Professional Accounting Blog

    Accounting For Your Prosperity

    Lynn Koster

    Lynn Koster is a Senior Manager at Meaden & Moore in the Assurance Services Group and serves both closely held businesses and not-for-profit clients.

    Recent Posts

    Changes are Coming for Not-For-Profit Financial Reporting

    Posted by Lynn Koster on Sep 8, 2016 8:00:00 AM

    Topics: Not For Profit

    For the past several years, changes have been in the works for the not-for-profit financial reports. The Financial Accounting Standard Board (FASB) believe that the changes will improve the financial statements and provide more useful information to the users of these statements.

    The changes are effective for the year end beginning after December 15, 2017 – which means the effective year of an organization with a fiscal year ended June 30th – will be June 30, 2019 (the year beginning July 1, 2018, ending June 30, 2019).

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    Good Meeting, Bad Meeting

    Posted by Lynn Koster on Sep 30, 2014 9:00:00 AM

    Topics: Small Business, Not For Profit

    A simple list for a good meeting. Start on time, prepare, follow an expected protocol and participate.

    Certainly you have experienced both good and not so good meetings. And effective meetings are becoming even more challenging today with the opportunity for attendees to participate using the latest technology - skyping in your pj's anyone? Maybe you have seen the hysterical YouTube illustration "A Conference Call in Real Life" with Tripp and Tyler (if not, check it out). Regardless of the venue or the topic of your meeting, in order for it to be an effective one - if you are in charge of it - you should take charge of it!

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    Program Related Investments: Gaining Momentum

    Posted by Lynn Koster on Jul 22, 2014 8:00:00 AM

    Topics: Not For Profit

    Once considered underutilized (Forbes, “Why Program-Related Investments are Not Risky Business”, February 21, 2013), Program Related Investments (PRIs) are more often being considered as an option for foundations to financially support the mission of their favorite not-for-profit organizations. Instead of or in addition to a direct contribution or a grant, a not-for-profit may make a low interest, long term loan which is referred to as a PRI. This type of transaction offers both financial as well as programmic returns. There are both initial and established considerations for the accounting of these transactions. 

    Initial considerations for accounting and reporting:

    • Determine the character of the contribution as a PRI at the time of the transaction. Is the contribution part investment and part donation? There may be a split in how the transaction is recorded. One test to help in this determination is whether the loan has a market interest rate. If it does not, then the loan may be considered to have a contribution element.
    • The main goal of the investment is not to generate market returns or appreciate, but to help advance the mission of the not-for-profit. The pay back of the loan provides the opportunity for the not-for-profit to make future gifts.
    • The investment is considered a financial instrument and should be accounted for accordingly.
    • Determination of the relative significant of the PRI for disclosures and presentation in the financial statements specific to the user.
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    3 Internal Control Basics for Small Not-for-Profit Organizations

    Posted by Lynn Koster on Jun 19, 2014 1:05:00 PM

    Topics: Not For Profit

    With almost 1 million tax exempt organizations classified as public charities and almost 1.6 trillion in revenue reported (source: National Center for Charitable Statistics), there appear to be many opportunities and resources to provide excellent and meaningful services through the not-for-profit sector. However, how do we know that the revenue as reported is accurate - and it should not be 1.7 trillion? As auditors, Meaden & Moore understands the importance of internal controls over the financial reporting as required by auditing standards. But what if your organization does not need a financial statement audit, what if your organization has a limited purpose and is small on purpose? Should you consider internal controls? Absolutely! And even more so. Too many times in local communities, there are reports of a trusted individual absconding with the receipts that were collected for kids sports uniforms, band travel funds, membership dues or to provide assistance to a struggling neighbor. Even a small organization with no employees, run by volunteers can take steps to add safeguards over cash.

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    When Should a Not-for-Profit Organization Make a Profit?

    Posted by Lynn Koster on May 20, 2014 9:18:00 AM

    Topics: Not For Profit

    non-profit-make-profitHave you heard that a not-for-profit should not make a profit? Crazy, right? What happens if an organization ends every year without a profit? One obvious answer is that the organization will begin the next year with no available cash to operate, because there have been no profits to provide for the opportunity to build cash reserves for unforeseen events. And one thing we are all learning, there are always unforeseen events!  So when should a not-for-profit organization make a profit? Answer: Always!

    Now that might sound like a lofty goal to some organizations. It is a struggle to break even! It might also sound confusing to some board members and donors. Why are they asking for financial support when they have resources that are not being used? Yet, this type of thinking is very short sighted - especially when considering the future long term goals and sustainability of an organization. At Meaden & Moore, we view our not-for-profit clients as businesses and a healthy business operates effectively, efficiently and profitably. In the case of profitable not-for-profits, surplus cash helps to create reserves, enables the payment of timely expenses, and most importantly helps to avoid the panic and desperation that accompanies financial stress. It is more difficult to focus on mission goals, client service, and community outreach effectively when there are impending financial worries.

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    4 Considerations for Non Profit Transparency

    Posted by Lynn Koster on Mar 27, 2014 1:09:00 PM

    Topics: Not For Profit

    4-considerations-non-profit-transparencyTransparency. In the non profit community, transparency is one of the critical requirements if an organization wants to maximize their success and potential to achieve their mission goals. As a public charity, donors will demand it, employees will expect it and in some instances, the law may require it. There are many opportunities for a non profit organization to take advantage of the opportunity to be transparent. Consider these suggestions:

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    5 Things to Consider Before Joining a Board of Directors

    Posted by Lynn Koster on Feb 25, 2014 1:35:00 PM

    Topics: Not For Profit

    board-of-directorsThe success of a nonprofit organization depends on public support and confidence – and on volunteers, specifically in the role as a member of the governing body. Maybe you have a special skill that, when combined with a passion for helping others, you could find yourself being asked to participate as a member of the board of directors of a nonprofit. There are many things to consider before you accept. Consider these five:

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    Handling Your Funding: Capital Assets with Restricted Donations

    Posted by Lynn Koster on Oct 29, 2013 5:13:00 PM

    Topics: Not For Profit

    When a not-for-profit organization (NFP) receives a donor restricted gift to purchase a capitalizable asset there is generally confusion over the appropriate treatment. It would seem reasonable to match the gift with the expense in the period that the cash was expended, but that is not the correct treatment in accordance with generally accepted accounting principles.

    A NFP should look to the two transactions separately, recognizing the gift and the expense. Following the rules governing donor restricted gifts, the NFP should recognize the gift in the period when it has been awarded, received or otherwise confirmed in accordance with the policies adopted by the organization. Organizational policy may also dictate whether the gift is automatically recorded as temporarily restricted or unrestricted. If the funds will be appropriated during the same reporting period, the funds may be recorded as unrestricted. The release of funds will follow the organization’s policy with respect to approval for appropriation which ensures that there is a process to review if the donor restriction has been met.

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    10 Tips To Avoid Business Fraud

    Posted by Lynn Koster on Sep 5, 2013 9:06:00 AM

    Topics: Accounting & Auditing

    I was in the field at a client, when I noticed the Human Resource Manager handing out payroll checks. My reaction was so immediate – I jumped all over him, “You aren’t supposed to be handing out the checks!” I even startled myself. And in hindsight, I realized that I missed paying attention to his reaction. . . .

    Let me back up and fill you in, as Paul Harvey would say, on “the rest of the story.” This particular client ran various hospitality operations and in the summer months, employee count swelled to almost 200 – with many in the ranks considered temporary or seasonal. Most of these hourly employees received actual paper checks – which is going the way of the dinosaur as so many payroll transactions occur electronically.

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