By Keoni Moniz, CPA, Assurance Senior
In 2016, FASB issued ASU 2016-13, Financial Instruments-Credit Losses, also known as Current Expected Credit Losses (CECL). Effective for all fiscal years beginning after December 15, 2022, this standard will be applicable for all non-profit organizations. While primarily directed at financial institutions, any organization that holds financial assets not accounted for at fair value may be affected. Most common examples of these financial instruments that may have an impact on not-for-profit reporting are: notes receivable, held to maturity debt securities, and grant and trade receivables. Promises to give (contributions and pledges) will not be impacted by this standard and are scoped out. The objective of this standard is to consider expected losses over the contractual term of a financial asset, usually upon initial recognition. This replaces the prior standard where losses are recognized only as they become probable. (more…)
Gifts and donations are vitally important to nonprofit organizations. However, not all donations are created equal, especially non-cash gifts and in-kind donations. In some circumstances, these types of donations can cause more problems than they’re worth. (more…)
There’s a good chance you’ve heard the term ESG, which stands for environmental, social, and governance. ESG is a framework used to assess how corporations are addressing various sustainability and ethical issues. The role of an ESG program is to ensure corporate accountability and processes to manage a business’ impact in each of these areas. (more…)
Donor restricted assets present a good news-bad news scenario for nonprofit organizations. The good news is that these assets are real donations that your organization can use to further its mission.
The bad news is that the assets must be used for the specific purpose stated by the donor. Donors have the legal right to require that their gifts be used for limited and specific purposes. Once your organization accepts the assets, the donor stipulation is inviolate. If you accept the gift, you are legally required to follow the stipulation. Failure to do so could lead to financial penalties or even the loss of your tax-exempt status. (more…)
The Nasdaq stock exchange will soon require all listed companies to publicly disclose board-level diversity statistics and have (or explain why they don’t have) diverse directors. While this requirement only applies to Nasdaq-listed companies, it might be a good idea for all organizations to increase board diversity, including nonprofits. (more…)
According to the 2022 Report to the Nations, published by the Association of Certified Fraud Examiners (ACFE), the most common way that internal fraud is detected is via anonymous tips. These accounted for 42 percent of the frauds that were uncovered, compared to just 16 percent of frauds that were uncovered in an internal audit and 12 percent that were uncovered in a management review. (more…)
One of the biggest keys to financial stability for nonprofit organizations is budgeting. Creating and approving an annual budget is fundamental to financially managing a nonprofit.
The annual budget will serve as a blueprint for your organization’s financial activity in the coming year. Because circumstances will change throughout the year, your budget must be flexible enough to change with them. In this sense, your budget is a guide that can help you plan for the financial future, as well as assess your current financial health. (more…)
IRS Form 990 includes specific information that helps donors and watchdogs assess and monitor nonprofit organizations. In a single document, it provides a snapshot of the financial health, governance, and operations of a nonprofit. (more…)
It’s not uncommon for nonprofit organizations to receive donations of tangible property from supporters in addition to cash contributions. Special rules apply when valuing such property and providing donors with the right kinds of documentation to substantiate deductions claimed for these donations.
Here are some common questions nonprofits have about valuing and substantiating non-cash gifts. (more…)