In June, the American Institute of Certified Public Accountants held a virtual Not for Profit Conference, which discussed a range of issues including stimulus funding, changes to tax law, cybersecurity and changes to independent auditors report.
Stimulus Funding
There are different opportunities for not for profit organizations to receive stimulus funding, including the Payroll Protection Program (PPP) and Economy Injury Disaster Relief (EIDL) loans.
While the guidance continues to evolve as rules change and additional stimulus programs are rolled out, not for profit organizations are urged to monitor the situation in order to take advantage of every opportunity for funding.
It is imperative to discuss opportunities with your auditors, bankers and any expert resources on your board to ensure everyone is on the same page with the proper accounting treatment, as these stimulus payments can be recorded either under a debt model or under a grant model, depending on the circumstances and views of the organization.
Gifts in Kind
After June 15, Accounting Standards Update 2020-07 will increase transparency regarding contributed nonfinancial assets, which are commonly called gifts in kind, through enhancements in presentation and disclosure.
Now is a good time to review your organization’s policies and procedures in order to recognizing these gifts in kind, including contributed advertising and radio time, use of outside facilities, below market interest rates, and other nonfinancial assets.
Some organizations prefer to wash their hands of valuing these contributions and just set the value to zero, but in addition to being a GAAP requirement, recognizing and valuing these contributions is essential in order to fully understand the total cost of running an organization.
Remote Working Environment
Many organizations have realized they can operate efficiently and effectively in a fully or partially remote environment, and employees have realized there are tangible benefits to working (at least partially) from home.
As these policies become longer term, there are opportunities for organizations to realize reduction in real estate costs, an increase in hiring footprint, and improved sustainability. However, organizational policies and controls should be evaluated for weaknesses that might emerge as a result of the shift to remote work, especially in cases where cloud computing and security solutions are impractical or prohibitively expensive.
Cybersecurity
The increase in cyberattacks and privacy concerns has placed an increased emphasis on cybersecurity, especially in the not for profit space.
Organizations are encouraged to think about risk management around breaches as a matter of “when” rather than “if” and have robust cybersecurity controls and disaster recovery plans.
Remember, simple actions such as reminding employees to be cautious with unusual or unexpected emails can go a long way in preventing breaches.
Changes to Independent Auditors Report
Effective for organizations with fiscal years ending after Dec. 15, there will be changes to the form of the independent auditors report.
Now is a good time to start communicating with donors and other granting organizations who require audited financial statements to alert them that these changes are coming.
If your non-profit organization has questions regarding any of the topics mentioned above, please reach out to a Zinner & Co. Non-Profit Team member.
