Posts tagged with "new accounting standards"

Nonprofit Forum – August 26, 2020 – Common Audit Pitfalls and Implementing the New Standards

Common Audit Pitfalls and Implementing the New Standards                                                                                                                                     Register

11:30 to 12:30-Common Audit Pitfalls and Implementing the New Standards

How should you evaluate your audit process?  Please bring your questions so we can have a candid conversation regarding the auditing process.  We will share our expertise and candid advice to better prepare you for this important role for your organization.

While not required by law, one reason a nonprofit might conduct an audit is to demonstrate the organization’s commitment to financial transparency and accountability.

And while a nonprofit can spend considerable resources for its annual audit, it is important that it consider the following to ensure the audit is a success.

No delays: An audit needs to avoid any major delays.

Minimal accrual and year-end adjustments: The nonprofit needs to ensure that all accrual and year-end adjustments are completed prior to the start of the audit.

Minor board and management comments: It is a good idea to have an exit interview after the fieldwork to review the audit’s results.

No material weakness or significant deficiency: This is a deficiency in internal controls that could negatively impact financial integrity.

Nonprofit should prepare audited financial statements and related disclosures:  The organization should have the ability and accounting systems to prepare the audited financial statements and related footnotes and disclosures.

Fraud detection is not the purpose of audit:  While nonprofit leaders may believe the annual audit will uncover fraud, it is very unlikely this will occur.

Auditor does not guarantee financial statement accuracy:  While auditor does issue an opinion on the nonprofit’s financial statements, the auditor does not certify or guarantee its accuracy.

If your nonprofit has one of these audit pitfalls or misperceptions, you should take action to bring expertise and capacity to your organization to remedy it.

This webinar will help Nonprofit Leaders, Executive Directors, Finance Directors, and Finance  Staff to better prepare for an annual audit.  Savvy nonprofit leaders know that effective financial audits can be the difference between good and great performance.

Immediately following the presentation on nonprofit financial governance, we will host a MIP Fund Accounting User Group meeting focusing on how to use MIP to help with your audit.

3 Key Things you will learn include:

  • Why audits have become more complicated to complete?
  • Best practices to improve annual audit
  • What audit pitfalls should I avoid?

Those attending the forum will receive handouts.

12:30 to 12:50-MIP User Group-How to use MIP to help with your audit?

12:50 to 1:00-FTM Updates and Closing                                                                                                                                                                        Register

FTM Nonprofit Forum – February 26, 2020 – Common Audit Pitfalls and Implementing the New Standards

Common Audit Pitfalls and Implementing the New Standards                                                                                                                                     Register

Nonprofit Forum Agenda for February 26, 2020

11:30 to 12:30-Common Audit Pitfalls and Implementing the New Standards

How should you evaluate your audit process?  Please bring your questions so we can have a candid conversation regarding the auditing process.  We will share our expertise and candid advice to better prepare you for this important role for your organization.

While not required by law, one reason a nonprofit might conduct an audit is to demonstrate the organization’s commitment to financial transparency and accountability.

And while a nonprofit can spend considerable resources for its annual audit, it is important that it consider the following to ensure the audit is a success.

No delays: An audit needs to avoid any major delays.

Minimal accrual and year-end adjustments: The nonprofit needs to ensure that all accrual and year-end adjustments are completed prior to the start of the audit.

Minor board and management comments: It is a good idea to have an exit interview after the fieldwork to review the audit’s results.

No material weakness or significant deficiency: This is a deficiency in internal controls that could negatively impact financial integrity.

Nonprofit should prepare audited financial statements and related disclosures:  The organization should have the ability and accounting systems to prepare the audited financial statements and related footnotes and disclosures.

Fraud detection is not the purpose of audit:  While nonprofit leaders may believe the annual audit will uncover fraud, it is very unlikely this will occur.

Auditor does not guarantee financial statement accuracy:  While auditor does issue an opinion on the nonprofit’s financial statements, the auditor does not certify or guarantee its accuracy.

If your nonprofit has one of these audit pitfalls or misperceptions, you should take action to bring expertise and capacity to your organization to remedy it.

This webinar will help Nonprofit Leaders, Executive Directors, Finance Directors, and Finance  Staff to better prepare for the annual audit.  Savvy nonprofit leaders know that effective financial audits can be the difference between good and great performance.

Immediately following the presentation on nonprofit financial governance, we will host a MIP Fund Accounting User Group meeting focusing on how to use MIP to help with your audit.

3 Key Things you will learn include:

  • Why audits have become more complicated to complete?
  • Best practices to improve annual audit
  • What audit pitfalls should I avoid?

Those attending the forum will receive handouts.

12:30 to 12:50-MIP User Group-How to use MIP to help with your audit?

12:50 to 1:00-FTM Updates and Closing                                                                                                                                                                        Register

FASB proposes moving back effective date for lease and other new accounting standards

The Financial Accounting Standards Board (FASB) recently voted unanimously to propose a delay to the effective date for the implementation of the new lease accounting standard, ASC 842, for non-public business entities. The proposed delay in the effective date is until January 2021, which provides an additional year to privately held companies to comply with the new lease rules.

Additionally, the vote proposed delays to other recent standards updates including credit losses, derivatives, and long-duration insurance contracts. For credit losses and long-duration insurance contracts, the proposed delay could potentially also apply to nonprofits and smaller reporting companies as the FASB seeks to re-define its reporting entity buckets in relation to implementation dates of its future standards.

Refresher on lease accounting

The existing lease accounting standard, Leases (Topic 840), requires companies to record lease obligations on their balance sheets if the arrangements are considered financing transactions, such as rent-to-own contracts for buildings or vehicles. Few arrangements get recorded, however, because U.S. Generally Accepted Accounting Principles (GAAP) give companies leeway to arrange the agreements to look like simple rentals. If an obligation isn’t recorded on a balance sheet, it makes a business appear less leveraged than its reality.

After nearly a decade of debate, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The new standard calls for major changes to current accounting practices for leases. In a nutshell, companies will be required to recognize on their balance sheets the assets and liabilities associated with rentals, such as offices, factories, airplanes and heavy equipment. The effects of the new standard are expected to be pervasive, because businesses rent anything from forklifts to photocopiers to recycling bins.

ASU No. 2016-02 defines a lease as a contract (or part of a contract) that conveys the right to control the use of a rented asset for a specified period in exchange for consideration. The concept of control is a key change from the definition of a lease. It means that the customer has both the right to realize substantially all of the economic benefits of the asset and the right to direct the asset’s use.

Most existing arrangements that currently are reported as leases will continue to be reported as leases under the new standard. In addition, the new definition is expected to encompass many more types of arrangements that aren’t reported as leases under current practice.

Delayed implementation

The new standard took effect for public companies, employee benefit plans, and non-for-profit conduit bond obligors in January 2019, and was intended to take effect for private companies for reporting periods beginning after December 15, 2019. However, the AICPA asked the FASB for a delay earlier this year in light of the overlap with the implementation of the new revenue recognition standard and the struggles public companies have incurred thus far in complying with the new lease accounting rules.

The additional year will allow for further educational opportunities for private companies and other organizations that anticipate a major disruption when implementation arrives.

If you have questions on how this delay will affect you and your company, please reach out to us.