Accounting ideas in World Help’s revised financial statements

May 8, 2013, 11:18 am

There are some accounting concepts in the most recent financial statements released by World Help that warrant discussion. This post will walk through those items I noticed.

This will be a long post. You might want to get a fresh cup of coffee and settle in.

Efforts to reach out to World Help

I have been asking World Help for their comment for a week and a half. The only reply I have received was when the president’s assistant gave me the e-mail contact for the organization’s outside media consultant. I have sent e-mails to the president’s assistant and the contract media consultant several times and received no replies.

Proper accounting is a broader issue in the R&D community than has been discussed

The focus of conversation on accounting in the relief & development community has been variance power and the valuation of medicine, particularly 500 mg mebendazole.

I perceive there are issues involved in disclosures that haven’t yet been discussed.

In accounting shorthand, the matters I see that have not yet been addressed are disclosures of concentration of contributions, concentration of donors, and estimates with a reasonable possibility of change in the near-term.

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Posted by Jim Ulvog

Internal control, 1860s edition

April 2, 2013, 8:10 am

Two posts at my other blog illustrate how Wells Fargo stagecoaches used internal controls in the 1860s.

You will see the concepts discussed by your auditor today have been around for over 150 years.

Posts have some fun photos from the Wells Fargo Museum in San Diego. Well, okay, they are fun if you are an accountant or banker or like history of the Old West.

Leave a Comment » | Board training, Internal control, Non-profit accounting | Permalink
Posted by Jim Ulvog

Accounting issues illustrated in 990 of a cancer charity – 1

March 22, 2013, 9:49 am

“Little Money of Children’s Cancer Charity Goes to Main Programs” is a major article in Chronicle of Philanthropy by Caroline Preston discussing the accounting at Children’s Cancer Recovery Foundation.

Overview

I mentioned this article here. There is much in the article that can be discussed from an accounting perspective. I will touch on some of the ideas.

The Chronicle article is behind a paywall, so you need to use your online subscription to read it or grab the February 28, 2013 print edition.

This series of posts is going to be an inside-baseball discussion. More technical than usual with lots of accounting shorthand. Probably won’t be much fun unless you are already familiar with issues in the NPO world. Likely to be wordier than usual (as if I wasn’t wordy enough already!)

You can find the organization’s 990 for 2011 on their website here.

Why this discussion and why this organization?

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2 Comments | GIK - gift-in-kind valuation, Non-profit accounting | Tagged: , | Permalink
Posted by Jim Ulvog

Are people too nice in the nonprofit sector?

March 4, 2013, 9:35 am

That’s the question in Caroline Preston’s article at The Chronicle of Philanthropy – Some Nonprofit Leaders Ask: Is Philanthropy Killing Itself with Kindness?

The answer in over 1,500 words: check out Ms. Preston’s article.

The answer in six words: Do you really need to ask?

The answer in one word: Yes

A one paragraph explanation from the article:

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Leave a Comment » | Board training, Non-profit accounting, Pondering | Permalink
Posted by Jim Ulvog

Background on functional expense allocation

February 24, 2013, 5:38 pm

The staff at World Vision has two good articles on functional allocations. Keep in mind these are the personal opinions of the staff.

Both articles written by Jennifer Brenner.

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Posted by Jim Ulvog

Charity Navigators reallocates joint costs on a selective basis

February 24, 2013, 5:27 pm

I visited with the staff of Charity Navigator and learned they are reallocating joint costs from program to fundraising on a selective basis, not across the board.

There website suggests they reallocate all joint costs that go into the program category. See their page How Do We Rate Charities’ Financial Health? which says:

Joint Cost Allocation Adjustment

Generally Accepted Accounting Principles (GAAP) allow for organizations that follow SOP 98-2 or ASC 958-720-45 to report their specific joint costs from combined educational campaigns and fundraising solicitations and the IRS requires organizations to disclose this on the Form 990. In most cases, charities utilizing this technique allocate a small percentage of their solicitation costs to program expenses from fundraising expenses. However, we believe that donors are not generally aware of this accounting technique and that they would not embrace it if they knew a charity was employing it, nor does Charity Navigator. Therefore, as an advisor and advocate for donors, with rare exception, when we see charities using this technique we factor out the joint costs allocated to program expenses and add them to fundraising.

Blog post from WV staff asks are joint costs valid?

Writing at the NFP Audit and Accounting blog, ejwcpa takes exception to Charity Navigator’s position – are join costs valid?

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4 Comments | Non-profit accounting | Tagged: | Permalink
Posted by Jim Ulvog

Discussion of joint cost allocation, variance power, GIK valuation, and portion of funds spent for outside fundraisers, all for one charity

February 22, 2013, 2:57 pm

Yes, that is a lot of ground to cover.

Long article out today in the on-line edition of Chronicle of Philanthropy by Caroline Preston covers all those issues in just one NPO – Little Money of Children’s Cancer Charity Goes to Main Programs.

The article is only available on-line and in the print edition soon to arrive in your mailbox.

When the article is out on-line I’ll have more to say.

In the meantime, just know the article discusses one cancer charity at length. Also includes the names of other NPOs that have been in the news lately.

If you have access to either the on-line or paper edition, the article starts on page 7. It runs for one full page and two half-pages.

1 Comment | GIK - gift-in-kind valuation, Non-profit accounting | Permalink
Posted by Jim Ulvog

Tips for handling endowments

February 21, 2013, 7:51 am

Colette Kamps, CPA writing at Nonprofit GPS has Top 12 Points to Avoid Endowment Confusion.

If you’ve got endowment funds in your ministry, check out her post for some good ideas on accounting and management for the endowments. Might find something new or a reminder of something you’d forgotten.

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Posted by Jim Ulvog

Joint Cost Allocation is drawing attention

February 11, 2013, 8:23 am

Chronicle of Philanthropy has a major article out on joint cost allocation, written by Suzanne Perry – Watchdog Cracks Down on Misleading Statements on Fundraising Costs (behind paywall).

The issue is that under certain circumstances, the accounting rules allow allocating fundraising costs into the program category on the functional allocation of expenses. The million dollar question is whether the particular fundraising cost meets very specific conditions.

Here is the crux of the issue in four sentences:

Read the rest of this entry »

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Posted by Jim Ulvog

Article on joint cost allocation in Chronicle of Philanthropy

February 9, 2013, 2:08 pm

My post today will have lots of accounting shorthand.  This week’s print edition of the Chronicle of Philanthropy has a major article by Suzanne Perry on allocation of joint costs – Watchdog Cracks Down on Misleading Statements on Fundraising Costs.

Article is not yet visible on their website.

I have two observations.

Read the rest of this entry »

1 Comment | Non-profit accounting | Tagged: | Permalink
Posted by Jim Ulvog

“Tragedy of Fraud” e-book now available at Amazon

February 7, 2013, 9:43 am

“Tragedy of Fraud – The Ripple Effects from Fraud and the Wages Earned” describes the tragic consequences from fraud.

There are ripple effects that spread out to harm innocent bystanders.  The perpetrator draws a wide range of well-deserved wages that will be paid in full.

The book looks at two fraud incidents to learn what happens after a fraud is discovered. One took place in a local megachurch and the other in the mayor’s office of a small city.

The book closes with a discussion of the fraud triangle. That’s the idea that three components need to be present for a fraud to take place – opportunity, motivation, and rationalization. There are steps an organization can take to reduce those factors.

You can find the book at Amazon here. 

This book is a compilation of blogs posts that have been previously published at Nonprofit Update and Attestation Update. The posts have been edited slightly and reorganized for easier reading.

Major sections of the book: Read the rest of this entry »

Leave a Comment » | Auditing, Fraud, Internal control, Non-profit accounting | Tagged: , , , | Permalink
Posted by Jim Ulvog

No more unlimited FDIC insurance on transaction accounts after 12-31-12

January 3, 2013, 8:40 am

I had thought about writing a short post about the end of unlimited insurance on non-interest bearing checking accounts.  Since I’ve now seen two articles talking about going back to the $250,000 limit, it’s better to point you to other bloggers.

Check out:

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Posted by Jim Ulvog

Do you own your data that is stored in the cloud? If your cloud provider gets in a jam with the government, can you get your data back?

November 19, 2012, 9:20 am

Those are two extremely serious questions that everyone who is storing data in the cloud should start asking.

What would happen to your business or ministry or hobby if the feds seized the server of your cloud provider and you had to fight in court to get your data back?

How would you cope with this situation:

Megaupload is a cloud provider who stands accused of essentially being a storehouse of pirated videos. Their servers were seized by the federal government. That means the data of every user was also seized.

Read the rest of this entry »

Leave a Comment » | Information Technology, Non-profit accounting | Permalink
Posted by Jim Ulvog

3 more Q&As on a church paying for services – do you see a pattern of answers saying payments are normally taxable and typically to an employee?

October 29, 2012, 7:00 am

If you do a bit of research on paying people being compensation or whether to treat them as employee or independent contractor, you will see an obvious trend in the discussions.  

If someone is providing services to your church and you pay them, there is usually going to be some taxable income.  It is fairly unusual for those services to be in the category of independent contractor.  

Corey Pfaffe has three more Q&A discussions posted at MinistryCPA blog.  All deal with whether amounts paid to a person for services are taxable and whether such payments should be reported on a W-2 as an employee or on a 1099 as an independent contractor: Read the rest of this entry »

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Posted by Jim Ulvog

What should you capitalize along with the contract price of the equipment you just bought?

October 26, 2012, 7:54 am

“All expenditures incurred in acquiring the equipment and preparing it for use,”

is the very short answer from Danny Oertle in his post at Nonprofit GPS, Not-for-Profit Organizations Acquiring New Fixed Assets – What Should You Capitalize?

Read the rest of this entry »

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Posted by Jim Ulvog

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