ANNUAL NOT-FOR-PROFIT ACCOUNTING UPDATE Thursday August 17, 2017 Presented By: Erica Battle, CPA An independent member of UHY International
OPENING COMMENTARY Mike Santicchia Partner, UHY LLP Welcome to our fourth annual nonprofit update!
ATTENDEE CHECKLIST CPE materials Feedback • Tear out form in back of presentation ‒ Please note any topics of interest for future workshops Questions Keep a look out for a post-event email • Download a copy of the PowerPoint presentation Pre-register for 2018
ABOUT OUR FIRM LOCAL • Nearly 50 years of experience • Ranked 5th largest accounting firm in Southeast Michigan by Crain's Detroit Business • Over 350 employees in Detroit, Farmington Hills and Sterling Heights • Largest accounting firm presence in Macomb County NATIONAL INTERNATIONAL • N amed one of IPA’s Top 10 Fastest Growing • Member firms in 325 business centers across Accounting Firms of 2016 99 countries • 16 offices across the US • Over 7,800 professionals • PCAOB registered • 16th largest international accounting and consultancy network • Most recent peer review resulted in a Pass • Member of the Forum of Firms opinion, the highest possible result
UHY’S NOT -FOR-PROFIT PRACTICE • UHY LLP performs attest services for over 360 not-for-profit clients • We perform over 60 Uniform Guidance single audits annually • Our experience with not-for-profit entities includes the following sectors: ˗ Arts and Culture ˗ Health and Human Service Organizations ˗ Educational Institutions ˗ Foundations ˗ Private Clubs ˗ Religious Organizations ˗ Trade Associations ˗ Government Agencies ˗ Other Public Sector Organizations
UHY’S NOT -FOR-PROFIT PRACTICE • Our team members are provided with national and local training specific to not-for-profit entities • We utilize several resources to ensure our staff keeps current on all industry developments • We provide periodic information and training seminars for our clients and other not-for-profit entities • We issue a quarterly newsletter that focuses on issues specific to not-for- profit entities • We send electronic e-blasts for hot topics affecting not-for-profits
NOT-FOR-PROFIT SERVICE OFFERINGS Audit & Assurance • Collateral audits • Audits, reviews and compilations of • Attestation services including financial statements agreed-upon procedures reports and • Implementation of accounting standards service auditor reports (SSAE16) Single audits • • Audit committee advice • Audits of financial statements of • Financial and compliance audits Financial forecasts • employee benefit plans • Financial reporting assistance Tax Planning & Compliance Property tax planning • • Preparation of Form 990, 990-T, 990-PF, • Tax incentives and state equivalent returns • IRS resolution • Unrelated business income tax Employee benefit plan filings (e.g., • (UBIT) planning Form 5500) • Sales and use taxes Related for-profit corporate, • partnership and trust filings Other Advisory Services • Charitable and trust registration • Resource Solutions • Benchmarking preparation • Financing assistance • Enterprise risk management • Form 1023 application assistance • Transaction Services Design, implementation and testing of • Financial fraud examinations and • internal controls • Cost assignments and allocations investigations Contract compliance • Profit enhancement solutions • • Review and development of fraud prevention policies and procedures
PRESENTERS Erica Battle, CPA Erica is a CPA specializing in Not-for-Profit attest and tax services. She has a Master’s degree in Accounting from Walsh College and a Bachelor’s degree in Art History from the University of Michigan. Erica has over 20 years’ experience in providing accounting and management consulting services; with 10 years specific to nonprofit entities. Erica’s nonprofit experience includes not only accounting, but also development, marketing, strategic planning and governance. Before returning to CPA work in 2014, she worked at Gilda’s Club Metro Detroit, Detroit Chamber Winds & Strings and the DIA. She is an active volunteer in the community, currently serving on the boards of Detroit Children’s Choir, Signal Return, The Scarab Club, Shrine Education Trust, DIA Friends of Arts & Flowers, and as an advisory board member for NAWBO. She has served as a grant panel reviewer for Michigan Council for Arts & Cultural Affairs and takes an active role in nonprofit education, developing and presenting several workshops over the years.
PRESENTERS Robert Seestadt, CPA Chief Client Officer, Apparatus Solutions As a respected CPA, Bob has presented various financial and accounting topics at Not-for-Profit workshops, conferences and training sessions covering topics such as financial statement presentation, liquidity and capitalization, and board oversight. Bob is a member of the Michigan Association of CPA’s Nonprofit Task Force and has over 20 years experience in providing accounting and management consulting services to the impact sector. In his role of Chief Client Officer for Apparatus, Bob provides strategic leadership and financial oversight ensuring compliance and satisfaction for their clients. Bob has compiled his years of experience with a goal to help organizations measure and build financial strength. Apparatus Solutions Inc. is based in Detroit, with vision to transform our community through insight , influence and impact .
TOPICS INDUSTRY UPDATES REVENUE RECOGNITION (ASU 2014-09) LEASES (ASU 2016-02) FINANCIAL STATEMENT UPDATES (ASU 2016-14) LIQUIDITY ASSESSMENT
INDUSTRY UPDATES
ECONOMIC AND INDUSTRY DEVELOPMENTS • NFPs continue to play a large role in the economy • Currently, more than 1.5 million NFPs registered with the IRS • Contributions to NFPs in 2014 exceeded $358 billion • Total revenues in sector exceeded $2 trillion • 62 million people volunteered at a NFP in 2015 (relatively consistent)
ECONOMIC, INDUSTRY, LEGISLATIVE AND REGULATORY DEVELOPMENTS Charity Watchdog Concerns • Watchdog organizations maintain online databases which are widely accessible • Although the organizations are not regulatory bodies, they have significant influence over the NFP sector • Some watchdog rating agencies adjust financial results reported on the IRS From 990 for their own evaluation process – primarily with respect to joint costs and in-kind gift valuation ˗ If there is not sufficient transparency on how the joint cost are allocated, the agency has been known to re-allocate joint cost reported as program expense to fundraising expenses ˗ One agency excludes in-kind for its rating methodology • Make sure to monitor your ratings
ECONOMIC, INDUSTRY, LEGISLATIVE AND REGULATORY DEVELOPMENTS Cyber Security • As technologies advance and NFPs become more sophisticated in using them, sensitive data that is stored internally or transmitted across networks become more vulnerable • While resource at NFPs may be limited, the costs of dealing with a breach can be high. A breach can expose the organization to steep fines as well as litigation and remediation expenses • NFPs should consider putting policies and processes in place to manage data privacy and security
ECONOMIC, INDUSTRY, LEGISLATIVE AND REGULATORY DEVELOPMENTS DOL overtime rules • The new overtime rules that were to have gone into effect December 1, 2016 are still under appeal • On July 26, 2017 the Department of Labor published a Request for Information (RFI) The RFI is an opportunity for the public to provide information that will aid the Department in formulating a proposal to revise these regulations. The 60-day comment period for all issues raised in the RFI ends on September 25, 2017 IRS • Data-Driven Decision Making by IRS ˗ IRS uses 990 to initiate over 200 data queries to ascertain whether a return might warrant examination ˗ Be mindful of accuracy and completeness when preparing or reviewing your 990 • Filing deadline for Forms W-2 and 1099-Misc ˗ Due January 31 (previously had been February 28)
ECONOMIC, INDUSTRY, LEGISLATIVE AND REGULATORY DEVELOPMENTS Property Tax • Uniform property tax exemption for charitable organizations is in the works for the state of Michigan • Current criteria for what constitutes a charity that should be exempt is inconsistent from municipality to municipality • A legislative solution is still in the works
REVENUE RECOGNITION (ASU 2014-09)
INTRODUCTION • ASU 2014-09, Revenue form Contracts with Customers was issued September 2014. In August 2015, the effective date was extended • Current Effective Dates (early adoption permitted):
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