Category

Accounting

Dec 05
0

New FASB Rules Go into Effect for Enhanced Clarity in Nonprofit Financial Reports

By | Accounting, Nonprofit | No Comments

FASB announced changes to Accounting Standards Update No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. This landmark set of guidelines is the first update since 1993 and will change how many nonprofits report their numbers.

Summary of the New Guidelines

The new guidelines call for the following changes:

* Reducing the net asset classifications from three to two, net assets with donor restrictions and net assets without donor restrictions;

* Underwater amounts of donor-restricted endowment funds in net assets with donor restrictions are now required to be reported;

* Enhanced disclosures about underwater endowments are also required;

* Preparers can now choose between the direct method and indirect method for presenting operating cash flows;

* The requirement to reconcile the direct method with the indirect method is now waived;

* Requires a not-for-profit to provide in the notes qualitative information on how it manages its liquid available resources and liquidity risks;

* Requires reporting of expenses by function and nature, as well as an analysis of expenses by both function and nature.

The new standards take effect for fiscal years beginning December 15, 2017 and for interim fiscal years after December 15, 2018.

Enhanced Clarity for Donors, Members, and the Public

The impetus behind the changes is twofold. First, FASB sought to update the rules after a long period of consistency. The last update occurred in 1993, and an update was thought long overdue. With the changing nature of nonprofit organizations, donations, and information access by the public, new guidelines were thought necessary for enhanced clarity and confidence in the financial management of nonprofit finances.

The rules also seek to simplify financial reporting for nonprofits. FASB has no wish to complicate reporting for anyone, and the new guidelines, once understood and implemented, will likely make financial reporting easier for nonprofits.

Making the Switch Easier on Your Organization

How the changes may or may not impact your organization depends greatly on how your accounts are currently kept. For those who need to adjust their accounting methods, now is the time to begin planning to meet the compliance deadline of December 2017.

Reducing net asset classifications should not be too difficult for most nonprofits. Many already used two net asset classifications, and the former classifications can be rolled into three without too much difficult by most.

If you need assistance making these changes, Welter Consulting can help. We bridge people and technology together for effective solutions for nonprofit organizations. Your accounting software is an important component of the changeover from the older 1993 regulations to the new rollout. We can help you with the change and more.

Please contact Welter Consulting at 206-605-3113.

Dec 01
0

Could You Be At Risk Of An FLSA Lawsuit?

By | Accounting, FLSA, Nonprofit, Overtime | No Comments

A record number of FLSA lawsuits were filed against U.S. employers last year and with new overtime regulations due on December 1, this is a very good time to ask if you could be at risk.

 

As we reported earlier, another four million employees will be eligible for overtime pay under the new regulations and attorneys have warned this could lead to a spike in the number of disputes.

 

“We now have a new salary threshold that puts 4.2 million workers back into play,” said Daniel Abrahams of Brown Rudnick LLP in an interview with TSheets earlier this year. “You can bet the plaintiffs’ bar is busy monitoring this and looking for new cases.”

 

You may wonder what impact the Trump presidency will have on the new regulations and that remains to be seen, but experts warn it would be unwise to ignore the December 1 deadline. The Fair Labor Standards Act has been around for a long time — and it’s not going away anytime soon — so it’s a very good idea to get familiar with the regulations.

 

There are some great free resources out there to get you started and this one, recently published by TSheets, highlights seven of the most common risk areas:

 

1. Misclassification

8.6 million employees are currently misclassified and the consequences can be costly. It pays to know the difference between an independent contractor and an employee, and to know who is exempt from the FLSA and who is not.

 

2. Off-the-clock work

Mobile technology means more and more employees now work outside of normal hours and if they are nonexempt, this time has to be tracked and paid. This is already a common cause of disputes and more are expected after December 1.

 

3. Unauthorized overtime

When nonexempt employees work overtime they have to be paid for it, even if it was unauthorized. The rate is usually 1.5 times their normal pay but in some states, like California, the regulations demand more than this.

 

4. Breaks

 

Research shows that 4 out of 5 office workers now regularly work through their lunch breaks — but if they are nonexempt and the time is being deducted from their paychecks, their employers could end up in court.

 

5. Record-keeping

 

“To the degree that you don’t have this in place, start creating a really good paper trail,” says attorney Maria Hart from Parson, Behle & Latimer. “That’s an attorney’s best friend—to have documents that show what you were doing, not doing, and so forth. Document, document, document.”

 

6. Interns and volunteers

 

In 2015, just 39% of graduate interns were paid. But as attorney Mark S. Goldstein warns, a recent ruling could mean that more of them could be in future. “An employment relationship is created when the benefits to the intern are greater than their contribution to the business,” he says.

 

7. Regulatory changes

 

Should you be complying with state or federal laws? Or both? Are you following the latest labor department regulations? The shifting sands of labor laws makes it a challenge to get it right all of the time.

 

Disclaimer: Please refer to a professional tax or legal advisor regarding specific requirements of FLSA and how they impact your business. We do not recommend particular employee classifications or practices and leave those decisions to the discretion of your organization.

Nov 14
0

New FASB Rules Help Nonprofits Tell Their Stories

By | Accounting, FASB, Nonprofit | No Comments

Can you really tell stories with numbers? The FASB thinks so. The new Accounting Standards Update No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities takes effect for annual financial statements issued for fiscal years beginning after Dec. 15, 2017, and for interim periods within fiscal years beginning after Dec. 15, 2018. The goal is to help nonprofits clearly state, through their financial statements, their ‘story’ so that donors and others can make better-informed decisions.

Welter Consulting helps nonprofits gather and share their financial ‘stories’ through smart money management and software that supports better financial management. As you learn more about FASB Topic 958, consider upgrading your software to provide you with the updated and detailed accounting information that will be required moving forward.

FASB Topic 958

Much has been written in the financial press about FASB Topic 958, or the new Accounting Standards Update. It is the first such update in 20 years and proposes several major changes for nonprofit accounting methods.

These changes include:

* Two net asset classes instead of three.

* Changes in how underwater amounts of donor-restricted funds are reported.

* Requirements to how nonprofits report liquidity risks.

* Reporting expenses by function and nature, as well as an analysis of expenses by both function and nature.

Why all the changes? The FASB recognizes that numbers tell an important story. The public has a right to obtain a clear, concise, and detailed summary of that story through a nonprofit’s financial statements.

Although much of the information was included by nonprofits, the new requirements hope to force nonprofits to accurately, clearly, and completely disclose how they are tracking and using funds.

Donors Require Fiscal Transparency

Donors today are just as philanthropic-minded as past generations. They are, however, deeply concerned that their donations are used for the purposes for which they are given. They want to know that their money is going to fund specific activities. Although most donors do recognize that some money must be spent on operational expenses, most want to see their donation going for the good of the cause or to fulfill the organization’s mission.

You can help donors understand your financial reports in many ways:

* Providing both required disclosure as well as additional, simplified language for the public to explain the numbers on your reports.

* Campaigns to increase awareness for your activities and initiatives.

* Donor outreach and communications, including social media and newsletters that shares how funds are used.

The greater the transparency around how your funds are used, the greater the trust between donors and organizations. The FASB requirement is important to note, but of even greater importance is winning and keeping the public’s trust. Smart nonprofits are already taking steps to ensure that this happens, along with steps to comply with the new FASB regulations.

At Welter Consulting, we are committed to helping you find affordable, useful technology, and to learning how to use that technology to its fullest capacity. We work exclusively with nonprofits and government agencies to help them find and use technology solutions. For more information, please contact us or call 206-605-3113.

Oct 26
0

Bringing Fundraising and Finance Together with Nonprofit Accounting Software

By | Accounting, Fundraising, Nonprofit | No Comments

Working Together Can be a Challenge

 

You play for the same team, but somehow you feel like cross town rivals.  This sometimes happens between the fundraising and finance departments of a nonprofit. You sit across from each other at meetings, but it doesn’t feel like you are on the same team.  In reality, you are all working towards the same common goal. Accounting software for nonprofits can help merge these two departments onto the same team. It’s easier to work together when you understand the roles of each department.

 

It’s Not Easy to Walk in Someone Else’s Shoes

 

When thinking about your finance and fundraising departments remember the old saying, “You don’t know what it’s like to be someone else unless you’ve walked a mile in their shoes.” When it comes to fundraising and finance, there are things that each department wished the other knew about their work and concerns.

 

Fundraising wishes that finance could…

  • Understand the challenges and process of fundraising;
  • Accept that you have to spend money to make money (or get donations);
  • Help us maintain good donor relations;
  • Offer us some flexibility – things aren’t always black and white in our world.
  • Respect that fundraising isn’t easy.

 

And finance wishes that the fundraising team could…

  • Understand the fact that finance’s job is complex and time-consuming;
  • Accept help from experts in finance.
  • Help us do our jobs better by providing us with information we need.
  • Offer to sit with us to learn some basic accounting practices.
  • Respect deadlines.

 

It’s often easier to come to consensus when you understand and respect one another’s positions in a situation. Knowing what the other ‘team’ wants can help you step closer to a compromise, and to support each other’s vital roles in an organization. One way to share information is through accounting software for nonprofits, which can help both teams step closer to one another through shared information.

 

Different Departments, Similar Challenges

 

Although finance and fundraising reflect different departments with varying needs, both seem to experience similar challenges when it comes to data and information. Ways in which both departments can help each other overcome their shared challenges include:

 

  • Collaborate on budgets and tracking
  • Improve reports and reconciliation of financial information
  • Jointly plan and set goals
  • Establish frequent, timely communications
  • Identify ideal processes and procedures
  • Integrate fundraising and accounting software

 

Software for nonprofits is a great tool that can help both departments communicate, collaborate, and plan together.  Various software packages including Abila MIP and others can work independently or together to provide data sharing among teams, timely updates and more. Cloud-based solutions ability to be accessed anywhere that there is a web connection makes it easier for fundraisers who travel to visit donors.  They can see and update accounts from the road, which in turn, will help the finance department do their jobs better.

 

The right accounting software for nonprofits won’t solve all of your internal struggles, but it can help to get fundraising and finance on the same team.  This will be a win win for all the players involved.

 

Contact Us

 

Welter Consulting makes choosing the right accounting for nonprofit software easier.   At Welter Consulting we are committed to finding you the most affordable technology, the most powerful solution, and providing expert support. We are dedicated to assist you in achieving your mission by leveraging technology and superior reporting. If you’re ready to cross the bridge to empowering technology, effective nonprofit solutions, and superior technology – let’s begin! We would love to talk to you about your specific needs.  Contact us today or call 206-605-3113.