This presentation provided attendees with an overview of significant accounting, tax, and compliance developments that are impacting the not-for-profit community. Information shared during the webinar will be beneficial to not-for-profit employees, service providers, and board members.

2. Building Successful
Employee Relationships
A Cornerstone to Fraud Prevention
and Risk Management

3. Building Successful
Employee Relationships
A Cornerstone to Fraud Prevention
and Risk Management

4. Building Successful
Employee Relationships
A Cornerstone to Fraud Prevention
and Risk Management

5. Not-For-Profit Organizations
The Accounting Updates
You Need to Know

6. Introductions
Gary Dubas
• Partner
• CPA
Janice Snyder
• Partner
• CPA
Jim Shellenberger
• Senior Manager
• CPA

7. Disclaimer
The information contained in this presentation, both that contained
in the slides and that expressed by the presenter, is not intended to
be complete and comprehensive. To obtain a more detailed
understanding of technical literature mentioned, please consult the
full standards and interpretations.

8. Accounting Updates
• Not-For-Profit Financial Reporting
• Form 990 Updates
• Uniform Guidance

9. Not-For-Profit Reporting
• Presentation of Financial Statements of Not-for-Profit Entities
• Affects Not-for-Profit Entities (958) and Health Care Entities (954)
Divided into 2 Phases

10. Not-For-Profit Reporting
Phase I
Net Asset Classification
(1) net assets with donor restrictions
(2) net assets without donor restrictions
Disclosure of amounts & purpose of Board Designated Net Assets
Placed-in-service requirement for capital restrictions
Underwater endowments classified as net assets with donor restrictions

11. Not-For-Profit Reporting
Phase I (continued)
Expenses - By nature and function
• In notes or on the face of the statement of activities.
• Must report all expenses by function and nature in one location – must show relationship between
functional and natural classification by disaggregating its functional categories by their nature
classification
Consideration of impact on healthcare NFPs moved to future project.
Operating Measure - Improved disclosures over operating measure (for entities who choose to
disclose this)
• Example: Performance indicator for NFP healthcare entities

12. Not-For-Profit Reporting
Phase I (continued)
Liquidity - Information useful in assessing liquidity
• Qualitative information indicating how an NFP manages its liquid resources to meet
cash needs for general expenditures within one year of the balance sheet.
• Quantitative information indicating the availability of financial assets to meet cash
needs for general expenditures within one year of the balance sheet date.
Statement of Cash Flows – Options for presentation – either:
(1) Direct method
(2) Indirect method
No longer need to reconcile direct method to indirect method!

13. Not-For-Profit Reporting

14. Not-For-Profit Reporting

15. Not-For-Profit Reporting
Phase I (continued)
Investment Return
Required to Present:
• Investment return net of external and direct internal expenses
NOT Required:
• Internal salaries and expenses netted against investment returns
• Investment return in the endowment net assets rollforward
Cost Allocations
• Enhanced disclosures about the methods used to allocate costs among program and support functions.
• Refining the definition of “management and general activities”

16. Not-For-Profit Reporting
Phase 2
Operating Measure
(1) Items not address in Phase I
(2) Requirement for intermediate operating measures?
(3) How to define operating measures?
Statement of Cash Flows
Realignment of certain line items.

17. Not-For-Profit Reporting
Presentation of Financial Statements of Not-for-Profit
Entities
• Retrospective application required.
• Effective for fiscal years beginning after December 15, 2017 (June 30, 2019
for most Not-For-Profit Entities)
• Early Adoption permitted.
• Final Standard for Phase I Expected in Q3 2016!

18. FASB Update
Accounting Standard
Update (ASU) #
Transition
Method Effective Date
Simplifying the Presentation
of Debt Issuance Costs
2015-03
2015-15
Retrospective Periods after
12/15/15
Early Adoption Permitted
Revenue from Contracts with
Customers
2014-09
2015-14
2016-08
2016-10
2016-12
Retrospective Periods after
12/15/18
(Private & NFPs)
Early Adoption Permitted
in 2017
Leases 2016-02 Modified
Retrospective
Periods after
12/15/19
(Private & NFPs)

19. FASB Update
Current Topics Status
Exposure Draft: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value
Measurement
Issued 12/3/15
Exposure Draft: Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost
Issued 1/26/16
Exposure Draft: Changes to the Disclosure Requirements for Defined Benefit Plans Issued 1/26/16
Exposure Draft: Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash
Payments
Issued 1/29/16
Exposure Draft: Statement of Cash Flows (Topic 230): Restricted Cash Issued 4/28/16
Clarifying When a Not-For-Profit Entity that is a General Partner should Consolidate a For-Profit
Limited Partnership
Exposure Draft in Q2 2016
Consolidation: Interests Held Through Related Parties that are Under Common Control Exposure Draft in Q2 2016
Revenue Recognition of Grants and Contracts by Not-For-Profit Entities Initial Deliberations
Accounting for Identifiable Intangible Assets in a Business Combination for Public Business Entities and
Not-For-Profit Entities
Initial Deliberations

20. Accounting Updates
• Not-For-Profit Financial Reporting
• Form 990 Updates
• Uniform Guidance

21. Current Issues Related to the IRS
Form 990
• No substantive changes to 2015 Form 990
• Instructions to Schedule L, Transactions With Interested Persons,
clarify when a business transactions need to be reported.
• Instructions to Schedule L define who is an interested person
• Officer, Director, trustee or key employee with last 5 years
• A substantial contributor
• A family member of the above
• A 35% controlled entity of one or more individuals and or
organizations described above including management companies.

22. Current Issues Related to the IRS
Form 990
• Thresholds for reporting business transactions with Interested
Persons
• All payments during the tax year exceeded $100,000.
• All payments from a single transaction exceeded the greater of
$10,000 or 1% of the filing organizations total revenue for the year.
• Compensation payments exceeding $10,000.

23. Common Errors on Form 990
• Uncompensated board members are volunteers.
• Reporting total voting members of the governing body
• Do not report ex officio members
• Report in accordance with bylaws
• Reporting independent voting members of the governing body
• If the member is reported on schedule L, they are not independent

24. Common Errors on Form 990
• Reporting the powers of members of the Organization accurately in
lines 6-7b in Part VI, Governance, Management and Disclosure
• Part V, line 1a-The number reported in Box 3 of Form 1096
• Are you reporting the correct number of 1099’s for your
organization?

25. Accounting Updates
• Not-For-Profit Financial Reporting
• Form 990 Updates
• Uniform Guidance

26. Uniform Guidance
Background
• Guidance for Federal Awards previously spread over eight (8)
different circulars:
• A-110, A-122, A-133 ,etc.
• Timeline:
• October 2011 – Council on Financial Assistance Reform (COFAR) created
• December 2013 – Final Uniform Guidance Issued
• January 2014 through September 2015 –COFAR webcasts (2) and FAQs (3)
produced
• September 2015 – 3rd COFAR FAQs issued (MOST RECENT)

27. Uniform Guidance
Effective Dates
• Administrative and cost principal changes applicable for new awards
and additional funding increments of existing awards made after
December 26, 2014.
• Procurement is the only area with a time extension for implementation of up
to two years.
• Audit changes effective for fiscal years beginning on or after
December 26, 2014.
• i.e. Years ending December 31, 2015, June 30, 2016, etc.

28. Uniform Guidance
Internal Control 200.303
• The non-federal entity must establish and maintain effective internal control over
the Federal award that provides reasonable assurance that the non-federal entity
is managing the Federal award in compliance with Federal statutes, regulations,
and the terms and conditions of the Federal award.
• These internal controls should be in compliance with guidance in “Standards for
Internal Control in the Federal Government” (Green Book) issued by the
Comptroller General of the United States and the “Internal Control Integrated
Framework”, issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO)
Must = Required
Should = Indicates best practices or recommended approach

29. Uniform Guidance
Procurement
• Good News - Grace period for one full fiscal year that begins on or
after December 26, 2014 included in the initial guidance
• Even Better News - COFAR FAQ #3 extended this to two years.
• Organization with a June 30th year-end, can elect to defer the procurement
provisions in the UG to 7/1/17 (i.e. the fiscal year ending June 30, 2017 is the
final grace year)
• Election must be documented in writing.
• Can still early implement

30. Uniform Guidance
Procurement
• Organizations must:
• Have written procurement policies
• Engage in full and open competition
• Ask for actual or potential conflicts of interest (written)
• Maintain records for all procurement activity

31. Uniform Guidance
Procurement Levels Thresholds
1. Micro Purchases Less than $3,000
2. Small Purchases Up to $150,000
3. Sealed Bids Greater than $150,000
4. Competitive Proposals Greater than $150,000
5. Sole Source (Noncompetitive) Unique, Public Emergency

32. Uniform Guidance

33. Uniform Guidance
Cost Allocation
No universal rule for classifying certain costs as either direct or
indirect
• Reimbursement for more of your Direct Costs
• Reimbursement for Indirect Costs
• De minimus rate of 10% of the modified total direct costs
• Or may negotiate a higher rate
• The introduction of the de minimus rate of 10% does not automatically force
an agency to fund indirect costs where it was not the intention of the grant

34. Uniform Guidance
Indirect Costs
• Prepare an Indirect Cost Rate Proposal (ICRP)
• Previously referred to as a Cost Allocation Plan
• Submitted to the Cognizant Agency for Indirect Costs
• Updated and calculated annually
• Documentation includes:
• Organizational charts
• Financial statements and supporting schedules
• Proposal reconciliations
• Indirect Cost Pool and Direct Cost Base
• Certified by the CFO

35. Uniform Guidance
Impact to Audits
• Audit Threshold increases from $500,000 to $750,000 of federal
funds
• Still required to make records available for review/audit by Federal Agencies,
pass-through entities, and the GAO
• Change in audit coverage amounts
• Low-Risk Auditee = 20% (previously 25%)
• Non Low-Risk Auditee = 40% (previously 50%)
• Audit Finding threshold is raised to $25,000

36. Uniform Guidance
Impact to Audits
• Auditor has less judgement to determine if a Type A Program is low-
risk (i.e. not tested as a major program
• Type A programs are generally those programs greater than $750,000
(previously $300,000)
• Auditor may perform risk assessments on certain Type B Programs
that traditionally have not been assessed.
• Single Audit Report will now be posted publicly on the Federal Audit
Clearinghouse

37. Uniform Guidance
Resources
• How to Access the Uniform Guidance:
• PDF of the Federal Register issued December 26, 2013:
• https://www.gpo.gov/fdsys/pkg/FR-2013-12-26/pdf/2013-30465.pdf
• U.S. Government Publishing Office – Electronic Code of Federal Regulations
(e-CFR).
• http://www.ecfr.gov/cgi-bin/text-idx?tpl=/ecfrbrowse/Title02/2cfr200_main_02.tpl
• Access COFAR guidance including Frequently Asked Questions (FAQ),
archived webcasts, and other information
• https://cfo.gov/cofar
• 2016 Compliance Supplement – late June 2016

38. Questions?
Gary Dubas
• Partner
• CPA
• GDubas@macpas.com
Janice Snyder
• Partner
• CPA
• JSnyder@macpas.com
Jim Shellenberger
• Senior Manager
• CPA
• JShellenberger@macpas.com

39. Building Successful
Employee Relationships
A Cornerstone to Fraud Prevention
and Risk Management

41. Questions?
Gary Dubas
• Partner
• CPA
• GDubas@macpas.com
Janice Snyder
• Partner
• CPA
• JSnyder@macpas.com
Jim Shellenberger
• Senior Manager
• CPA
• JShellenberger@macpas.com

42. Building Successful
Employee Relationships
A Cornerstone to Fraud Prevention
and Risk Management