Category: Nonprofit

“You cannot say yes or no until you touch the books”

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A very wise woman said this to me last week. It’s a great reminder that, as freelancers, we have the power to turn down gigs. Awesome little org doing terrific work, with a QuickBooks file that hasn’t been updated since 2015? You can say no. People you dig, a mission you love and a balance sheet so messy it makes your heart sink? You don’t have to say yes. Reflect on your personal capacity and your stress level. Do you want to be a hero, or do you want to have a personal life? It’s all up to you.

I also liked the tactile image she used—”until you touch the books.” I’ve said to clients, “I can’t answer that question because I haven’t really had my hands in the books.” Sometimes I wiggle my fingers for added effect.

Those new accounting standards!

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Last August, the Financial Accounting Standards Board issued a new standard on not-for-profit financial reporting. It’s super-technical (which is why Cathy Keeps Books hasn’t gotten it together to comment until now). But bookkeepers should know the following:

  • The new standard will affect financial statements for fiscal years 2018 or later (specifically, it covers fiscal years that start after December 15, 2017).
  • It updates the reporting of restricted funds, investments, and cash flow.
  • Under this standard, the distinction between time-restricted and purpose-restricted funds is going away.
  • Board-restricted funds are also no longer a thing.
  • The standard requires “enhanced disclosures” about investments and liquidity.

According to the published update (click accept), “The currently required distinction between permanent restriction and temporary restrictions has become blurred by changes in state laws that diminished its relevance and rendered that distinction less useful.” The only classes in restricted equity will now be Net Assets With Donor Restrictions and Net Assets Without Donor Restrictions.

Here’s a screenshot from the FASB’s nonprofit portal:

fasb-org-screenshot

Other resources: AICPA coverage here, here and here. And AAF CPAs has some blog posts and a webinar.

Internal controls when you are very small

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CKB works with some very small nonprofits. Very small as in there is one employee and Cathy. Even if—perhaps especially if—your org is super-wee, you need to have as many internal controls in place as possible to keep things from going haywire. An internal control is a process for handling money that helps protect your organization from fraud, theft, abuse, and other bad things. Blue Avocado, an excellent site for nonprofits that’s included on our Links page,  offers the following thoughts on how teeny-tiny organizations can maintain basic internal controls:

  1. Set the control environment (make sure people know there are policies that must be followed).
  2. Define clearly who is responsible for what.
  3. Physical controls (lock it up).
  4. Always have two people count cash.
  5. Reconcile your bank statements!

Read a detailed explanation of each point, plus additional notes on payroll and checks, from Carl Ho at Blue Avocado.

UPDATE: The American Institute of CPAs has a good and related take: “4 Critical Reasons Startups and Smaller Organizations Need Internal Control.”

That 1099 deadline

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Worrying about 1099s already? If, like Cathy Keeps Books, you subscribe (or have been subscribed to) various accounting-related e-mails, you may have seen something like this:

1099-notice

This one came from Paychex. Previously, the forms were always due to recipients (your contractors) at the end of January—but the government reporting copy, the 1096, was due at the end of February, or in March if you e-filed it. Starting with tax year 2016 (that is, with the forms you file at the start of 2017), that government deadline will also be the end of January, for both paper and e-filing. By the way, the same applies to W-2s and their associated W-3.

I’ve never understood why there was a month allowed between recipient and IRS filing. For a bookkeeper, the biggest risk is screwing up on recipient forms; you can always amend your 1096, but if you get a contractor’s payment wrong on her 1099, she’ll be pissed. So this deadline change is no big deal to me.

Donor acknowledgement letters

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Useful bits and bobs come to you through CPA firm e-mails sometimes. Here’s an article from Clifton Larson Allen called “Donor Acknowledgement Letters: A Guide For Charitable Organizations.” Sounds good! In tiny nonprofits such as CKB assists, a bookkeeper might very well find herself asked about these letters—or asked to write one. According to CLA, a donor acknowledgement letter must include:

  • Organization’s full legal name
  • Date of donation
  • Amount of cash/check donation
  • In the case of a noncash donation, the charity should also provide a description (but not value) of the donated item(s)

A donation acknowledgement also needs one of the following:

  • Statement that no goods/services were provided in exchange for the donation and that the only benefit to donor was an intangible benefit, or
  • Description and estimated value of goods/services provided in exchange for the donation, and the net resulting deductible amount.

Read the full post.