Sad as it is to read about, leaders in the Christian community need to be aware of what happened at Willow Creek Community Church.

July 25, 2019, 9:16 am

What can we learn from this mess? Image courtesy of Adobe Stock.

Anyone who has been an adult a few years or has read news for more than , oh a few weeks, knows there is massive ugliness in the world.

Anyone who has been in leadership of a church or ministry for more than a few months knows the ugliness we see in the world is also present in the community of believers.

Why read about and then study messiness?

There are several disasters in the Christian community at the moment which leaders should pay attention to.

Why?

So we can learn. By observing we can be better prepared for dealing with horrible things if (or rather when) they appear in our area of responsibility.

In my professional role as auditor over the last few decades I have observed moral failure of leaders, embezzlement, fraudulent financial misstatements, tax fraud, and sundry other unpleasantness. (Okay, okay, sin is the correct description of those things.)

Because of confidentiality requirements, I cannot discuss anything about any of those issues.

Current, public issues are a different story. Having no connection to those incidents frees me to discuss them.

Willow Creek Community Church

A major scandal has been in the news at Willow Creek for over a year. Here is a tour of some articles which can fill you in.

What can you learn as a leader from this fiasco?

3/22/18 – Christianity Today – Bill Hybels Accused of Sexual Misconduct by Former Willow Creek Leaders. Article summarizes a range of allegations that had surfaced over the previous five years, including stories of decades old misbehaviors.

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FASB plans to postpone changes in lease and credit loss standards for non-public companies.

July 19, 2019, 7:00 am

Image courtesy of Adobe Stock.

FASB decided on 7/17/19 to postpone four major accounting rule changes for non-public companies. Journal of Accountancy reported the news on 7/17/19:  FASB to propose delaying effective dates for 4 major standards.

Two of the rules are particularly significant to the non-profit community while two will affect few charities.

The article uses a new method of identifying effective dates. It mentions January 1 of the year the standard will first be effective instead of the ol’ “fiscal years beginning after December 15” phrasing usually used..

Changes include:

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Comments from recent continuing education classes worth repeating: not-for-profit entities.

July 5, 2019, 8:46 am

Image courtesy of Adobe Stock.

(Following discussion of nonprofit accounting issues was posted at my other blog, Attestation Update, since the string of posts are more focused on the audit community. These comments may be helpful for the nonprofit community so the discussion is cross-posted here.)

 

Here are some fun or interesting or useful tidbits from the October 2018 A&A and the June 2019 Not-for-profit conferences presented by California Society of CPAs that apply to not-for-profit organizations.

Previous posts had comments on

Non-attest services and Yellow Book independence. Everyone probably knows that charities with more than $2 million of revenue who are registered with the California Attorney General must have an audit. Excluded from the requirement would be religious organizations, who are exempt from registering with the AG.

That requirement was created by the Nonprofit Integrity Act of 2004, so it’s old news.

The best payoff from attending CPE conferences is to compare every piece of information you hear to what you think you know. So, here is one of the big rewards for me attending this class…

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Minor revisions to California AB 1181, with bill re-referred to Senate Judiciary Committee.

July 3, 2019, 9:17 am

Image of editing courtesy of Adobe Stock.

On June 28, 2019, the Senate Judiciary Committee made some minor changes to AB 1181. In one sentence, the bill under consideration would require charities to recognize gifts in kind at the fair value in the location where the items will likely be distributed if the items have a geographic restriction.

Comment at the legislature’s website says:

From committee chair, with author’s amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on JUD.

I am not quite sure how to read that, but think it means the author made some changes, probably at the suggestion of the committee chair, the bill was technically put back to the committee after that change, the committee made additional changes and the bill was technically put back to the committee again.

All that to say there were minor changes to the proposed bill.

Based on the “compare versions” tab at the website, changes made at this point include:

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What is the specific, focused target of California AB 1181?

June 13, 2019, 5:00 am

Image courtesy of Adobe Stock.

Update – Mark Hrywna (@mhrywna) tweeted on 6/17/19 the Senate Judiciary committee has scheduled a hearing on AB 1181 on 7/9/19.

After attending CalCPA’s Not-for-Profit Organization conference last week and talking to a small group of my CPA colleagues, I have two thoughts on regulatory attention currently focused on the valuation of donated medicine.  Let me provided two questions which will focus my comments:

  • What is the primary concern of the regulators?
  • What is the specific, focused target of California AB 1181?

Previous post discussed the first question.

As I mentioned in that post, I have long wanted to develop an extensive discussion on the main accounting issues found in the California AG’s three cease and desist orders along with several accounting issues raised in their January 2019 settlement and May 2019 litigation.

That full discussion would have ended up somewhere around 3 or 5 times longer than these two posts. I won’t have time in the foreseeable future to write such an extended discussion. This pair of posts, at over 2,600 words, will have to do.

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What is the primary, core concern of the AG community over charity financial statements?

June 10, 2019, 11:14 am

What, oh what could be the core issue for charity regulators in their recent enforcement efforts? Image courtesy of Adobe Stock.

After attending CalCPA’s Not-for-Profit Organization conference last week and talking to a number of my CPA colleagues, I have two thoughts. (Yeah, yeah, I obviously don’t think much if I only have two thoughts after a full day of great presentations.)

Let me offer two questions which provide a way to focus my thoughts:

  • What is the primary concern of the regulators?
  • What is the specific, focused target of California AB 1181?

I have long wanted to develop an extensive discussion on multiple accounting issues found in the California AG’s three cease and desist orders. I would also like to discuss the host of accounting and auditing issues that are explicit or implied in the January 2019 settlement and the May 2019 litigation. It would be fun for me and informative for readers of this blog to dive deep into the wide range of issues raised by the AG.

That discussion would have probably run something in the range of 6,000 or 10,000 words, or perhaps longer.

I have not had the time to go into that extensive detail and don’t anticipate having that much spare time in the near future.

Instead, I will describe in the next post what I perceive is the very precise, very specific target of AB 1181 from the California Assembly and in this post will describe my perception of the key concern for the regulators.

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California AG settlement with charity for valuation of GIK

June 3, 2019, 8:12 am

What is the proper valuation of a pallet of medicine purchased on the international market? Image of pharmaceutical warehouse courtesy of Adobe Stock.

Back on January 29, 2019, the California Attorney General announced a settlement with a charity for financial reporting which was misleading because of the valuation of donated pharmaceuticals.

Although the settlement is four months old and thus counts as ‘old news’, it is worth discussing as an indication of the level of concern the AG has for valuing GIK.

The AG’s press release: Attorney General Becerra Announces $410,000 Settlement with Giving Children Hope, After the Charity Engaged in a Misleading Reporting Scheme.

The settlement consists of $400,000 from the charity and $10,000 from four named individuals.

A page on the charity’s website comments on the settlement: Giving Children Hope’s Settlement Resolution.

The charity says its insurance company agreed to pay the $400,000. The charity asserts the penalty was “not paid from donated dollars of program funds.” That would be a technically true statement because the insurance company would have cut the check and not the charity.

The charity also said there were “no fines or penalties levied against” the charity. On one hand I suppose that is correct because an agreement to pay four hundred thousand dollars is not the same as a fine or penalty. I don’t think that’s quite correct for two reasons. First, the AG doesn’t collect voluntary contributions; the payment was made as settlement of civil charges. Second, insurance companies don’t write checks out of the generosity of their heart; they settle the liability of their insureds.

I think most people looking at the situation would agree the charity was hit with a $400,000 penalty.

Individual penalties

The press release says four individuals will also pay $10,000 in total. It is not clear from the press release whether this is a joint and several liability or each person will be billed individually for $2,500.

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