ANNUAL NOT-FOR-PROFIT ACCOUNTING UPDATE Thursday August 17, 2017 - - PowerPoint PPT Presentation

ANNUAL NOT-FOR-PROFIT ACCOUNTING UPDATE

An independent member of UHY International

Thursday August 17, 2017 Presented By: Erica Battle, CPA

OPENING COMMENTARY

Mike Santicchia Partner, UHY LLP Welcome to our fourth annual nonprofit update!

ATTENDEE CHECKLIST

 CPE materials  Feedback

• Tear out form in back of presentation

‒ Please note any topics of interest for future workshops

 Questions  Keep a look out for a post-event email

• Download a copy of the PowerPoint presentation

 Pre-register for 2018

ABOUT OUR FIRM

LOCAL

• Nearly 50 years of experience
• Ranked 5th largest accounting firm in Southeast

Michigan by Crain's Detroit Business

• Over 350 employees in Detroit, Farmington Hills and

Sterling Heights

• Largest accounting firm presence in Macomb County

NATIONAL

• Named one of IPA’s Top 10 Fastest Growing

Accounting Firms of 2016

• 16 offices across the US
• PCAOB registered
• Most recent peer review resulted in a Pass
• pinion, the highest possible result

INTERNATIONAL

• Member firms in 325 business centers across

99 countries

• Over 7,800 professionals
• 16th largest international accounting and

consultancy network

• Member of the Forum of Firms

UHY’S NOT-FOR-PROFIT PRACTICE

• UHY LLP performs attest services for over 360 not-for-profit clients
• We perform over 60 Uniform Guidance single audits annually
• Our experience with not-for-profit entities includes the following sectors:

˗ Arts and Culture ˗ Health and Human Service Organizations ˗ Educational Institutions ˗ Foundations ˗ Private Clubs ˗ Religious Organizations ˗ Trade Associations ˗ Government Agencies ˗ Other Public Sector Organizations

UHY’S NOT-FOR-PROFIT PRACTICE

• Our team members are provided with national and local training specific to

not-for-profit entities

• We utilize several resources to ensure our staff keeps current on all

industry developments

• We provide periodic information and training seminars for our clients and
• ther not-for-profit entities
• We issue a quarterly newsletter that focuses on issues specific to not-for-

profit entities

• We send electronic e-blasts for hot topics affecting not-for-profits

NOT-FOR-PROFIT SERVICE OFFERINGS

Audit & Assurance

• Audits, reviews and compilations of

financial statements

• Single audits
• Financial and compliance audits
• Attestation services including

agreed-upon procedures reports and service auditor reports (SSAE16)

• Audits of financial statements of

employee benefit plans

• Financial reporting assistance
• Collateral audits
• Implementation of accounting standards
• Audit committee advice
• Financial forecasts

Other Advisory Services

• Charitable and trust registration

preparation

• Form 1023 application assistance
• Financial fraud examinations and

investigations

• Review and development of fraud

prevention policies and procedures

• Resource Solutions
• Financing assistance
• Transaction Services
• Cost assignments and allocations
• Profit enhancement solutions
• Benchmarking
• Enterprise risk management
• Design, implementation and testing of

internal controls

• Contract compliance

Tax Planning & Compliance

• Preparation of Form 990, 990-T, 990-PF,

and state equivalent returns

• Employee benefit plan filings (e.g.,

Form 5500)

• Related for-profit corporate,

partnership and trust filings

• Tax incentives
• Unrelated business income tax

(UBIT) planning

• Sales and use taxes
• Property tax planning
• IRS resolution

PRESENTERS

Erica’s nonprofit experience includes not only accounting, but also development, marketing, strategic planning and governance. Before returning to CPA work in 2014, she worked at Gilda’s Club Metro Detroit, Detroit Chamber Winds & Strings and the DIA. She is an active volunteer in the community, currently serving on the boards of Detroit Children’s Choir, Signal Return, The Scarab Club, Shrine Education Trust, DIA Friends of Arts & Flowers, and as an advisory board member for NAWBO. She has served as a grant panel reviewer for Michigan Council for Arts & Cultural Affairs and takes an active role in nonprofit education, developing and presenting several workshops over the years.

Erica Battle, CPA

Erica is a CPA specializing in Not-for-Profit attest and tax services. She has a Master’s degree in Accounting from Walsh College and a Bachelor’s degree in Art History from the University of Michigan. Erica has over 20 years’ experience in providing accounting and management consulting services; with 10 years specific to nonprofit entities.

PRESENTERS

In his role of Chief Client Officer for Apparatus, Bob provides strategic leadership and financial oversight ensuring compliance and satisfaction for their clients. Bob has compiled his years of experience with a goal to help organizations measure and build financial strength. Apparatus Solutions Inc. is based in Detroit, with vision to transform our community through insight, influence and impact.

Robert Seestadt, CPA Chief Client Officer, Apparatus Solutions

As a respected CPA, Bob has presented various financial and accounting topics at Not-for-Profit workshops, conferences and training sessions covering topics such as financial statement presentation, liquidity and capitalization, and board

• versight.

Bob is a member of the Michigan Association of CPA’s Nonprofit Task Force and has over 20 years experience in providing accounting and management consulting services to the impact sector.

TOPICS

INDUSTRY UPDATES REVENUE RECOGNITION (ASU 2014-09) LEASES (ASU 2016-02) FINANCIAL STATEMENT UPDATES (ASU 2016-14) LIQUIDITY ASSESSMENT

INDUSTRY UPDATES

ECONOMIC AND INDUSTRY DEVELOPMENTS

• NFPs continue to play a large role in the economy
• Currently, more than 1.5 million NFPs registered with the IRS
• Contributions to NFPs in 2014 exceeded $358 billion
• Total revenues in sector exceeded $2 trillion
• 62 million people volunteered at a NFP in 2015 (relatively consistent)

ECONOMIC, INDUSTRY, LEGISLATIVE AND REGULATORY DEVELOPMENTS

Charity Watchdog Concerns

• Watchdog organizations maintain online databases which are widely

accessible

• Although the organizations are not regulatory bodies, they have significant

influence over the NFP sector

• Some watchdog rating agencies adjust financial results reported on the IRS

From 990 for their own evaluation process–primarily with respect to joint costs and in-kind gift valuation ˗ If there is not sufficient transparency on how the joint cost are allocated, the agency has been known to re-allocate joint cost reported as program expense to fundraising expenses ˗ One agency excludes in-kind for its rating methodology

• Make sure to monitor your ratings

ECONOMIC, INDUSTRY, LEGISLATIVE AND REGULATORY DEVELOPMENTS

Cyber Security

• As technologies advance and NFPs become more sophisticated in using

them, sensitive data that is stored internally or transmitted across networks become more vulnerable

• While resource at NFPs may be limited, the costs of dealing with a breach

can be high. A breach can expose the organization to steep fines as well as litigation and remediation expenses

• NFPs should consider putting policies and processes in place to manage

data privacy and security

ECONOMIC, INDUSTRY, LEGISLATIVE AND REGULATORY DEVELOPMENTS

DOL overtime rules

• The new overtime rules that were to have gone into effect December 1, 2016 are still

under appeal

• On July 26, 2017 the Department of Labor published a Request for Information (RFI)

The RFI is an opportunity for the public to provide information that will aid the Department in formulating a proposal to revise these regulations. The 60-day comment period for all issues raised in the RFI ends on September 25, 2017

IRS

• Data-Driven Decision Making by IRS

˗ IRS uses 990 to initiate over 200 data queries to ascertain whether a return might warrant examination ˗ Be mindful of accuracy and completeness when preparing or reviewing your 990

• Filing deadline for Forms W-2 and 1099-Misc

˗ Due January 31 (previously had been February 28)

ECONOMIC, INDUSTRY, LEGISLATIVE AND REGULATORY DEVELOPMENTS

Property Tax

• Uniform property tax exemption for charitable organizations is in the

works for the state of Michigan

• Current criteria for what constitutes a charity that should be exempt is

inconsistent from municipality to municipality

• A legislative solution is still in the works

REVENUE RECOGNITION (ASU 2014-09)

INTRODUCTION

• ASU 2014-09, Revenue form Contracts with Customers was issued

September 2014. In August 2015, the effective date was extended

• Current Effective Dates (early adoption permitted):

REVENUE RECOGNITION

The new guidance affects all entities that enter into contracts with customers to transfer goods or services or nonfinancial assets

• New revenue recognition policies should apply the following steps to recognize

revenue: ˗ Identify the contract(s) ˗ Identify the performance obligations ˗ Determine the transaction price ˗ Allocate the transaction price to the performance obligations ˗ Recognize the revenue when the performance obligations are satisfied

• Contributions are excluded from the standard because a donor is not considered a

customer

• Certain transactions will require bifurcation between an exchange transaction and

a contributions – i.e. membership dues, special event tickets

• There is continued discussion on the treatment of private and government grants

REVENUE RECOGNITION

Treatment of private and government grants

• Depending on the circumstances of the grant terms, the government or granter is

not considered a customer, because it is not receiving something if equal value in return for the grant funds. The constituents or society as a whole receives the benefit

• Two issues still in review by FASB:

˗ Characterizing grants and similar contracts with government agencies and

• thers as reciprocal (exchange) or nonreciprocal (contributions) transactions

˗ Distinguishing between conditions and restrictions

• Proposed ASU Not for Profit Entities (Topic 958) in the works to clarifying the scope

and the accounting guidance for contributions received and contributions made . Proposed ASU was issued on August 3, 2017 FASB with a comment deadline of November, 2017

REVENUE RECOGNITION

Develop an implementation plan

• Compile a list of the organizational revenue streams
• Document a revenue recognition principal for each revenue stream:

˗ Start by noting current process ˗ Identify revenue streams impacted ˗ Update revenue recognition policies for the impacted revenue streams

• If change is required, access materiality. If not material, may decide to pass on

new treatment; however this may result in an annual passed adjustment with the auditors

• If change is required, consider all areas of impact. i.e. is new verbiage needed in

related contracts, does the monthly/annual close process need modifications, do budgets and forecasts need to be modified

INTRODUCTION

• ASU 2016-02, Leases (Topic 842) issued February 2016
• Effective Dates (early adoption permitted):

INTRODUCTION (CONTINUED)

With the exception of leases that have a term of 12 or fewer months, all leases will be recognized on the balance sheet by recording:

• Right of use (ROU) asset
• Lease liability

When calculating the ROU/Lease liability, organizations should not include the market value of donated use of facilities (only included cash or other assets exchanged in the transaction)

• Any donated rent (difference between FMV and amount paid) should be

recorded as a contribution

• Expanded quantitative and qualitative disclosure required

LEASES

Current Lease Accounting New Lease Model Lessee accounting Leases are either:

• Operating leases (off

balance sheet)

• Capital leases
• All leases recorded on balance

sheet (except short-term)

• Two income statement

presentations

• Operating lease
• Finance lease

Lessor accounting

• Operating leases
• Sales-type or direct

finance leases

• Leveraged leases
• Operating leases
• Sales-type/direct finance

leases

• No more leveraged leases

LEASES

Finance leases ˗ Most existing capital/finance leases will be “finance” leases ˗ Record amortization expense for the asset and interest expense on the liability (expense is greater in early years) ˗ Classify payments of principal as financing cash flows and payments of interest and variable lease payments as operating cash flows Operating leases ˗ Most existing operating leases will be “operating” leases ˗ Record amortization and interest expense together as a single cost (rent expense) on a straight-line basis ˗ Cash payments classified as operating cash flows

SHORT TERM LEASES

For lease terms of 12 months or less –

• A lessee may elect not to recognize lease assets and liabilities by class of

asset

• Lease expense will be recognized on a straight-line basis
• Lessee must consider options to extend the lease when considering this

election (may not have a short-term lease)

LEASES

Financing Operating Right of Use Asset and Lease Liability Right of Use Asset and Lease Liability Balance Sheet Income Statement Cash Flow Statement Amortization Expense Interest Expense Single lease expense on a straight-line basis Cash paid for principal and interest payments Cash paid for lease payments

LESSEE DISCLOSURES

• Contractual details (lease term, contingent rentals, options, etc.) and related

accounting judgments*

• Information about significant leases that have not yet commenced
• Information about lease liabilities separately for operating and finance leases:

˗ Maturity analyses of undiscounted lease payments ˗ Weighted-average remaining lease term ˗ Weighted-average discount rate ˗ Cash flows and supplemental noncash information

• Amounts related to lease cost (including any amounts capitalized) and related cash

flows, separately for operating and finance leases

• If practical expedients related to short-term leases and separation of lease and

non-lease components elected, disclose that fact and related details

• No specific format required; ASU provides tabular example
• Judgment required to determine level of aggregation or disaggregation

*Also disclose this information about subleases if applicable

OVERVIEW

• New standard was issued in August 2016
• Revisions are to update, not overhaul, the current model
• Provide more useful information to donors, grantors, creditors, and
• thers
• Improve the current net asset classification requirements
• Improve the information presented in financial statements and notes

about a NFPs liquidity, financial performance, expenses, and cash flows

• Better enable NFPs to “tell their financial story”

EFFECTIVE DATES AND TRANSITION

• Effective date:
• Fiscal years beginning after 12/15/2017 (e.g. CY 2018 and FY 2018/2019)
• Interim financials the following year
• Transition:
• In year of adoption apply all provisions of the new ASU
• For comparative years presented; apply all provisions, except can choose not to present

− − Analysis of expenses by nature and function (except for Voluntary Health and Welfare Entities that are required under current GAAP to present Statement of Functional Expenses), and/or − Disclosures around liquidity and availability of resources

• In year of adoption, disclose the nature of any reclassifications or restatements and

their effects, if any, on changes in the net asset classes for each period presented.

• Early adoption permitted, but must apply the regular transition provisions

SPECIFIC CHANGES

• Net Asset Classes
• Expense Reporting
• Investment Return
• Statement of Cash Flows
• Liquidity & Availability

NET ASSET CLASSES

Unrestricted Temporarily Restricted Permanentl y Restricted Without “Donor” Restrictions With “Donor” Restrictions Current Presentation New Presentation

MOVE FROM THREE NET ASSET CLASSES TO TWO

DISCLOSURE REQUIREMENTS

• With Donor Restriction
• Include the nature and amount of the restriction
• Without Donor Restriction
• Include board designated

− New disclosure requirements for reporting amount, purpose and type of board designations

IMPLEMENTATION – BALANCE SHEET

Net assets: Without donor restrictions 97,677 With donor restrictions 115,657 Total net assets 213,334 Net assets: Without donor restrictions - Undesignated 92,677 Designated by the Board for [purpose] 5,000 97,677 With donor restrictions - Time restricted only, for periods after 20X1 5,250 Purpose restricted 8,250 Perpetual in nature 102,157 115,657 Total net assets 213,334

• Further break-out is allowed
• Standard presentation

IMPLEMENTATION – STATEMENT OF ACTIVITIES

Total Revenues and other support: Contributions 8,640 $ 8,390 $ 17,030 $ Fees 5,200 5,200 Investment return, net 6,650 18,270 24,920 Other 350 350 Net assets released from restrictions 19,240 (19,240)

• Total revenues and other support

40,080 7,420 47,500 Expenses: Program A 13,296 13,296 Program B 14,566 14,566 Management and general 2,038 2,038 Fundraising 2,150 2,150 Total expenses 32,050

• 32,050

Change in net assets 8,030 7,420 15,450 Net assets at beginning of year 84,570 186,070 270,640 Net assets at end of year 92,600 $ 193,490 $ 286,090 $ Without Donor Restrictions With Donor Restrictions

EXAMPLE DISCLOSURES – BOARD DESIGNATIONS

Net assets without donor restrictions: Undesignated 56,377 Quasi-endowment 35,000 Operating reserve 1,300 Total net assets 92,677 Note 13 – Net Assets Without Donor Restrictions The Board of Directors of XYZ Organization has several standing board policies that affect the presentation of board designations on net assets. Bequests without donor restrictions are designated for long-term investment (quasi- endowment). The quasi-endowment fund balance totaled $35,000 at December 31, 20XX. Additionally, the Board of Directors has established an operating reserve with the objective of setting funds aside to be drawn upon in the event of financial distress or an immediate liquidity need. The operating reserve balance totaled $1,300 at December 31, 20XX.

• Balance Sheet
• Text disclosure in notes

UNDERWATER ENDOWMENTS

• Revised net asset classification
• To be reflected in net assets with donor restrictions rather than net

assets without donor restrictions

• Enhanced disclosure
• Current GAAP requirements to report aggregate amounts by which

funds are underwater still apply, however now must also disclose the aggregate of the original gift amounts for the funds, the fair value and any board policy, or actions taken regarding appropriation from the funds

EXAMPLE DISCLOSURES - UNDERWATER ENDOWMENTS

Underwater Endowment Funds – From time to time, the fair value of assets associated with individual donor- restricted endowment funds may fall below the level that the donor or NYPMIFA requires NFP A to retain as a fund of perpetual duration. NFP A has a policy that permits spending from underwater endowment funds depending on the degree to which the fund is underwater, unless

• therwise precluded by donor intent or relevant laws and regulations.

As of June 30, 20X1, three donor-restricted endowment funds had aggregated original values totaling $3,500, current fair values totaling $3,300, and deficiencies totaling $200. These deficiencies resulted from unfavorable market fluctuations that occurred shortly after the investment

• f new contributions for donor-restricted endowment funds and continued

appropriation for certain programs that was deemed prudent by the Board

• f Trustees.

EXPIRATION OF CAPITAL RESTRICTIONS

• Gifts of cash restricted for acquisition or construction of PP&E

˗ No longer allowed to imply a time restriction, absent explicit donor stipulations

• Now use placed-in-service approach

˗ Report expiration of restriction on donations used to acquire or construct a long lived asset ˗ Reclassify amounts from donor restricted to without donor restrictions for long lived assets placed in services as of the beginning of the period of adoption

• Eliminates the option to release the donor imposed restriction over the

estimated useful life of the asset

SPECIFIC CHANGES

• Net Asset Classes
• Expense Reporting
• Investment Return
• Statement of Cash Flows
• Liquidity & Availability

NEW REQUIREMENTS FOR EXPENSES

• Present an analysis of expenses by function and nature in one location
• May be presented in the notes, in the statement of activities, or as a

separate statement

• Disaggregation of functional expense classifications by their natural

expense classifications

• Voluntary Health and Welfare entities no longer required to present a

separate statement of functional expenses

• Include a description of the method used to allocate costs among program

and support functions

• Improved guidance about management & general expenses

ANALYSIS OF EXPENSES - EXAMPLE

• Presentation in the notes or in a separate statement

Management Program Program Program and Fund- Supporting Total A B Subtotal General raising Subtotal Expenses Salaries, benefits, and taxes 7,400 $ 5,625 $ 13,025 $ 1,130 $ 960 $ 2,090 $ 15,115 $ Grants to other organizations 2,075 2,675 4,750 4,750 Supplies and travel 890 1,512 2,402 213 540 753 3,155 Services and professional fees 160 2,090 2,250 200 390 590 2,840 Office and occupancy 1,160 1,050 2,210 218 100 318 2,528 Depreciation 1,440 1,370 2,810 250 140 390 3,200 Interest 171 164 335 27 20 47 382 Total expenses 13,296 $ 14,486 $ 27,782 $ 2,038 $ 2,150 $ 4,188 $ 31,970 $ Program Services Supporting Activities

ANALYSIS OF EXPENSES - EXAMPLE

• Presentation on face of the statement of activities

Expenses: Grant activities - Grants 12,125 $ Salaries, benefits and taxes 1,808 Occupancy costs 970 Depreciation 845 Supplies 1,255 Other 56 17,059 Management and general - Salaries, benefits and taxes 452 Occupancy costs 243 Depreciation 211 Supplies 314 Other 14 1,234 Total expenses 18,293 $

EXAMPLE DISCLOSURE OF ALLOCATION METHODS

Note 5 – Methods Used for Allocation of Expenses Among Program and Supporting Services The financial statements report certain categories of expenses that are attributable to one or more program or supporting services of the

• Organization. Those expenses include depreciation, the Executive Director’s
• ffice, communications department, and information technology
• department. Depreciation is allocated based on a square footage basis, the

Executive Director’s office is allocated based on a time and cost study of where efforts are made, certain costs of the communications department are allocated based on the benefit received, and the information technology department is allocated based on a cost study of specific technology utilized.

ENHANCED GUIDANCE ON M&G ALLOCATION

• Activities that represent direct conduct or direct supervision of program or
• ther supporting activities require allocation from management & general

activities

• Examples added:
• IT – benefits various functions and generally would be allocated
• CEO – could be allocated to program, fundraising, M&G
• CFO – could be allocated to M&G and investment expense
• HR – generally would assign all to M&G
• Grant Accounting and Reporting – program reports would be program

(grant-related) but financial reports and related accounting would be M&G

SPECIFIC CHANGES

• Net Asset Classes
• Expense Reporting
• Investment Return
• Statement of Cash Flows
• Liquidity & Availability

INVESTMENT RETURN

• Net presentation of investment expenses against investment return
• Netting limited to EXTERNAL and direct INTERNAL expenses
• Removes requirement to disclose the gross investment income and

expense (permitted but no longer required) − Investment footnote − Endowment footnote

DEFINING INTERNAL INVESTMENT EXPENSES

Involve the direct conduct or direct supervision of the strategic and tactical activities involved in generating investment return

• Salaries, benefits, travel, and other costs associated with staff

responsible for development and execution of investment strategy

• Allocable costs associated with internal investment management and

supervising, selecting, and monitoring of external investment management firms

• DO NOT include items that are not associated with generating

investment return such as costs associated with unitization and other such aspects of endowment management

SPECIFIC CHANGES

• Net Asset Classes
• Expense Reporting
• Investment Return
• Statement of Cash Flows
• Liquidity & Availability

CHANGES TO STATEMENT OF CASH FLOWS

• Can continue to use either direct or indirect method
• If use direct, no longer required to show indirect reconciliation
• Other proposed changes deferred to Phase 2:
• Reclassifications between type of activity (i.e. operating, investing and

financing)

• Alignment of Statement of Cash Flows with the Statement of Activities

SPECIFIC CHANGES

• Net Asset Classes
• Expense Reporting
• Investment Return
• Statement of Cash Flows
• Liquidity & Availability

NEW REQUIRED DISCLOSURES

• Qualitative information on how a NFP manages its liquid resources

available and its liquidity risk(in the notes)

• Quantitative information that communicates the availability of financial

assets at the balance sheet date to meet cash needs for general expenditures within one year (on the face of the financials and/or in the notes)

• Availability may be affected by:

− Nature of the assets − External limits imposed by donors, laws, and contracts with

• thers

− Internal limits imposed by board decisions

QUALITATIVE LIQUIDITY DISCLOSURES

• EXAMPLE

The Board periodically designates a portion of any operating surplus to its liquidity reserve. As of June 30, 20X1, the liquidity reserve was $1,300. This is a governing board-designated fund with the objective of setting funds aside to be drawn upon in the event of financial distress or an immediate liquidity need resulting from events outside the typical life cycle of converting financial assets to cash or settling financial liabilities. In the event of an unanticipated liquidity need, NFP A also could draw upon $10,000 of available lines of credit (as further discussed in Note XX)

• r the quasi-endowment fund.

QUANTITATIVE AVAILABILITY DISCLOSURES - EXAMPLE

Financial assets, at year end 229,200 $ Less: Contractual or donor-imposed restrictions making financial assets unavailable for general expenditure (192,413) Quasi-endowment fund, primarily for long-term investing (34,628) Less amounts set aside for liquidity reserve: (1,300) Financial assets available within one year to meet cash needs for general expenditures within one year 859 $

liquidity

(amount available after assigning

• ther categories)

fixed (and other

non-financial assets)

current liabilities

and commitments

restricted and designated net assets

external commitments internal commitments

HOW I THINK ABOUT LIQUIDITY

HOW I PUT LIQUIDITY INTO CONTEXT WITH THE “RELIABLE REVENUE RATIO”

l (liquidity) + r (reliable revenue) e (expenses)

ASU 2016-14 EXECUTIVE SUMMARY

♦ Net Asset Class Reporting – Two new categories (replacing unrestricted, temporarily & permanent):

1.

Net assets without donor/grantor restrictions (*)

2.

Net assets with donor/grantor restrictions (footnote disclosures will include restrictions by time, purpose & perpetual restrictions – with expanded details for each program activity)

(*) board-designated net assets (governing board designations/appropriations that are self-imposed limits on the use of resources without donor restrictions) will require enhanced disclosures. Also, the placed-in-service approach will be required when releasing restrictions related to long-lived assets (the option to imply a time restriction & release the restriction over an asset’s estimated useful life will no longer be permitted). ♦ Underwater Endowments – as part of the classification of net assets, if fair value < original gift amount, the

deficit will now be part of net assets with donor restrictions (current practice is to include the deficit in unrestricted net assets). Expanded disclosures include: a) original gift b) spending policy and c) whether the spending policy was followed.

♦ Expenses Classified by Function & Nature – Required for all NFPs (can be a separate statement, on the face

• f the statement of activities, or in a footnote). Expanded disclosures are required on cost allocation
• methodologies. Specific guidance is provided on expenses that should be allocated to management & general.

♦ Cash Flows Reporting – Two options: Indirect or Direct Method (reconciliation is no longer necessary) ♦ Transparency & Utility of Liquidity Information – Quantitative & qualitative information about liquidity

will be required for the entity’s exposure to risks, how it manages liquidity risk, and how financial assets (cash, investments, receivables & pledges) are available to meet cash needs for general expenditures within 1 year of the balance sheet date. Many NPFs may want to present assets and liabilities on a classified basis.

♦ Investment Expenses - A presentation of investment expenses (including direct & indirect) against investment

return will be required on the face of the statement of activities as “investment income, net”.

CONTACT INFORMATION

Erica Battle, CPA Bob Seestadt ebattle@uhy-us.com roberts@apparatussolutionsinc.com 248-204-9374 313-259-1780 www.uhy-us.com www.apparatussolutionsinc.com

ATTENDEE CHECKLIST

 CPE materials  Feedback

• Tear out form in back of presentation

‒ Please note any topics of interest for future workshops

 Questions  Keep a look out for a post-event email

• Download a copy of the PowerPoint presentation

 Pre-register for 2018

Thank you!