Gifts-in-kind: Presentation and disclosure changes

FASB has issued a proposed Accounting Standards Update intended to increase transparency regarding such contributed nonfinancial assets. As many nonprofit organizations rely on these contributions to carry out their programs and related activities – the following is a brief overview of the changes, and how they may apply to your organization. ASU – Not-for-Profit Entities (Topic …

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How should a nonprofit record their PPP loan?

We need to start out with a disclaimer here. Currently, there is no authoritative guidance on how to account for PPP loans. If you google this topic, you’ll find that there is diversity in thought and approaches. However, there is some unofficial guidance from the Center for Plain English Accounting (CPEA), which is the AICPA’s …

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What is positive pay?

One of the most common forms of fraud within organizations continues to be check fraud. Positive Pay can be a great tool for nonprofit organizations looking to strengthen their controls and help prevent fraudulent checks from being paid. Positive Pay does, however, come at a cost of both time and money. So, do the pros outweigh …

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Are you missing a related party footnote disclosure?

This disclosure is easy to overlook but it’s important for proper financial reporting.  A related party footnote disclosure is needed when transactions are recorded in the financials between the preparer and related parties.  Understanding whom and what is considered a related party will help alleviate missed opportunities in disclosing related party transactions.  Per ASC 850 …

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Functional expenses 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. …

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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 …

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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, …

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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 …

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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 …

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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 …

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