Tag Archive for Financial Reporting

FASB Exposure Draft on Not-for-Profit Financial Reporting Issued

Last month, the FASB issued a much anticipated exposure draft relating to the proposed accounting standards update relating to not-for-profit and health care entity financial reporting.  BlumShapiro Partner Reed Risteen summarized the exposure draft in a recent article to help explain the proposed changes, and provided some practical examples of how financial statements may look under the new proposed guidelines. Read the full article here.

Jeanne Pagnozzi Boston AccountantJeanne Pagnozzi is a manager in BlumShapiro’s Accounting and Auditing Department, based in Quincy, Massachusetts, Jeanne oversees attest and tax engagements and is responsible for engagement planning, staff supervision and coordination with client personnel to ensure successful completion of projects.

Communication Between the Business Office and The Board

As a member of the business or finance office, you hold some of the most sensitive and important information regarding the operation of your non-profit.  Budgets, cash flows, obligations, covenants, financials, audit, internal controls, legal and regulatory matters….all of these can have a tremendous impact on how the individuals running the program activities accomplish their goals. Matters surrounding finance can provide stepping stones or significantly hinder the progress of the organization’s mission.

The finance office is charged with providing the most useful and pertinent information to the Board, which will enable them to fulfill their responsibilities of providing guidance and decision-making, most importantly surrounding fiscal matters.

Nonprofit Board meetingAs the CFO, Controller or Business Manager, have you thought about what you should be providing to the Board and in what format? Boards typically meet for an hour or two once a month or quarter. Given the limited time frame, this should be the time that they discuss critical matters, review accurate and timely financial reports and vote on high-level governance matters. Providing a great deal of extraneous data can muddle the waters and prevent them from understanding the true issues and being able to make timely resolutions. Here are a few areas to focus on which will help to ensure the Board has the tools to be most effective in fulfilling their responsibilities.

Organizational, legal and regulatory matters: 

First and foremost, the Board should be well informed of any and all potential risks that arise in these areas. Has the organization consulted an attorney for any claims or potential litigation? Are there new financial, reporting or other regulatory matters that are coming down the pike that may affect the organization? Significant accounting or audit standards, personnel matters, 990 reporting, communications from regulators, filing complications, due dates, donor matters, etc. can all have an impact on the organization and its ability to continue with its mission.

The Business Office should be preparing timely, summarized financial reports that are relevant to the Board’s responsibilities. Reports should be formatted in a way that does not confuse, overwhelm or complicate discussions surrounding finance.  Discuss with the Treasurer of the Board the most effective method of providing these reports. Have the Treasurer review the reports, and other more detailed information prior to submission to the Board, which may help to identify any questions or concerns ahead of time. It is probably helpful if the Board can review current month/quarter budget vs. actual reports as well as year-to-date compared to budget and prior years. A concise analysis of the significant activities of that period, such as large new contributions, significant past due balances or write offs and reserves, unanticipated expenses or capital purchases as well as high level departmental budget to actual comparison. Most importantly, having the most relevant and timely reporting available will enable the Board to make decisions on a timely basis, and avoid surprises at the end of the year.

Conflict of Interest and Related Party Activity: 
All Board members should be reading and signing a conflict of interest (COI) policy each year. All possible related parties and transactions should be disclosed in full, and any interested person should be excused from those discussions and determinations.  One misconception is that it is undesirable to have any related party activity, such as a Board Member who can provide professional services to an organization. Often times, a Board member can give back to an organization by providing expertise that the Organization would otherwise have to incur significant expenses for. This is ok, as long as regulation allows for it (for example, a financial statement audit must be conducted by an Independent Auditor), and provided that the Organization follows its COI policies surrounding disclosing, understanding and voting on these relationships and the transactions.  The Business Office liaison is often times the individual who ensures that the Board has all of the relevant information, that these matters get on the agenda and that the process adheres to approved policy.

Form 990: 
The Business Office is typically the department that ensures that the Form 990 is prepared timely and accurately. One section of the 990 includes several questions surrounding governance and policy. It goes without saying that the Board should be well aware of these policies at the time that they sign on to be a Board member. However, one question asks whether the Board has received a full copy of the 990 (as filed), and what the process is for the review of the 990. These questions are really aimed at shining a light on the Organization’s responsibility for ensuring that the 990 contains accurate information. Typically, the auditor/CPA is preparing the form, however there is so much more than quantitative data on the 990 as compared to any other IRS tax form. The qualitative data must come from the leadership of the Organization.  Each Board member should be aware of what is contained in the filing, and be expected to understand the questions and implications of the Organization’s responses.

As the key financial officer of a non-profit, the CFO or Business Manager should aim to provide the financial reports to the Board members in advance of their meeting dates. Having the appropriate amount of time to carefully review reports, budgets, forecasts and analysis will enable the Board members to prepare thoughtful questions and commentary on the information given.  This will set the stage for a more meaningful discussion and proposed responses, ultimately benefitting the mission of the Organization.


Jeanne Pagnozzi Boston AccountantJeanne Pagnozzi is a manager in BlumShapiro’s Accounting and Auditing Department, based in Quincy, Massachusetts, Jeanne oversees attest and tax engagements and is responsible for engagement planning, staff supervision and coordination with client personnel to ensure successful completion of projects.

How Interested Parties Learn About Your Non-Profit Organization and How to React

Interested Party Communication - Nonprofit CPAIndividuals looking to learn more about your non-profit organization have a wealth of information at their fingertips thanks to the many resources available to them on the Internet.  In today’s competitive environment, it is important for leadership to view these resources as opportunities to generate interest from those who seek out information and invest the time necessary to produce comprehensive materials that will help them tell their story.  It is also important for your organization’s leadership to understand where and how information is made available.  With that knowledge, a comprehensive approach to addressing each one of these resources can be developed to ensure the message conveyed through them is positive and thorough.

Nonprofit Resources

Below are a few resources that can be accessed by the general public and provide details of your organization’s standing and compliance with filing requirements:

  • The IRS website and GuideStar. These sites provide visitors with an opportunity to review the exempt status of your organization and determine whether or not it is in good standing.
  • GuideStar and Charity Navigator. These allow for access to your organization’s federal informational returns.
  • Secretary of State, Attorney General or other agencies that monitors charities at the state level. Many websites for these state agencies include a searchable database of registered non-profit organization filings, formation documents, by-laws, etc.  For example, the Massachusetts Attorney General’s charities database includes copies of federal and state filings as well as the audited or reviewed financial statements (for larger organizations).

Because your exempt status and federal and state filings can be reviewed by the general public, it is important that you remain up-to-date and in compliance with all applicable laws and regulations.  Further, these filings should be viewed by the leadership within your organization as a marketing tool where accomplishments can be celebrated and where you can clearly demonstrate that the mission has been put into action.  Take the time to review these documents thoroughly with the board before they are filed and ensure everyone understands how easily accessible they are to potential donors, grant makers and others who want to learn more about the organization.

In addition to the above resources, those desiring to gain further knowledge about your organization will likely review the following:

  • The organization’s website. Your website should provide a great level of detail on the organizations mission, programs, fundraising initiatives, board of directors, etc.  In addition, it should also include testimonials and stories about those who have been positively impacted by the work of the organization.
  • Facebook, LinkedIn and Twitter accounts.  Social media has become an important way for organizations to communicate what’s happening in real time.  While organizations should be cautious with their use of social media, responsible use can produce extremely positive results as a great message will be spread very quickly.
  • Search engine results.  Often, the best way to learn about an organization is simply to “Google” it.  Search engines are a great tool for interested parties to see how your organization is connected to others, what people are saying about the organization and review the services you provide or causes you support.

With knowledge of the fact that people are using these resources to learn more about your organization, it is important to keep them up-to-date and to continuously prepare new content.  Having old and outdated information about your organization available to interested parties could result in them concluding that your mission and activities are also old and outdated.  Set roles and responsibilities within your organization for maintaining the website and social media accounts and know what your competition is doing so you can stay on the cutting edge.

Chris Ernest, CPA oversees audit and tax engagements and is responsible for engagement planning, staff supervision and coordination with client personnel to ensure successful completion of projects.  Chris provides services to a wide range of  non-profit organizations, including independent schools, country clubs, museums and trade associations. In addition, he specializes in audits of employee benefit plans.

FASB Progresses Toward Issuance of Exposure Draft to Redesign the Non-Profit Financial Reporting Model

In the summer issue of our Non-Profit Notes newsletter, BlumShapiro partner Marcus Harwood shared the latest accounting update affecting non-profit organizations.

As we have discussed in previous articles the Financial Accounting Standards Board (FASB) is working on a project to redesign the non-profit financial reporting model in order to provide more useful, transparent and consistent information to financial statement users. Marcus’ article outlines the changes and the areas most likely to be affected.

Get the full article now >>

A New Look to Your Non-Profit’s Financial Statements

There are currently some changes in the works for the non-profit financial reporting model. The proposed changes, currently being developed by the Not-For-Profit Advisory Committee of the Financial Accounting Standards Board, aims at improving net asset classification requirements as well as disclosure information provided to the reader.

Recently, Marcus Harwood, Partner at BlumShapiro, provided some relevant information about these proposed changes and the current status of the initiative. Read Marcus’ article here.

Jeanne Pagnozzi Boston AccountantJeanne Pagnozzi is a manager in BlumShapiro’s Accounting and Auditing Department, based in Quincy, Massachusetts, Jeanne oversees attest and tax engagements and is responsible for engagement planning, staff supervision and coordination with client personnel to ensure successful completion of projects.