Author: Jean Schroeder

KT Insights
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Nonprofit Board Review of Form 990

Although not technically required, the IRS recommends nonprofit board members be provided with a copy of the organization’s Form 990 before it is filed.

Why is This Considered a “Best Practice?”

  • Assists in fulfilling board responsibilities for oversight of financial reporting.
  • Exhibits strong governance practices.
  • Enhances donor confidence – donors may be more likely to support organizations that demonstrate accountability and transparency.
  • Form 990s are public documents available on the IRS website, as well as several other charity watchdog sites. It’s important for the board to see and understand information that is publicly available to donors, other supporters, and even critics.
  • Shows compliance with IRS recommended policy.

What Items Should a Nonprofit Board Member Focus on During Their Review?

  • Mission, purpose, and program accomplishment narratives – this tells the organization’s story and details how success is measured. Board members should be well-versed in this.
  • Financial statements – these should be consistent with what has been reviewed and approved previously. Trends and discrepancies should be discussed.
  • Governance practices – have the other IRS recommended policies been implemented and followed? Why or why not?
  • Officer compensation – does this disclosure match up with your expectations? What will the public’s reaction to this be, and do you know how to respond?
  • Marketing – if you were a donor, would you be compelled to support the organization?

Review of Form 990 is more than just a compliance measure – it’s an opportunity to enhance transparency, accountability, and ensure the story being told to the public aligns with the organization’s mission to encourage donor support.

November 12, 2024
| Jean Schroeder
KT Insights
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Nonprofit Board Orientation & Effective Meetings

Orientation

Nonprofit board orientation is more than just a formality. It is the foundation from which an organization’s board members grow. A well-planned orientation equips new board members with essential knowledge about the nonprofit’s missions, activities, and structure.

It is important to set clear expectations early on during orientation regarding activities such as the number of annual meetings, special events, committees, and personal financial contribution requirements. Diving into the nonprofit’s mission, operation, and key policies are good places to start in orientation.

Pairing new board members with veteran board members as mentors can also ease the transition into board responsibilities, as well as having formal training on organization policies.

By investing time and resources into board orientation, nonprofits can create a board that is informed, engaged, and committed to the same values as the organization.

Effective Meetings

Board meetings are where important decisions are made, strategies are formulated, and progress is monitored. Therefore, it is important to create a standard that keeps these meetings productive and efficient, as these meetings reflect a commitment to operational excellence and organizational transparency.

Quarterly in-person meetings are an industry standard, but more may be needed depending on the complexity of the organization’s operations. Sending agendas and supporting documents in advance ensures that everyone is prepared, maximizing the board’s productivity.

It is important to remember that all nonprofit board decisions must be documented in meeting minutes as required by state law for accountability and compliance.

November 4, 2024
| Jean Schroeder
KT Insights
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Full Steam Ahead!

What picture enters your mind when you hear “Full Steam Ahead!”?  Is it a group of people racing toward a finish line?  Or maybe the noise of a steam engine powering a large piece of equipment?  After reading the book “Full Steam Ahead!” by Ken Blanchard and Jesse Lyn Stoner, this phrase now reminds me to grab onto my personal vision and use positive energy to forge past any “gremlins” that try to block me.

The book tells the story of a new employee who gets caught up in the creation of a vision for her company.  Along the way, she also realizes she needs a vision to guide her family values.  The concepts are introduced easily through the story line and allow the reader to see vision creation in action. 

So, what is a vision?  Think of it as the “why” behind what you do, a picture of the future, and a set of values that guide you along your journey.  A vision gives purpose to an ultimate big-picture legacy and allows you to drill down and create micro-steps (i.e. goals) that take you down the path of achievement. 

Creating my personal vision included analyzing my joys, dreams, values, and talents and truly allowing myself to picture how those intangibles could manifest into the life I want to live.  From my vision, I have been able to create goals in all areas of my life that help me live my legacy.

At Ketel Thorstenson, LLP, our vision is to inspire excellence in our people, clients and communities by living our core values – being excellent, innovative, friends, true, and different.  Using this vision to guide us, we can find the best answers to problems that arise and serve our staff and our clients at the highest possible level each and every day.

I challenge you to create your own vision – both personally and professionally.  As a coach once told me, once you know your destination, the path becomes clearer.  Take time to dream big and develop that vision.  And if you need a little help, grab “Full Steam Ahead!” for an easy read and a roadmap to start your journey.

February 16, 2021
| Jean Schroeder
KT Insights
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Nonprofit Accounting for PPP and EIDL Funds

You survived the initial business closures associated with COVID-19 and were lucky enough to obtain Paycheck Protection Program (PPP) and/or Economic Injury Disaster Loan (EIDL) funding.  You may have even muddled through forgiveness applications.  But you still need to figure out how to account for all this in your financial statements!  Just like everything else associated with COVID-19, nothing is simple.

PPP Funding

PPP dollars are considered conditional contributions under generally accepted accounting principles, with the condition being government approval of forgiveness.  As such, cash received is initially recorded as a “refundable advance” liability on the statement of financial position.  Once the Organization is notified that forgiveness is approved, the conditional contribution becomes unconditional.  At this time, the refundable advance can be zeroed out and recognized as restricted revenue.  The restriction relates to the requirement that funds must be spent on payroll, rent, utilities, etc. as specified in the funding documents.  The restriction will be immediately released since it has already been met at the time of forgiveness.  If it becomes certain that a portion of the PPP funding will need to be repaid, the “refundable advance” liability becomes long-term debt, no different than other bank borrowings. 

As the PPP forgiveness process continues to be clarified, the accounting for PPP gets muddier.  The accounting profession has been debating whether formal forgiveness is necessary to recognize PPP revenue.  If your organization has calculated the forgiveness, compiled supporting documentation, and deem formal forgiveness merely an administrative process and not a barrier, you may be able to recognize the revenue in advance of formal forgiveness.

In addition, interest at 1% begins accruing immediately based on the terms of the agreement with the lender.  However, there is debate in the accounting profession as to when/if this liability should be recorded on the financial statements.  In general, the liability should not be significant if you are anticipating qualifying for PPP forgiveness, and you can likely avoid recording the interest until more clarification is received. 

EIDL Funding

EIDL dollars from the Small Business Administration may have arrived in two different forms – an initial advance of up to $10,000, and a formal loan that must be repaid.  EIDL dollars have no restrictions on spending and can be used for any operational costs.  The initial advance is considered an unrestricted contribution and is recorded as revenue at the time it is received.  The loan funds are recorded as long-term debt.  Don’t forget to consider any related accrued interest – this can become significant to some organizations since repayment does not begin immediately.

Consideration of Federal Funds

The Office of Management and Budget has clarified that PPP funding is NOT considered to be federal dollars and is NOT subject to Uniform Guidance audit requirements.  However, any EIDL funding received, whether in the form of loans or grants, is required to be included on your Schedule of Federal Awards.  In some cases, this funding could push total federal expenditures over $750,000 and subject the organization to a compliance audit.  In other cases, these funds could shift the compliance testing to a different federal program than was originally anticipated.

And remember – no double dipping!  If PPP or EIDL dollars are used to cover certain payroll or other costs, those same costs can’t be used in other grant drawdowns.

Audit Disclosures

You can expect additional financial statement disclosures related to the pandemic and any applicable funding the organization received, even if the events happened after the close of the fiscal year.  Be prepared to visit with your auditors about the organization’s ability to continue operations, cash flow and budget projections, investment declines, and the status of any forgiveness application that has been filed.  If business continuity is uncertain, the audit opinion letter may include a going concern disclosure that clearly identifies the challenges you face.

Don’t let accounting for these unique cash flow streams become frustrating. The experts at Ketel Thorstenson, LLP are here to assist you in navigating the accounting details summarized above and are happy to assist you!

September 3, 2020
| Jean Schroeder
KT Insights
 |

COVID-19 Updates for NonProfits

Hello Nonprofit Friends! 

We want you to know we are ready to help as you face the challenge of keeping employees on the payroll and operating at the level necessary to serve our community during this unprecedented time.  We at KT have had a chance to digest the Families First Coronavirus Response Act and the Coronavirus Aid, Relief and Economic Security Act (CARES).   We’ve been deep in the details and are continuing to learn more every day. All these laws have little caveats and triggers that need to be carefully considered.  We are continuing to update our website with information as we get it.  If you are not receiving our emails and newsletters, please let me know so you can be added to our list.

  • See the attached summary of the Families First Coronavirus Response Act for details regarding specific eligibility, amount of payment, exemptions, etc.  This is effective April 1, 2020.  The basic premise of this law is as follows:
    • Emergency family and medical leave must be provided to employees who can’t work because their child’s school or daycare provider is closed or unavailable due to coronavirus emergency/declaration. 
    • Emergency paid leave must be provided to employees if they are missing work because of coronavirus (i.e. government or medical quarantine/isolation of employee or someone they are caring for, seeking medical diagnosis, or caring for child whose school or daycare is closed). If employees choose to self-isolate, this provision does not apply.
    • Tax credits are available to offset wages paid under the above provisions – you can reduce your payroll tax deposit by the amount of the credit.  Forms will be available soon to submit a refund claim if the reduction in payroll tax deposit is not enough to cover employee wages paid under these provisions.
  • See the attached SBA Loan Program Summary – this is the best summary we have found. These loans are good until they run out and are available to nonprofit organizations.
    • The Paycheck Protection Program (PPP) covers the cost of retaining employees.  These loans are available through your banker – visit them soon to make sure this loan is right for you and to get an application started – funds are not unlimited!
      • Loan amounts are based on 2.5X the prior year’s average payrolls.  See page 4 regarding forgiveness of these loans. 
      • For the 8 weeks following the date you receive the loan, four things are totaled to figure the amount of the loan forgiven (interest on mortgage debt and secured equipment loans, rent, utilities, and payroll costs).  However, there is a catch – the amount of forgiveness is reduced by a ratio of employees maintained during the 8 weeks compared to the average FTE’s in prior periods.
      • A couple of hints to maximize amounts you can receive under this loan program: (1) if you lease your building from a third party and are asking for rent relief, ask for that relief after the 8-week period has passed; (2) pay as many bills as possible related to the above eligible costs during the 8-week time frame.
    • If you choose not a pursue a PPP loan, two other options may be available to your organization (see page 10):
      • The employee retention credit is equal to 50% of wages for employees who were furloughed or had their hours reduced.  Employers are eligible in the event of a government order limiting your operations or if you experience over 50% reduction in quarterly receipts.   
      • Payroll tax deferral of 2020 employer social security taxes (6.2%) – half must be paid in 2021, with the remaining half paid in 2022.
    • The Economic Injury Disaster Loans & Emergency Economic Injury Grants (EIDLs – see page 7) – these loans provide an immediate grant, as well as additional loan funds. Amounts can be used for any expenses that could have been met if the disaster had not occurred, including payroll and other operating costs.  The application process does not go through the bank, but you will need to apply quickly before funds run out!
      • Within 3 days of application, your organization receives an advance of $10,000 to be used for employee sick leave, payroll, rent, or mortgage costs. This grant does not have to be repaid, but is subtracted from the PPP loan amount forgiven.
      • Additional funds are in the form of loans up to $2M.  Interest rates are set at 2.75%, and payments of principal and interest are deferred for 4 years.
  • Unemployment benefits have been significantly expanded, and any layoffs due to COVID-19 will not impact your experience rating.  This may be an option that will allow employees to stay afloat in the short-term, keep only essential staff on the payroll, and then bring them back when you are ready.
  • Many of your employees may be working remotely, taking home confidential information, performing different job responsibilities, or not working at all. In addition to the stress this creates on normal operations, it can also create significant segregation of duties issues as your processes are required to change.  Extra stress on employees, combined with new opportunities to circumvent internal controls, can result in errors or fraud.  Don’t forget to maintain as much monitoring and segregation of duties as possible.
  • Also consider budget revisions, cash flow projections, debt covenant waivers, and granting agency compliance waivers.
  • Charitable contributions up to $300 can be deducted in 2020 even if an individual can’t itemize on their tax return.  Limits are also reduced for corporations making donations.  Small amounts add up, so reach out to donors as the economy begins to recover!

Our team is available to answer your questions and support your efforts – please reach out when you need us. 

March 30, 2020
| Jean Schroeder
KT Insights
 |

Does Your Form 990 Tell a Story?

Your story is more than just your numbers!  Most of us think of a tax return as a regulatory requirement, but nonprofits have a unique opportunity to tell their story through their Form 990.  Surveys show that donors, grantors, and potential board members seek out online information about your organization before deciding where their support is most needed and best used.  One source of this online information is an organization’s Form 990, which can be easily found on the IRS website, as well as various charity watchdog websites. 

To make your Form 990 stand out, consider what about your organization will get the general public excited and entice them to become involved, whether through monetary donations or volunteering.  Paint a picture of what has been accomplished over the year – how many people have been served in your programs, what activities you have undertaken, how you have met your goals, etc.  Don’t just say “we serve the homeless population”.  Instead, say “we housed an average of 25 people each night in our shelter and served 25,000 meals to individuals who would have otherwise been cold and hungry on the streets of our community”.  Also be transparent in explaining best practices, related party transactions, etc. Providing the right amount of information will avoid unanswered questions that might turn away potential contributors.

Remember, it’s not just the numbers – the Form 990 is a blank slate you can use to make an impact on anyone reading it.  Work with your CPA today to educate the public and create a more effective message that will resonate and stand out!

February 27, 2020
| Jean Schroeder
KT Insights
 |

New Revenue Recognition Standards

The landscape surrounding revenue recognition is changing dramatically in 2019, and nonprofit organizations are not exempt from its effects.  In fact, the way you record revenue for certain types of transactions could be changing. 

Two new revenue recognition standards are effective for years ending December 31, 2019.  One relates specifically to contributions and grants (which affects most nonprofits), and one covers most other revenue sources (which will have minimal effect for most nonprofits).  Both standards are intended to reduce diversity in practice and ensure all organizations are recording revenue in the same manner.  Some of the key issues included in these standards include:

Membership Dues

Currently, membership dues are recorded over the term of the membership period, regardless of what benefits the member is receiving.  Under the new guidance, you will need to document exactly what the member is paying for and analyze each of those components to determine how revenue should be recognized.  For example, if a member pays $100 for annual dues, receives quarterly newsletters, and has access to your facility and website (which is not available to nonmembers), each of those items is considered to be a performance obligation for which a portion of the $100 in dues must be allocated.  The timing of recording that revenue may also change – for example, the portion of revenue related to the newsletters would be recognized at the time the newsletter is delivered to the member, while the portion related to facility access would be recognized over the term of the membership. 

Nonrefundable Upfront Fees

Many nonprofits charge an application fee to cover the cost of processing applications for reduced rate services, low income housing, etc.  These fees were generally recorded as revenue at the time of receipt due to the fact they were nonrefundable.  Under the new guidance, nonprofits must determine if the customer is receiving something in return for the application fee.  If the fee is merely to cover costs of processing by the nonprofit, the customer receives nothing in return, and no performance obligation exists.  Therefore, the fee should be recognized over the term of the service that will be performed (e.g. over the term of the low-income housing lease). 

Splitting Transactions Between Contribution and Exchange Transactions

Although the accounting rules have always required consideration of what a donor receives in return for their contribution, this analysis becomes more critical with the change in revenue rules.  For example, if the nonprofit charges $500 per ticket for a fundraising dinner, the portion of the ticket representing the cost of the meal provided is an exchange transaction.  The remaining portion of the ticket price is a contribution.  The two different pieces of the transaction follow different revenue recognition rules, and must be considered appropriately under those rules. 

Grants

Significant diversity in practice exists in accounting for grants, resulting in the potential for nonprofits to account for the same exact grant in a different manner based on how the accounting rules are interpreted.  New guidance is meant to eliminate these discrepancies and provide for more consistency in accounting.  Under this guidance, a clearer definition of when a grant is considered a contribution exists.  If the granting agency does not receive commensurate value in return for the grant given to the nonprofit, the grant is considered to be a contribution.  The next step in the process would be to determine if the grant is conditional or unconditional (see below).  Unconditional grants are recorded with or without donor restriction, with any restrictions being released upon satisfying the donor’s wishes.  The new accounting guidance specifically states that the granting agency is not synonymous with the general public – if the only benefit received by the granting agency is societal benefit (e.g. housing the homeless), commensurate value is not exchanged, and the grant is deemed to be a contribution.  In many cases, nonprofits have been calling these grants exchange transactions, so significant changes in timing of recognition could occur.

Conditional Contributions

Another area of diversity in the nonprofit accounting world relates to whether contributions are unconditional (and can be recorded immediately) or conditional (and can’t be recorded until conditions are met).  For a grant to be considered conditional, it must include a barrier to overcome and either the right of return of assets transferred or the right of release of the promisor’s obligation to transfer the assets.  Barriers may be measureable performance-related barriers (e.g. achieving a certain level of service or obtaining a certain level of matching dollars before the contribution is given) or may stipulate limits on how activities are conducted (e.g. approval of expenses before they are allowed to be reimbursed or the hiring of a specific position).  Administrative or trivial items, such as filing of an annual report, are not considered to be barriers that would result in a contribution being conditional. 

The two new revenue standards are complex and require a significant amount of analysis and judgment.  The above examples are not all-inclusive and do not contain all the specific details that need reviewed in order to determine the timing and amount of revenue your organization will recognize.  You will need to review the standards closely and document your revenue streams in order to ensure compliance.  This will be a significant component of your audit beginning with the December 31, 2019 financial statements.  Contact the experts at Ketel Thorstenson, LLP today for assistance!

September 8, 2019
| Jean Schroeder
KT Insights
 |

What?! Nonprofits pay tax on employee offered parking??

Yes, you read that correctly!  A hidden provision in the 2017 Tax Cuts and Jobs Act makes employer-provided parking nondeductible.  Because nonprofits don’t generally pay tax to begin with, parking is now considered a taxable event that requires filing of Form 990-T and payment of 21% tax.  Here are a couple examples:

  • NPO pays third-party for employee parking. The payment made to this third-party equates to $100 per month per employee.  Because this amount is below IRS limits, none of it is included as wages on the employee’s W2.  However, it is taxable to the NPO, and a Form 990-T must be filed.
  • NPO owns its parking lot and reserves a certain number of spots for employees only. An allocation must be made to determine the cost of those spots, and a Form 990-T must be filed to pay tax on that amount.

The above examples are simplistic – there are many details for allocating costs in different situations, as well as instances when employer provided parking could be taxable to the employee.  One way to avoid this situation is to never reserve parking spots for employee-only use.  If you choose to offer the benefit, contact our non-profit experts to understand the tax implications.

July 24, 2019
| Jean Schroeder
KT Insights
 |

Reporting Considerations for Successful Golf Tournaments

After a long winter, it is finally time to enjoy the beautiful outdoors of the Black Hills!  The good weather also means a flurry of charitable golf tournaments.  Although your development team takes the lead in seeking out businesses to be hole sponsors, donate prizes, and form teams of golfers, the accounting department also plays a critical role in all phases of the tournament.

Tournament Planning

Any communication made to golfers, sponsors, or donors by the development team has both accounting and tax implications.  If the accounting department is not involved in these discussions in advance, unintended complexities and additional work could be created.  Things to consider include:

  • Who will be collecting cash and soliciting prizes?
  • How much of the fee represents golf and cart rentals vs. contributions?
  • Are all in-kind contributions of prizes being tracked?
  • Do fundraising materials contain statements restricting tournament proceeds for any specific purpose of the organization?
  • Are sponsors receiving any substantial return benefit?

Tournament Controls

As with any significant process, internal controls surrounding cash collections should be reviewed to ensure no one individual has complete control over the process.  This can be especially challenging if volunteers are utilized as part of the fundraising team.  Prizes being solicited from area businesses should be logged and safeguarded.  Involving more than one individual in this process will ensure the prizes make it to the tournament and are not kept for personal use.  Receipts should be given for cash collected in advance.  The numerical sequence of receipts should be tracked independently to ensure completeness.  More than one individual should be involved in collecting cash at the event – dual control will prevent cash receipts from being taken.  Also consider publishing a list of all donors and sponsors, along with contact information to notify the organization if the information is not accurate – this contact should be someone independent of the development and accounting staff.

Tournament Accounting

Several unique accounting considerations could apply to your golf tournament:

  • Participant fees should be split between direct donor benefits (i.e. fair value of green fees, cart rental, food, etc.) and contributions (any excess amount).
  • In-kind contributions should technically be recorded at fair market value at the time of the donation, and then removed from the general ledger when they are given out as prizes. The resulting contribution revenue and special event expense should be recorded.
  • If proceeds are restricted for a specific purpose, they need to be tracked in order to ensure funds are spent as intended.

Tournament Tax Implications

  • Splitting tournament fee revenue between direct donor benefits and contributions is also required for reporting your golf tournament properly on Form 990, as these are two separate line items.
  • If gross receipts from your tournament exceed $5,000, you may be required to report the event in more detail on Schedule G. This detail includes itemizing event expenses (e.g. food, facility rentals, and prizes).
  • Identifying the benefit tournament sponsors receive in exchange for their sponsorship is necessary to determine if sponsorship revenue results in unrelated business income tax. If a sponsor receives “substantial return benefit” (e.g. advertising beyond just identifying the sponsor), you may be subject to additional tax.

Tournament Wrap-Up

Your work is not done after the tournament is over.  In addition to finalizing the accounting, you also need to consider two other important items:

  • Prizes paid to individuals that exceed $600 require 1099 reporting
  • Tournament donors (including golfers who paid more than fair value to participate) should receive acknowledgement letters thanking them for their donation and advising them of their charitable deduction. A good faith estimate of what the donor received in return for the contribution (i.e. green fees, meal, etc.), must be included in the acknowledgement. If the donor provided a non-cash prize, the acknowledgement should include a description of the item, but not a value.

You are now ready to hit the golf course!  Contact the professionals at Ketel Thorstenson, LLP if you need any assistance or clarification as you plan your tournament.

 

June 6, 2019
| Jean Schroeder
KT Insights
 |

Liquidity Disclosures Under ASU 2016-14

As a reminder, Accounting Standards Update (ASU) 2016-14 is effective for 12/31/18 year-ends and will affect every nonprofit organization.  In our last article, “Functional Allocation of Expenses,” we provided information on the guidance for allocating expenses between program and supporting services.  The last provision of ASU 2016-14 is addressed in this newsletter series and relates to liquidity disclosures.

Nonprofit financial statements are sometimes seen as misleading and difficult to interpret.  Because of the requirement to show contributions as revenue in the period pledged instead of the period spent, revenue and expenses related to contributions are not always recorded in the same fiscal year.  This can cause large fluctuations in net income and detract from the operating results of the organization’s program activities.  In addition, you might have assets on your balance sheet that aren’t available for current needs because they are restricted by certain donor stipulations.  Your auditors may have tried to identify these issues when explaining your financial statements and comparing current results with those of prior periods.  Under ASU 2016-14, a new concept is introduced that attempts to provide financial statement readers with this information in the form of qualitative and quantitative note disclosures.

The qualitative disclosure requirement requires nonprofits to explain how liquid resources are managed to meet cash needs for general expenditures within one year of the balance sheet date.  The board of directors should approve a formal policy that addresses liquidity needs, as this policy has to be disclosed in the financial statements annually.  Things to consider include strategies for addressing organization-wide risks (e.g. undesignating net assets and access to line of credit or long-term financing), establishing liquidity reserves, and the time horizon used to manage liquidity (e.g. 30, 60, or 90 days).

The quantitative disclosure requirement communicates the availability of financial assets at the balance sheet date to meet cash needs for general expenditures over the next year.  Management will have to identify all financial assets and any limitations on their use in the next 12 months.  This may include external limits (e.g. by donors or granting agencies) or internal limits (e.g. assets designated as a reserve for future building needs).  All financial liabilities will also need to be identified.  A reader will then be able to compare those liabilities with the available assets to gain an understanding of future liquidity needs.  Although no specific format is required for this disclosure, it should reconcile to the balance sheet.

So, what does this look like?   Here is a simple example:

The Board periodically designates a portion of any operating surplus to its liquidity reserve.  As of December 31, 2018, the liquidity reserve was $1,300.  This is a board-designated fund with the objective of setting funds aside to be drawn upon in the event of financial distress or an immediate liquidity need resulting from events outside the typical life cycle of converting financial assets to cash or settling financial liabilities.  In the event of an unanticipated liquidity need, the organization could also draw upon $10,000 of available lines of credit or the quasi-endowment fund.

Financial assets at December 31, 2018                                                    $229,200

Contractual or donor-imposed restrictions making

financial assets unavailable for general expenditure                          (192,413)

Quasi-endowment fund, primarily for long-term investing             (34,628)

Amounts set aside for liquidity reserve                                                      (1,300)

Financial assets available within one year to meet cash

           needs for general expenditures within one year                         $     859

This example clarifies that although the balance sheet shows just over $229,000 in total assets, only $859 of those assets are available for operational needs within the next year.  In addition, the reader is now aware that if liquidity becomes an issue, the organization will utilize line of credit borrowings or un-designate quasi-endowment dollars in order to make ends meet.

This is one very simple example to start the thought process of what may be relevant to your organization.  Working through these disclosure requirements will be a useful tool for management and the board to assist them in better understanding the organization’s financial picture.  It may also highlight instances in which going concern issues need to be addressed.

Reminder

The above provisions need to be adopted for your 12/31/18 financial statements.  The nonprofit experts at Ketel Thorstenson, LLP are here to help you navigate the intricacies of ASU 2016-14.  Call us at 605-342-5630 to set up a meeting now.

 

December 7, 2018
| Jean Schroeder