Nonprofits that accept gifts-in-kind and other non-cash contributions will have to present and disclose them in a new way on financial statements, under amendments to Generally Accepted Accounting Principles (GAAP). The Norwalk, Conn.-based Financial Accounting Standards Board (FASB)’s Not-for-Profit (NFP) Advisory Committee held its semiannual meeting via teleconference where staff provided an overview of amendments in Accounting Standards Update 2020-07 – Not-For-Profit Entities (Topic 958): Presentations…

By Denise McKnight, CPA The Financial Accounting Standards Board (FASB) in 2016 introduced new lease accounting rules with the publication of ASC Topic 842 (https://bit.ly/3qK6yq4), the lease standard. Initially scheduled to take effect in 2019, the implementation has been repeatedly delayed.  A further delay looked like a possibility until a tentative, Nov. 10, 2021 decision issued by the FASB ruled against any further deferrals of the effective…

By Christine Hall, CPA The year-end financial close process and preparation for the annual audit can be a stressful time. It’s never dull and there are always new wrinkles added by various regulatory agencies. Here are five tips that you can use to stay ahead of the game and prepare for your nonprofit’s upcoming June 30 year-end. Document Changes to the Internal/Financial Controls and Assess…

Nonprofits will be allowed to group unrelated business income into about 20 categories if proposed Internal Revenue Service (IRS) rules for dealing with Unrelated Business Income Tax (UBIT) from the 2017 Tax Cuts and Jobs Act (TCJA) are enacted. For example, an organization could group all types of accommodations and food services into one category. The proposed rules are “perhaps the least bad option for…

Tax-exempt organizations will have an extra two months to file their federal Form 990 because of the novel coronavirus (COVID-19). The Internal Revenue Service (IRS) extended the April 15 deadline for individual taxpayers and now has done the same for nonprofits. Organizations are required to file the Form 990 no later than 4½ months after the end of their fiscal year. For nonprofits that operate…

A federal judge overturned a rule change instituted by the Internal Revenue Service (IRS) that allowed certain nonprofits to forgo identifying major donors in tax filings with the agency. In a 30-page ruling handed down July 30, Judge Brian Morris of the U.S. District Court in Great Falls, Mont., set aside the IRS’s decision of last summer and wrote that the tax agency violated the…

The American Institute of CPAs (AICPA) has issued non-authoritative guidance on the definition of direct care of collections to help nonprofits implement the Financial Standards Accounting Board (FASB) Accounting Standards Update No. 2019-03. “The requirements of the new FASB standard provide latitude in the way an entity with a collection chooses to spend the proceeds from sales of those items, by permitting the proceeds to…

Scale + Standardization = Savings Streetsmart nonprofit managers are looking for savings everywhere, for all the obvious reasons. No type of spending is likely to escape at least momentary attention, and many managers are poring over cost reports looking for increasingly elusive opportunities to reduce spending. From this effort has grown an interest in purchasing economies. It’s a natural direction to try to save money…

State charity regulators have been increasing scrutiny of nonprofits’ financial statements, the Internal Revenue Service (IRS) Form 990s and solicitation materials in a number of key ways. These areas of growing scrutiny include nonprofits’ allocation of joint costs and valuation of non-cash donations (a.k.a. gifts in kind or GIK). Many state regulators believe that charities are improperly using these accounting principles to hide their fundraising…

Nonprofits that are more transparent and proactively share information with the public received 53 percent more in contributions the following year than organizations that were less transparent, according to a new study. The finding comes from a new peer-reviewed study published in December by the Journal of Accounting, Auditing & Finance. “Determinants and Consequences of Nonprofit Transparency” was authored by Erica Harris, the Andrew J.…

As charities gear up for the seventh annual #GivingTuesday tomorrow, a smaller group of tax and law professors and others are tweeting about #AccountabilityMonday. The hashtag is organized around nonprofit transparency, sharing success stories or best practices about accountability, or just simple ways for donors to understand how nonprofits operate. There also are suggestions about how to read a charity’s Internal Revenue Service (IRS) Form…