Meeting evolving nonprofit regulations in 2015 webinar slides

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Meeting Evolving Nonprofit
Regulations and Standards in
2015
JACQUELINE TISO
CEO, JMT Consulting Group
JOAN BENSON
Sr. Nonprofit Marketing Manager

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Introductions
JOAN BENSON
Nonprofit Industry Expert, Intacct
JACKI TISO
CEO, JMT Consulting Group

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95% Customer Satisfaction
Nonprofit Organizations Rely On Intacct
Real
Value
8,500+
Growth Companies
55,000+
Business Entities
Growing with
Intacct
FOUNDATION

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Built for Success
Choice of accounting
experts worldwide
Top workplace
4th year in a row
10+ year track record of delivering results
Industry
awards 25 Best
Small Biz Apps

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Nonprofit Overview

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Accounting Rules CHANGING?
 Replace current 3 net-asset classifications down to two
– Without donor-imposed restrictions (or unrestricted)
– With donor-imposed restrictions
• Retain requirement to track & disclose type
• Describe how & when funds can be used
– Board designated – must disclose amount & purpose
 Capital-like transactions
– Gifts of long-lived assets with no donor restriction
– Cash gift restricted for purchase of long-lived assets
 Board designations, appropriations, and similar transfers
 Continued tightening of NFP Note Disclosures
– Salary & benefits expense
– Allocations
– Tax exempt status

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NY Nonprofit Revitalization Act
 Signed into law December 2013 and became effective July 1, 2014.
– All charities must have a conflict-of-interest policy.
– Charities with support and revenue over $1,000,000 and 20 employees or more
need to adopt a whistleblower protection policy. Several good examples are
available online.
– Charities with over $500,000 must have an audit committee that hires auditors
and oversees the audit. In addition, charities with over $1,000,000 must have a
committee that interacts with auditors including planning the audit and
reviewing audit results.
– Employees are prohibited from serving as board chair or a similar position.
– No employee may participate in the deliberations or voting about their own
compensation.

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Uniform Grant Guidance
 Effective for new awards, and increases to current awards, starting December
26, 2014
 The key areas you need to be aware of are:
– Internal controls over federal awards
– New rules for time and effort reporting
– Procedures for indirect costs
– Procurement requirements (AKA buying stuff),
– Sub recipient monitoring if you pass any of your federal money on to other agencies
 Key things that you need to do (if you haven’t already):
– Adopt the policies to comply with the new rules
– Identify who will be responsible for compliance with these rules
– Train responsible staff in these new rules
– Consider applying for an indirect cost rate or elect a 10% rate to increase what you
get paid or decrease your documentation requirements

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Polling Question #1
 Have you started planning or implemented changes in your
organization to meet the new requirements?

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“A good hockey player plays where the
puck is. A great hockey player plays
where the puck is going.”
--Wayne Gretzky
Where is The Sector MOVING?
 Outcome measures (accountability and transparency)
 Higher expectations of donors and funders
 Data driven performance management
 Fidelity to evidence-based models
 More competition for funds
 Data driven fundraising

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Where is The Sector MOVING?
It will become more
and more about data.
 Government funding has increased compliance reporting and
performance expectations
 Pay for performance, performance-based contracting and
privatization of public sector services
 Entrepreneurial modeling for nonprofits (diversify, scale)
 Data visualization (Dashboards)
 Non-financial reporting
 System integration

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What?
So What?
Now
what?
Perpetual Performance Improvement
What data do we have?
What do we know?
So what does this mean to us?
Now what are we
going to do with this
information?

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WHAT DO YOU
NEED TO DO?
Dashboard visibility – Dollars and Statistical

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Design and Implementation
Preparation and fair representation
Free from material misstatement, whether due to
fraud or error
Your Organization’s Management is
Ultimately Responsible!
Management is responsible for the preparation and fair
representation of its financial statements, including:

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Financial Operational
Ad-HocManagementRegulatory
Summary Intermediate Transaction
Vendor Project Offerings and more…
Performance Measures
Stakeholder Needs
Granularity
Business Drivers
Basis / Books
Cash Accrual
Your Financial Management Solution Needs to
Address Multiple Needs

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“Telling the Story”
 Donors are very interested in
what an NFP does, and how
effective it is. The best evidence
of this is for nonprofits to expand
the story of the organization in
the financial statements.

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System
Benefits
Organizational
Impact
Nonprofit Accounting and Compliance Challenges
 Lack of true fund accounting
 Weak internal controls
 Cash flow management
 Budgeting and planning
 Manual, offline reporting
 Volunteers/part-time staff
 Complex allocations
 Lengthy close process
 Heavy dependency on Excel
 Redundant, manual processes

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Polling Question #2
 Are you confident that you have the system(s) you need to manage and meet
compliance requirements?

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Lack of Visibility
Challenges of Financial Management Systems
 Inefficient manual processes
 Dependence on spreadsheets
 High system costs
 Resource constraints
 Changing workflows
 Growing company needs
 Multiple locations / currencies
 Data silos–cumbersome
reconciliation
 Lack of access to real time data
 Limited reporting / analysis
Low Productivity
Limited Internal
Controls

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Today’s Systems Need To Do More…
Full audit
trail of any
access &
activity
Workflow
automation
with
approvals
Document
management
attached to
every
transaction
Automated,
“smart”
events, such as
notifications of
changes to
master records
Proper documentation
reinforces internal
controls & drives audit
trail quality
Visibility to metrics, measurements &
evaluation is key

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Liquidity and Financial Health
 There is general agreement
that liquidity information is
both important, and not as
clear as it could be under
current GAAP

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Improve Reporting on Financial Performance
 The NAC focused on reporting,
paying particular attention to
the statement of activities
and statement of cash flows.
NAC agreed that there was
room to improve the reporting
of finance performance.

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Reporting Requirements Should Be Met
Directly From Your Accounting Software
 FAS 116
 FAS 117
 Segregation and auditing of uses
and sources of funds
 501(c)(3) charitable vs. non-
exempt activities
 IRS Forms 990, etc.

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The Dangers of Reporting by Spreadsheets
Spreadsheet Pro’s Spreadsheet Con’s
Robust Incredibly fragile:
 No way to trace where your data comes from
 No audit trail (so you can overtype numbers and not know it)
 No easy way to test validation
Easy to create Created by who and how:
 No documentation
 No methodology
Easy to change Lots of data manipulation:
 Manual data entry from various sources
 Manual copy and paste
 Manual formulas (often with errors)

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Functionality to Eliminate Spreadsheet Use
 Nonprofit-specific financial and effort reporting directly from the system
(no reformatting)
 Have a chart of accounts that exactly matches your operational and
financial reporting requirements
 Automate nonprofit-specific functions typically done manually:
– Allocations
– Budgeting
– Purchasing
– Reconciliations
– Planning and projections
Look at your systems and determine what you need

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Polling Question #3
 Are you using spreadsheets for reporting to senior management, board,
funders, &/or program directors?

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Why JMT Recommends the Cloud

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Workflow, Triggers, and Logic
 Design custom workflow processes, including state, actions, and
sequence
 Add Triggers to automate actions
– Update fields
– Create new records
– Send emails
– Create documents
– Call external Web Services
– Invoke an API
– Plus five more trigger types

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New Technology Eliminates Out-dated Accounting Designs
 The “13th Period”
User defined books!
 GL Segments
Dimensions!
 Account Types
Account groups, flexible reporting (think pivot tables)
 The GL is only for GAAP
Bookings, encumbrances, grant management fields
 The GL is only for $$
Statistical accounts!
 GL Reporting is only on GL Accounts
Report on any field, including AP, AR, etc. & custom fields

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YOUR SOFTWARE
NEEDS TO DO
MORE!
Dashboard visibility – Dollars and Statistical

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Clear Visibility is Vital
 Real-time, consistent
information
 Role-based dashboards
 Management by KPI’s
 24x7 accessibility by all
stakeholders

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Employee and Volunteer Time and Expense
You should be able to clearly demonstrate management and oversight of your staff
and volunteer time & expenses, capturing time and expenses by program, project,
department, etc., flowing directly to your financials.
Benefits include:
 Ability to track cash
commitments in real-time
 Speed reimbursement
and manage approvals
 Complete visibility into
usage of funds right
through your financials

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Workflow Approvals and Controls
Benefits include:
 Safely engage all employees and volunteers
 Real-time visibility and control
 Ensures compliance
 Comprehensive audit trails reduce risk

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Best in Class Financials
AICPA preferred
CRM Budgeting
and
Planning
PayrollSales TaxFixed
Assets
Best in Class Financials
AICPA preferred
CRM Budgeting
and
Planning
PayrollSales TaxFixed
AssetsCRM Budgeting
and
Planning
PayrollSales TaxFixed
Assets
Best-in-Class Financials
AICPA preferred
Your system should
provide:
 Streamlined operations
 Automated reporting
 Full audit trail
 Workflow approvals
 Document management
 Real-time visibility
In Summary

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Questions?
www.intacct.com | info@intacct.com | 877-437-7765
FOR MORE INFORMATION:
Jacqueline Tiso
jtiso@jmtconsulting.com
CONTACT OUR GUEST SPEAKER:

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Interested in Learning More?
 Try Intacct with a free 30-day trial
http://www.intacct.com/trial
 Download a white paper
Why Cloud Makes Sense for
Nonprofits
 Attend an upcoming webinar
http://www.intacct.com/webinars
 Follow us on Twitter
@intacct_corp
 Connect with us on Facebook
http://www.facebook.com/Intacct
 Contact us directly
info@intacct.com | 877-437-7765

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Thank you!
www.intacct.com | info@intacct.com | 877-437-7765
FOR MORE INFORMATION:
Jacqueline Tiso
jtiso@jmtconsulting.com
CONTACT OUR GUEST SPEAKER: