Non-profit accounting

Some sources for comparable salary data

Where can you find some comparability information for salary? To support that your nonprofit is providing reasonable compensation to  your staff, you will need something to back up your conclusion the pay package is reasonable.

With a few minutes research, I found several resources. Prices and links as of the moment I looked at the websites.

The first three are already known in the religious community. Three more might be helpful as well. You can find more sources with a few minutes research on the ‘net, but this will get you started:

National Association of Church Business Administration: (more…)

Jim Ulvog

Primer on reading a 990. Lessons learned from looking at a journalists’ presentation.

If you don’t know where to start when looking at a 990 to figure out what’s going on, two reporters have provided you a great intro.

Here is a slide deck for a presentation that highlights a few items to look at: Five Tip-offs to Trouble in the Form 990.

A 990 has been highlighted here so you can see where to look for key numbers that tell the story of what is happening in a charity. The sample is an actual 990 with an unflattering story to tell.

Board training opportunity

If you have board members who have a basic idea of how to find their way around a 990 and want them to learn more, show them the above links.

The presentation is from Kris Hundley of the Tampa Bay Times and Kendall Taggart of The Center for Investigative Reporting.

For finance staff in a charity, some things to learn

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Jim Ulvog

Introduction to reading an audited financial statement

Does it seem like the report you get from your auditors is an unorganized jumble of numbers and words?

If so, that’s because financial statements for a charity are presented in a very stylized way. A specific set of rules spell out the sequence and structure of the information.

Need someone to help you get oriented so you can figure out what that report is saying?

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Jim Ulvog

IRS closes audit of Food for the Hungry’s 2008 tax return

On March 24, 2014, Food for the Hungry issued this press release:

Food for the Hungry’s 2007 Tax Return Audit Resolved – IRS acknowledges that FH followed all laws and accounting standards

In the press release the CFO, Barry Gardner, provided the following comment:

“After an exhaustive review lasting 1,030 days, the IRS allowed the 2007 return to stand as originally filed,” said FH Chief Financial Officer Barry Gardner. “Contrary to erroneous press reports in 2012, no fine was ever levied or paid. While FH and the IRS have minor disagreements concerning certain transactions from that period, those transactions were deemed not to require revision of FH’s tax return.”

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Jim Ulvog

Update to case study of legal and accounting costs during a major multi-year IRS audit

Update: The IRS has closed the audit.

The 2013 990 tax return and audited financial statements for Food for the Hungry (FH) are hot off the press and available at their website.

I previously discussed the costs incurred by Food for the Hungry to address their audit from the IRS. See previous post: Case study of legal and accounting costs during major IRS audit.

I am looking at that situation because this audit is of interest to the wider non-profit community and it is also a case study of the costs involved in a major dispute.

Try to stay out of court

Here are two posts on the whole idea of avoiding litigation:

Update of costs

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Jim Ulvog

Consider carefully before you start an NPO to get grants – advice for arts organizations and other creative people

Is it a good idea for an artist to create an NPO to get grant money?

If you’ve been wondering, consider the advice from Corbett Barklie at KCET: Should I Become a Nonprofit?

In addition to the cost and time involved in forming an NPO, the article points out the cost and time to maintain the infrastructure.

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Jim Ulvog

Free class on how charities account for expenses

Learn All About Nonprofit Expense Accounting on May 1 is the announcement from Sift Media of another free webinar on NPO accounting. The class is Expense Accounting – Key Accounting and Reporting Issues for Nonprofits #3.

The free class is one hour long and will be offered on May 1, 2014 at 2:00 p.m. Eastern. That means 11:00 here on the west coast.

Some of the topics covered will be the functional allocation of expenses and joint cost allocation.

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Jim Ulvog

Free class on how nonprofits record contributions

Learn About Revenue Accounting for Nonprofits on April 25 is the announcement from Sift Media about a good overview of how to account for revenue in a charity. The course is Key Accounting and Reporting Issues for Nonprofits No. 2: Revenue Accounting.

The course is free and will be offered April 25 at 2:00 Eastern. Runs for one hour, thus you can get one hour CPE.

I read through the handout for the course. This will be a superb class those who are new to the nonprofit community.

It will be a good review if you are quite experienced. I have a fair number of years working the NPO community, yet still enjoy this type of class for two reasons: First, it reinforces what I think I know. Second, I frequently find some little tidbit that escaped my attention or that I’d forgot about. Thus it is quite helpful. That, by the way, is the reason I always read the annual risk alert updates. You should too.

Looks to be a great course. I’ve gone through two classes from this instructor. He does a great job.

Oh, did I mention it’s free? And an hour of CPE?

Jim Ulvog

Think carefully before you start a new NPO as your platform to change the world

Catalyst Center for Nonprofit Management provides a challenge for those of you thinking of forming an NPO to provide a structure to carry out your passion:  Should You Start a Nonprofit Organization?

The article surveys the costs and says think carefully before diving in to start a 501c3.

Why?

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Jim Ulvog

Overview of NPO’s statement of financial position – Free one-hour on-line course

Going Concern/Sift Media is offering a one-hour on-line course that is a survey of the balance sheet used by charities, which is called a statement of financial position.

If you are new to the financial part of the NPO world, I really recommend you check out the class. If you aren’t an accountant and want to understand the NPO world, I really recommend the course.

RSVP: An Overview the Statement of Financial Position for Nonprofits on March 26th

On-line. Free. 1 CPE credit.  Wednesday 3/26.

If you miss the course, the video will be available after the class, but no CPE credit for that.

The course will be presented by Mr. Larry Perry, CPA. I just completed a Sift Media on-line course presented by him. He’s very good.

Check it out.

Did I mention it’s free?

Jim Ulvog

More good stuff on overhead ratios and “worst charities.” – 2–14

Some more articles that are worth attention but I don’t have enough time to respond in a full post. Here are the headlines, with links and a brief comment below: Super Bowl t-shirts, costs to raise funds, and an art museum gets ready to close its doors.

Impact

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Jim Ulvog

Charity restates GIK revenue in 2012. Increases valuation to AWP.

You read that correctly. Audited financials and 990 were restated for value of donated meds. Not a reduction from AWP, but an increase to AWP.

Cancer Fund of America has filed an amended 990 and audited financial statements with the New York regulators. The valuation of GIK medicines was increased to AWP.

I was clued in to the change by a comment from William Barrett, who writes at Forbes and New to Seattle. He has been covering the GIK valuation issues for a loooong time. I’ve mentioned his articles several times. In fact, it was his article at Forbes that first made me aware of the issues with mebendazole.

You can find the filings with the New York AG here.

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Jim Ulvog

California minimum wage increases in ’14 & ’16. Impact on exempt status for staff.

California increases minimum wage from $8 to $9 per hour starting July 1, 2014. Another increase to $10 starts January 1, 2016, two years from now.

This affects the minimum that employers can pay their staff.

It also has another impact – on determining if other staff are exempt from overtime rules.

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Jim Ulvog

Q: Should costs of developing a web site and other software costs be capitalized in a small NPO? Four answers.

One word answer: Yes

Sure-you-want-to-bother answer: Think carefully in terms of materiality. If you have no external reporting obligation, think really seriously whether it makes any difference for your internal reporting. If you issue compiled, reviewed, or audited financial statements to outsiders, evaluate carefully whether the amounts involved are actually material.

What passes for a brief answer from a CPA:  (more…)

Jim Ulvog

ECFA changes revenue cutoff for reviews

The Evangelical Council for Financial Accountability (ECFA) requires their members to submit annual financial statements as a condition of membership. A CPA is required to be involved with those financials.

ECFA has announced two changes to their requirement: the cutoff for a compilation and clarifying an independence requirement.

Before you make any changes, check with your funders to see if they will accept a change in the level of services provided by your CPA.

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Jim Ulvog