Article Archives: 2014

Posted by: Megan Ryan

By Megan Ryan, CPA

Beginning in calendar year 2015, certain employers must comply with the Affordable Care Act requirement to offer health insurance to full time employees. In conjunction with this requirement, employers are required to report to both employees and the Internal Revenue Service specific information related to the health insurance made available to employees. Such reporting requirements begin in early 2016, as it relates to the 2015 calendar year.

Which Employers Must Comply?

In 2015, the employer mandate and related health insurance reporting requirements will apply only to those employers with more than 99 full-time equivalent employees. In 2016,

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Posted by: Pete Miller

By Pete Miller, CPA, CFE

Fraud continues to be a rampant epidemic and a terrible economic reality.  If occupational fraud were a country it would have a national economy ranking in the top-10 across the globe.

For a lot of not-for-profit organizations (NFPs), resources available for robust internal controls and fraud prevention measures are quite limited. An NFP’s ability to protect itself against fraud is made doubly challenging by the fact that an NFP will have a much harder time replacing the lost funds when compared to other organizations. The risks are greater. For this reason, small businesses and NFPs alike need to be very deliberate with the internal controls and fraud prevention measures they implement.

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By Jennifer Becker Harris, CPA

New international tax developments over the last six months will affect U.S. charities and provide welcomed relief in some areas and added compliance in others. The following is a summary.

Passive Foreign Investment Companies (PFICs)

What is a PFIC?
A foreign corporation is a PFIC if:

  • 75% or more of its gross income is from passive sources, or
  • the average FMV of assets which produce or are held to produce passive income is 50% or more.

Once a foreign corporation is classified as a PFIC,

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If you are part of organization that is audited or have been involved in audits with a prior organization, you understand that audits can cause a significant amount of stress and anxiety. This is especially true when there are audit adjustments or other deficiencies identified and an internal control letter is issued to the governing board. It’s no surprise that this letter can cause some strain on the relationship between the client and the auditor.

First, what is the purpose of the letter?

Auditors are required by professional standards to report, in writing, internal control matters that they believe should be brought to the attention of those charged with governance (the board).

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Posted by: Julie Eisenhauer

By Julie Eisenhauer, CPA

On May 28th, under a joint project, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) issued their new standards for accounting for revenue under contracts with customers.

Why the New Standard?

Currently, U.S Generally Accepted Accounting Principles (GAAP) include many revenue recognition requirements across many specific industries, resulting in different accounting for similar transactions. The new standard improves comparability across entities, industries, jurisdictions and capital markets. It also removes inconsistencies, provides a more robust framework, and provides more useful information to users of the financial statements through improved disclosures.

What are the Main Provisions?  » Read more

Posted by: Dan Wright

By Dan Wright, CPA

Many start-up companies use convertible debt as a way to attract short-term investment. Convertible debt has appeal to investors because it can provide enhanced risk protection, while at the same time allowing for participation in the appreciation of the company as the value of the stock increases. It has appeal for start-up ventures because the cost of issuing convertible debt may be lower, and it can result in access to funding in a shorter time frame than issuing an additional round of equity.

Understanding the federal income tax consequences to the holder and the issuer can be daunting,

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Posted by: Amber Busch

By Amber Busch, CPA

For years the IRS has tried to wrap its arms around rules related to capitalization vs. deductible repairs and supplies for tangible property. In September 2013 the IRS issued the Final Tangible Property Regulations, two years after issuance of the proposed regulations. For many, the final regulations provide a more generous de minimis expensing rule than what was anticipated. Under the de minimis safe harbor election, taxpayers may elect to expense amounts paid for tangible property, up to $5,000 per item or invoice. This benefit may be advantageous to exempt organizations that have unrelated businesses that generate unrelated business taxable income (UBTI).

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Posted by: Sarah Wine

By Sarah Wine, CPA

As an employee at a not-for-profit organization required to have an annual audit, you know that audit preparation and audit fieldwork can be overwhelming and time consuming. However, by implementing the following 10 tips on preparing for a successful audit (plus 5 bonus tips for those preparing for a federal compliance audit), you will be able to reduce your preparation time and feel more confident when your auditors arrive for fieldwork.

1. Ask questions during the year, do not wait until fieldwork. If an unusual transaction occurs or you are thinking about entering into a new transaction,

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Posted by: Joe Haberzetle

By Joe Haberzetle, JD, LLM

The ability of not-for-profit organizations to rent their tax-exempt property to others has long been an area of contention between such organizations and the Washington taxing authorities, as evidenced by last year’s uproar over the highly acclaimed Everett Sausage Festival. The rules in this area are detailed, varying and confusing, and the penalties for a violation can be severe – typically including the loss of the property tax exemption on the affected part of the property for at least the year in which the violation occurs.

Thankfully, the state legislature has brought much-needed simplification and uniformity to this issue with the enactment of Senate Bill 6405 during the 2014 session.

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“California Attorney General sued directors and officers of Monterey County AIDS Project…Settlement created $1M fund plus barred 16 former officers and directors from serving as a fiduciary of any California charity for at least 5 years.”

From the Office of the Attorney General, State of California

Unfortunately, the above or similar types of headlines are becoming far too common for the officers and directors of many not-for-profit organizations. In many cases, board members graciously donate their time and effort to furthering the cause of their chosen charitable related organization; the last thing on their minds is becoming involved in a nasty lawsuit or related litigation.

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