Presentation at CalCPA Accounting and Auditing conference: “California GAAP” – A case study in valuation of donated medicine

October 16, 2019, 11:20 am

Image courtesy of CalCPA.

On October 24 at 3:55 I will be speaking at the California Society of CPAs Accounting and Auditing Conference where industry speakers and experts will provide comprehensive updates on current issues and emerging trends. The conference runs the 24th and 25th.

My topic is valuation of donated medicine in the not-for-profit community. I have the privilege of working with a 75 minute block of time.

If you are able to attend the session you will gain an understanding of the long-term enforcement effort at the federal and state level regarding valuation of donated meds. My concern is that the governor’s veto of AB 1181 is not the end of the enforcement actions considering what has happened over the last 9 years.

Title of the session is “California GAAP” – A case study in valuation of donated medicine.

Overview of the session from the conference schedule:

Read the rest of this entry »


Governor vetoes AB 1181. More details and background on override.

October 13, 2019, 2:58 pm

Image courtesy of Adobe Stock.

On Saturday October 12, 2019, Governor Newsom vetoed California AB 1181. The bill would require charities filing financial statements with the state Registry of Charitable Trusts to value donated medicine at the fair value in the market the medicine would be distributed.

Essentially this would have required charities to use values in the international market instead of the U.S. market.

The governor announce a list of bills he signed and vetoed. You can find the list here. By my count he signed 69 and vetoed 58 on Saturday.

Veto message

The governor’s veto message can be read here. In it he said:

Read the rest of this entry »


Governor vetoes AB 1181

October 13, 2019, 6:19 am

Image courtesy of Adobe Stock.

On Saturday October 12, 2019, Governor Newsom vetoed California Assembly Bill 1181, which would have required charities filing financial statements with the state Registry of Charitable Trusts to value donated medicine at the fair value in the end recipient market. Essentially this would have required charities filing in the state to use values in the international market instead of the U.S. market.

More discussion will follow later today.

Update: more details in followup post.

Update: The post you are reading here was the initial one published immediately after I learned the governor vetoed the bill. Later on Sunday a wrote a longer post which provided far more background. For some reason, the majority of traffic coming into this blog is going to this short post. To provide more value to those arrive in this page, I will copy the additional info on the longer post here. Hope this info is helpful.

Followup to this post, which was previously published here. Additional info is the text of the governor’s veto message, background on the veto override protocol, and my assessment whether the bill is totally, completely dead or not:

Read the rest of this entry »


More details on Food for the Poor’s settlement with Michigan Attorney General

October 11, 2019, 9:01 am

Image courtesy of Adobe Stock.

Previous discussion on 10/4/18 provided details on a settlement between Food for the Poor and the Michigan Attorney General.

Prior post provided explanation of the FFP appeal claiming 95% efficiency, the cost of 6 cents to provide a meal, and joint cost allocation of speakers who go out to raise funds.

I have obtained and read a copy of the settlement agreement with the AG.  There are a few more details that are worth describing.

Penalties

The settlement agreement was effective 9/27/18. It was announced the next day.

FFP denies their appeals were misleading and denies any violation of state law. They also deny doing anything wrong.  The charity does recognize

“…that modifying its solicitations would better emphasize its impact, as well as achieve greater transparency. Food For The Poor worked with the Department to modify its solicitation materials and resolve the Department’s concerns.”

FFP agreed to pay $250,000 to two charities in Michigan which feed poor people. The charity also agreed to pay the AG $50,000 as reimbursement for their litigation costs.

Issues and resolutions

Efficiency claims 

Read the rest of this entry »


Discussion of possible ramifications and compliance issues for AB 1181.

October 8, 2019, 9:35 am

Image courtesy of Adobe Stock.

Nicola White has an article at Bloombergtax.com discussing the ripple effects of AB 1181 along with some pondering on compliance issues for charities and auditors:  California Drug Bill Could Hike Accounting Costs for Charities.

Full disclosure:  I am quoted in the article. Scary step for me is this was my first on-the-record interview. This is only the second time I’ve been quoted in an article.

This article is not behind a paywall.

If you have been following the GIK issue, you will want to read the full article.

Read the rest of this entry »


Accessible copies of Final Cease and Desist Orders from California AG

October 7, 2019, 5:51 pm

The order may be final but case is not finished. Image courtesy of Adobe Stock.

If you are so interested, you can read for yourself the final cease and desist orders from the California AG against MAP International, Catholic Medical Mission Board, and Food for the Poor. They may be found at:

Read the rest of this entry »


Recent articles and comments on GIK valuation

October 2, 2019, 9:22 am

Image courtesy of Adobe Stock.

There has been little discussion of the GIK valuation issue, especially regarding AB 1181, that I have noticed over recent weeks. Here are all the public comments I have seen. Let me know anything I missed.

Before getting to five articles, a quick minor comment on AB 1181.  It was officially enrolled on 9/18/19. As of this morning (10/2/19) the exact status of the bill is that on 9/25/19 it was “Enrolled and presented to the Governor at 3:30 p.m.” according to the bill’s history.

I’m still playing catch-up on understanding the legislative process here in California. I now know that a bill must go through ‘engrossing and enrolling’ before going to the Governor for his consideration. Based on looking at some other bills, the next step after presentation to Governor is for him to sign. Then the bill is ‘chaptered’, or given an official location in the state statutes.

All that detail means the bill could not have been signed by the Governor before 9/25/19.

According to the Assembly’s legislative calendar, the governor has through 10/13/19 to either sign or veto bills.

Articles

Bloomberg Tax – 8/21/19 – Crackdown May Stop Charities From Inflating Cost of Donations

Article provides good background on the medical GIK issue. Gives good, brief background on the FTC case against four charities in 2015. Also summarizes the new FASB project.

Read the rest of this entry »