Unless you’re just a naturally lucky accountant or a psychic, chances are you will have errors in your budget causing you to go over or under the projected budgeted amounts from the beginning of the year. I wish I had better news for you; …

Keep Reading