Article Archives: 2015

Posted by: Cheryl R. Olson · Diane Shey

By Cheryl Olson, CPA, CGMA and Diane Shay, CPA

“Ugh, why can’t my accounting system just read my mind?” This is not an uncommon statement when you find your accounting system doesn’t do what you want it to do in the time you want it done. We all have our days when we are frustrated with our accounting system, but overall it should meet core needs, not only for what you need today but also in the future.

Fortunately, there are accounting systems today that are more powerful and easier to use. It’s time to step back and investigate if you truly need a new accounting system or if you need to invest resources in training and tweaking the original setup for better functionality.

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By Jennifer Becker Harris, CPA

The last thing many nonprofit leaders want to see is a media article that depicts their charity in a negative light. The vast majority of charities work hard to be in compliance at both the state and federal levels, as their nonprofit corporation and tax-exempt status is an integral piece of how they raise funds and operate. In addition, one of the primary goals of the Revised Form 990 is transparency. This includes shining a light on certain transactions between the charity and insiders or “interested persons”, as disclosures may be triggered on Schedule L of the Form 990.

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Your strategic business plan is becoming more closely linked with your technology plan as the years go by. Technology can often be the strategic plan accelerator if you view it as a strategic asset rather than a cost. Either way, we’re all spending money on computers, software, copiers and telephones, so let’s have a plan to use them wisely and another plan to purchase them correctly.

Purchasing technology is a balancing act between speed, stability, and cost and security. If you give me three of these variables, I can give you the fourth. The relationship really is that direct. I know it’s obvious,

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Most organizations do not realize that November 1st is a potential filing deadline in Washington. But, if your organization has an old employee paycheck sitting in a drawer, paid a check to a vendor that was never cashed, or has any other money or intangible property that is owed to an individual or business, you are likely the holder of unclaimed property.

Organizations are often unaware that they even have reporting responsibilities related to such property. There are two primary steps in evaluating whether your organization has unclaimed property to report. The first step is identifying what unclaimed property your organization holds.

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Posted by: Sarah Wine

By Sarah Wine, CPA

As auditors of not-for-profit organizations, we are often asked what policies are critical for organizations. Though much depends on the type and size of the organization, there are three key policies that all not-for-profits should have:

  1. Code of ethics
  2. Whistleblower policy
  3. Record retention and document destruction policy

Code of Ethics

One of the most valuable assets of a not-for-profit is its reputation.  In recent years more and more organizations have had public scandals that have impacted the organization by severely reducing its contributions or grants or by making the organization close its doors forever.

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Posted by: Karen Dunn

By Karen Dunn, JD, LLM

More due diligence and reporting is required than ever before for grant making and, in particular, foreign grants and programs. To maintain its exempt status, an organization must use its assets, including all domestic and foreign grants it may make, exclusively for qualified exempt purposes. Form 990 requires disclosure of whether an organization maintains records to substantiate both the amount of assistance and if eligibility for such grants or assistance is based on the organization’s policies and procedures.

Commonly recognized best practices recommend that charities develop policies, systems, and procedures for pre-grant inquiry, grant monitoring,

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Posted by: Julie Eisenhauer

By Julie Eisenhauer, CPA

A lawsuit was recently settled for $62 million in which the employees accused the employer of mismanaging their 401(k) plan. The lawsuit stated that the employer hid excessive fees and invested in conservative investments that resulted in diminished investment returns for plan participants. In another case, the U.S. Supreme Court will soon hear arguments where participants in a 401(k) plan argued that they were being charged excessive fees.

These cases raise the question: what are the employer’s fiduciary responsibilities with respect to retirement plans they sponsor? The Employee Retirement Income Security Act (ERISA) sets standards of conduct for those who manage private-sector retirement plans and its assets (called fiduciaries).

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Posted by: Karen Dunn

By Karen Dunn, JD, LLM

The Advisory Committee on Tax Exempt and Government Entities (ACT) released recommendations to the IRS last summer for specific changes to UBI reporting and additional guidance. In its report, the committee expounds on the lack of guidance from the IRS on the subject. The ACT points out that such lack of guidance contributes significantly to the reporting errors that the IRS found in their examinations of colleges and universities and proposes that the IRS publish a revenue ruling that provides comprehensive guidance on UBI issues.

Simply put, UBI is taxable income from trades or businesses that are unrelated to an organization’s exempt purpose.

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Posted by: Cheryl R. Olson

By Cheryl Olson, CPA, CGMA

You’ve all heard of the Overhead Myth, which is the “false conception that financial ratios are the sole indicator of nonprofit performance.”  In 2013, GuideStar, BBB Wise Giving Alliance, and Charity Navigator wrote a letter recommending donors look at other performance factors beyond the administrative and fundraising expense ratios. The three watchdog groups then released a second letter in the fall, inviting nonprofit organizations to take an active role in helping donors understand other measures in the following three ways:

  • First, demonstrate ethical practice and share performance data.
  • Second, manage towards results and understand true costs.

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We live in a world where time and resources are at a premium.  As a result, some responsibilities get pushed to the “back burner.”  However, we also live in a world where the possibility for employee fraud is real,  but the process to uncover such fraud could be difficult and time consuming. One way to get some high quality return on time investment is by using simple Excel functions.

As an auditor, I’ve had the privilege of being involved in thorough data mining projects designed to detect fraudulent activity.  During these projects, data mining software is used to perform a suite of complex tests that can comb through significant amounts of data and summarize it to obtain leads related to suspicious activity.

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