Listened to CalCPA’s virtual Not-for-profit conference today.
Lots of great stuff during the sessions. Three items were worth sharing on Twitter during the day. Thought I’d share them here as well:
How to account for PPP forgiveness.
Disasters can happen. Consider:
Rumbi Bwerinofa-Petrozzello ponders these questions in her 7/2/17 post If Lost…Then What?
She tells of finding a wallet on the ground, walking into the adjacent restaurant looking for the owner by glancing between the patrons and the photo on the driver’s license in the wallet. No luck.
When she got home she was able to do a bit more research. She located the woman and returned the wallet.
Life hack tip: make sure you have a business card with a current phone number and email in your wallet so that if a kind-hearted person finds your lost wallet the nice person can reach you quickly.
From there she transitions to disaster recovery. A few questions for you to ponder:
Updated for ASU 2018-08.
7/18/19 Update: FASB voted on 7/17 to postpone the effective date for leases and credit losses.
While you have been sitting on the beach enjoying life this summer, have you noticed that dark, odd horizontal line out there on the horizon?
It isn’t a figment of your imagination. There really is a tsunami wave out there in the distance of the accounting ocean and it is going to hit the shore where you are sun bathing.
As if that wasn’t bad enough, there will be fresh waves of water hitting the beach over four years.
The good news? Maybe one or two or three of the waves will miss your organization.
Here is a quick glance of what’s on the horizon:
Update: Comments added whether early adoption is or is not allowed.
Here is just a bit more detail:
The Supreme Court issued a major ruling in favor of religious freedom, finding that a religious preschool may not be prohibited from a program helping private schools merely because it is a religious based school.
I would like to give you a flash introduction to the ruling. If you are interested in this case, you must spend time in further research.
The case, referred to as Trinity Lutheran, is focused on a state program that paid for private schools to resurface their playgrounds with rubber from recycled tires. The state held that merely being run by a religious entity disqualified the preschool from participation in the program. (If you need a more precise cite, look up Trinity Lutheran Church vs. Comer)
The most frequent scam in 2016 was the phone calls saying “This is the IRS and if you don’t pay your past due taxes this instant we will send someone to your house to arrest you right now.”
There are many things wrong with those calls.
As a starter, your first contact with the IRS will never be by phone. You will instead get a letter explaining what the IRS thinks you messed up.
The Evangelical Council for Financial Accountability has published a concise, free resource explaining many of the rules of overtime, especially in the context of the charity world.
You can find it here and get a copy merely by giving them your email address. Not to worry – I don’t think they are going to overload you with spam – I’ve signed up for several things from them and the only emails I get are for free resources and invitations to webinars that are actually of interest. Oh, and news that is of interest to those of us in the charity world.
Oh, did I say it was free?
The new overtime rules were set to go into effect tomorrow, December 1. The rules are on hold as a result of an injunction issued by a federal judge. What should charities do about changes that have been implemented, or announced, or on the drawing board?
Two articles have some suggestions:
11/29 – Baltimore Business Journal – Plenty of questions still surround blocked overtime pay law – It is very uncertain how the new overtime rules will be handled. Article cites the CEO of an outsourcing and payroll company. His advice is stay tuned to developments. The rules could be implemented, overturned, or modified.
The new rules revising not-for-profit financial reporting are a significant change although they are not as dramatic as what we saw a long time ago with SFAS #116 and #117.
ASU 2016-14, Presentation of Financial Statements of Not-four-Profit Entities, was issued August 18, 2016. You can find the document here.
I will write a series of articles going into detail on the new rules. In the meantime, here are a few more articles providing background.
8/18 – AICPA – FASB’s standard Aims to Improve Not-for-Profit Financial Reporting – good overview of most changes
8/18 – Journal of Accountancy – FASB modifies not-for-profit accounting rules – High level overview. Article also provides some background on the process. Revision of GAAP to require operating measures is still under consideration but will be part of the next phase.
Congress requires W-2s and W-3s be filed with the IRS and Social Security administration by January 31 starting with reports filed in 2017. Previously, the deadline for sending reports to the government was February 28 by paper and March 31 for electronic filing.
The same, accelerated deadline applies for 1099s which have non-employee comp reported in box 7.
You can see more details in an 11/4 article at Forbes: Compressed Deadlines and Higher Penalties for Forms 1099 and W-2.
Penalties
In addition to the deadline for filing getting accelerated, the penalties for dropping the ball in 2017 are getting more severe.
Here are a few articles which will give you a different way of looking at the recent publicity surrounding Wounded Warrior Project. I’ve been swamped by several major projects so haven’t had much time to write recently. Those projects are still not done so I won’t be able to spend as much time on this post as I would like, yet I want to get some comments online for those who have been following the story.
The biggest article is The First Casualty: A report addressing the allegations made against the Wounded Warrior Project in January 2016 by Doug White, published September 6, 2016.
There is a lot of information about the entire story which has received minuscule coverage. Here is my quick recap of his major points:
A few articles to follow up on the accusations a World Vision manager allegedly routed aid money to a terrorist organization.
A number of public comments on twitter are claiming the total budget for the Gaza branch is only $2.2M a year.
Some people making this comment usually continue the discussion by calling into question the entire set of accusations from the Israeli government because the current claim is the manager diverted approximately $7 million a year.
This position implies that accusations of diverting $7M a year when the budget is only $2.2M means the accusations are untrue.
8/8 – AP, The Big Story – World Vision: Israeli charges based on “huge gap” in numbers – Article points out the intelligence agency accuses the program manager of diverting food, agricultural equipment, and medical supplies in addition to currency. That means there was in-kind material as well as heavy equipment.
The accounting argument appears towards the end of the article. A Foreign Ministry representative is guessing that the stated budget does not include in-in-kind donations.
A World Vision representative in Germany says the budget of $22.2M for the Gaza office over the last decade does include in-kind materials.
So, we may wind up with this being an accounting issue in addition to a loaded political issue on top of an alleged defalcation issue carrying over into alleged terrorism funding issue.
8/9 – Al Jazeera – Christian charity ‘top of Israel’s target list’ – It will help you filter news you hear about the manager of the Gaza office if you keep in mind the visible political agenda you will see in much reporting.
Last week, the Israeli intelligence service accused a World Vision manager of diverting resources to Hamas. The allegation is he diverted about 60% of the annual funds flowing through the Gaza office, with the amount diverted allegedly around $7M a year.
Some initial reactions are surfacing from donors. Also, some context for magnitude of the alleged amount. Finally, some questions to ponder for leaders of charities and those of us who audit NPOs.
8/4 – World Vision – Statement on World Vision Staff Arrest – Full statement from World Vision. Doesn’t say a lot because they don’t yet know a lot. I’m sure there will be more comments as the situation develops.
8/5 – Reuters at Business Insider – Australia suspends World Vision funding over allegations its Gaza representative funneled millions to Hamas – The Australian government has provided about $4.4 million over the last three years to World Vision for use in helping people living in Gaza and West Bank. The aid has been suspended over the allegations.
How do you keep one person from creating a public relations fiasco or, even worse, damaging the reputation of your entire organization? How do you keep a manager from illegally diverting a huge amount of resources?
What controls and procedures do you have in place to prevent something like this in your organization?
Let’s start with a FBI agent who pled guilty to charges of passing sensitive and classified information to a Chinese government official and businesses in China.
8/1 – ABC News – FBI Employee Arrested for Allegedly Acting as Secret Chinese Agent – According to the story, we can drop the word ‘allegedly.’ This week he entered a guilty plea to one felony charge. The government claims he was gathering sensitive and classified material based on instructions from his handler.
He was born in China and was naturalized in 1985 at age 16.
So, the FBI with all its investigative powers and intentional counter-intelligence operations was not able to prevent this man from being an agent of the Chinese government.
So what chance does a nonprofit charity have of filtering out people who want to do bad stuff? That is something to consider as we grieve the following story.
This week the story broke that a manager of the Gaza office of World Vision allegedly diverted a lot of money to Hamas for use in terrorist activities. At this point the story consists of allegations, but allegations from the Israeli security service after a few weeks of interrogation are extremely serious.
8/4 – Hareetz – Top Official in Christian Aid Group Charged With Funneling Funds to Hamas – The security service, Shin Bet, arrested the director of the Gaza branch office on June 16. He was indicted Thursday.
Shin Bet accuses the manager of joining an armed wing of Hamas in 2004 and being sent to infiltrate a western aid organization a year later.
In 2005 he was hired by World Vision and in 2010 was promoted to director of the Gaza branch.
It is only a few months until lots more people must be paid time-and-a-half for the actual hours worked beyond 40 a week. This will likely affect a huge number of charities and churches.
Just so you get the picture, after 12/1/16 your charity will need to track the actual hours for any full-time administrative staff or program managers earning less than about $47K and pay them for all hours worked over 40 per week.
Here are two more articles providing an intro to the issue.
5/23 – Associations Now – Overtime rule released: how organizations can prepare – additional discussion on how to start planning for the new overtime rules.
Here are a few of the first reactions I’ve seen to the letter that was released to the media by the Senator’s staff on Monday.
Professor Brian Mittendorf describes what he sees as The Fundamental Issue in the Wounded Warrior Project Inquiry. The underlying issue in the letter from Senator Grassley to WWP is just a different way to look at the core issues in the discussion. The issue: (more…)