If it seems the volume of accounting rules is growing fast, it isn’t just your imagination

September 13, 2018, 6:36 am

When diving into all the new accounting rules, are you feeling like this? Image courtesy of Adobe Stock.

There is a large volume of new accounting rules that will be implemented over the next few years. It isn’t just your perception the volume of rules is growing.

At my other blog, Attestation Update, I have tallied the number of pages in the printed version of the accounting rules that apply in the United States.  Check out: Been thinking the volume of accounting rules is growing a lot? It isn’t your imagination. Here’s a page count of GAAP.

The increased size of the authoritative accounting literature over the last few years is staggering.

Updated warning for tsunami on the horizon for charity financial statements.

August 4, 2018, 4:03 pm

tsunami” by hansol is licensed under CC BY 2.0

The July 2017 post explaining Before the tsunami hits it might be time to tune into the accounting rules on the horizon has been updated to mention ASU 2018-08, which addresses accounting for contributions and grants. Might be worth your time to think about the major changes in accounting rules coming into play over the next few years.


Major privacy bill approved in California

July 16, 2018, 7:43 am

Image courtesy of Adobe Stock.

To prevent an even stronger privacy proposition from appearing on the ballot in the fall, the California legislators rushed through a bill providing strong  privacy rights for all California citizens. Companies making lots of money from the ‘net dislike the bill but supported it in order to derail the proposition.

Since the law doesn’t go into effect until 2020, there is plenty of time for the legislators to agree with the inevitable demands from tech companies to water down the bill. Pending the expected vast dilution, the bill provides a few landmark protections for consumers, including:

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Food for the Poor’s response to news articles

July 5, 2018, 11:13 am

Clean water from a well – There are places in the world where that is a big deal; I’ve visited a few. Many charities, including those whose accounting is being criticized by the CA AG, are working to improve the lives of the least among us. Image courtesy of Adobe Stock.

Food For The Poor Executive Director Angel Aloma provided the following response to the post earlier today discussing several news articles. I am pleased to print the comments, with permission of FFP. For ease of reading, the comments will not be put in quotations. 

FFP has another statement at their website which you can read here.

The FFP statement, which is in response to comments in the Boston Globe article:


Food For The Poor is troubled by recent news coverage suggesting that our non-profit organization is not transparent about how we operate. Nothing could be further from the truth.

The claim that we deliberately mislead donors is contradicted by the facts. The regulatory action brought by the California Attorney General does not suggest any wrongdoing on our part in the handling of donations or our daily operations. It is an accounting issue about how we value donated goods and we are challenging it.

The Attorney General’s office claims that we have over-valued our pharmaceuticals because we have used the United States as our principal market and have valued our pharmaceuticals at U.S. wholesale prices, rather than international prices related to the 17 countries we serve. However, almost all international nonprofit organizations that receive significant donated goods use the same industry-specific methodologies to value their donated pharmaceuticals in accordance with Generally Accepted Accounting Principles (GAAP) established by the Financial Accounting Standards Board (FASB).  In following those standards, we are required to value all of our donated goods in a fair and consistent manner and to declare that value as revenue in our financial statements.

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More articles discussing the California AG’s enforcement actions over medical GIK

July 5, 2018, 5:30 am

…What accounting rules sometime feel like.  Image courtesy of Adobe Stock.

Here are three more articles discussing the cease-and-desist orders issued by the California Attorney General against three large charities who have large amounts of donated medicine. Previous post discusses a few earlier articles.

Update:  Food for the Poor has provided a response to the Boston Globe article, which you may read here.

5/30/18 – editorial in Sun Sentinel – Food for the Poor controversy reveals need for nonprofit transparency – Editorial highlights that using US pricing compared to international pricing increases apparent efficiency.  The challenge, visible in the article, is that the charity claims 95% of all expenses are for program and the article says the California AG claims 66.7% of cash donations are used for program.

In a statement which should sober every accountant, CPA, auditor of NPOs, and staff of R&D charities, the editorial asks:

(S)uch accounting practices may be legal, and they may be the industry standard, but are they honest?

Let me paraphrase two questions embedded in that comment (yeah, CPAs actually talk that way – we look for embedded derivatives and embedded leases). The editorial is asking:

  • Is the industry standard consistent with GAAP?
  • Is either GAAP or the industry standard honest?

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Guest post: Implementation of ASU 2016-14 Presentation of Financial Statements of Not-for-Profit Entities

July 2, 2018, 6:48 am

Image courtesy of Adobe Stock.

Julie Morgan, CPA, is an audit and accounting partner in the Orange County office of Ronald Blue & Co., CPAs and Consultants. Ms. Morgan works with many churches and other not-for-profit charities in Southern California. She has over 17 years experience in public accounting. The firm’s website is https://www.ronbluecpa.com

Ms. Morgan provides the following overview of the soon to be implemented major changes in accounting and financial reporting for not-for-profit organizations. These changes will be required at the end of 2018.


By Julie A. Morgan, CPA

Some have hailed it “the most significant new guidance for not-for-profits in 20 years.”  So what is ASU 2016-14 all about, and how is it going to affect my non-profit?

We’ll get to that momentarily, but first, the effective date: Implementation of ASU 2016-14 is mandatory for all non-profits, effective “for fiscal years beginning after December 31, 2017.”  A number of our December 31, 2017 clients early adopted, and so far the experience has been significant for some clients, but not for others.

The main provisions of the ASU are as follows:

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2018 nonprofit risk alert is available. New edition adds discussion on valuation of GIK as rebuttal to California AG.

June 11, 2018, 8:38 am

Cover of 2018 NFP risk alert, used under fair use since I’m recommending you buy the document.

The AICPA has released the 2018 edition of Not-for-Profit Entities Industry Developments.

If you are a CPA serving the not-for-profit community, you need to read this document each year. It provides a survey of the accounting and auditing issues affecting the nonprofit world.

If you are an auditor, there are several other risk alerts you ought to be reading every year.

If you are working for a nonprofit, these alerts would give you a good survey of accounting issues in general and the audit issues your CPA will be dealing with this year.

Valuation of Gifts in Kind

Of particular interest are new comments responsive to the challenge from the California AG over valuation of GIK. The 2017 and 2016 editions had minimal comments on GIK.

The 2018 edition has a new section, Gifts-in-Kind: Reporting Contributions of Nonfinancial Assets, in paragraphs .53 through .57, which describes the AICPA’s interpretation of GAAP.

Years after the mebendazole issue has faded away, the second bullet point of paragraph .56 says that when GIK is sourced outside the U.S. and is not approved for distribution in the U.S., the meds should be valued at international prices. (If you have been following this issue for years, you realize the concession made by that comment.)

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