Mark Koscinski NFP

NFP New Year’s Resolution: Get to Know Your CPA!

NFP New Year’s Resolution:  Get to Know Your CPA

It is time for NFP organizations’ New Year’s resolutions.  I am proposing a novel one:  Get to really know your CPA, and see what help she can provide!.   You might ask, Why?  Let me give you a few  key reasons:

  • The IRS is requiring more and more tax forms used by NFP organizations to be filed online.  For instance, see this article from  the  Accountingtoday Daily Briefing. As reported in this article, the IRS has experienced problems in keeping its systems up to date, causing frustration with many NFP organizations. The IRS is also experiencing a backlog in processing returns.  Your CPA is better equipped to deal with electronic filing requirements and the IRS (if needed) than you may be. 
  • Implementation of the new lease accounting standard is required for fiscal years beginning after December 15, 2021. This accounting will fundamentally change your balance sheet if you have a lot of leased equipment or premises. Do not underestimate the amount of work required for this effort. Interim financial statements beginning one year later will also need to be converted to this accounting, so you don’t have much time.  Additionally, the impact of the new lease accounting on prior years’ financial statements will also need to be calculated and reported on.  A CPA will be able to estimate the impact of and implement the new accounting. Additionally, your CPA can  help your organization negotiate any debt modifications with lenders if you have outstanding debt or a credit line from a financial institution. 
  • NFP mergers and acquisitions continue apace. One strategy for an NFP organization to grow quickly is by acquiring another organization.  To say this is complicated would be to understate that  complexity, especially when the NFP acquires a for-profit entity. Your CPA can help guide you through the acquisition process.  For instance, a CPA can provide financial modeling, due diligence, and strategic advisory services if you are considering an acquisition. 
  • Your CPA can advise you about the level of attest services your organization may need.  Audits are expensive.  A lesser level of professional accounting service may be appropriate.  Stakeholders understand this has been a rough spell for NFP organizations.  Perhaps they  do not need audited statements.  Reviewed or even compiled financial statements may be adequate for their needs  at a much reduced cost.  Your CPA can advise you on this issue. 
  • Lax internal control can lead to the potential for serious frauds and some bad press. In the current economic climate, news of squandered resources lost through lax internal processes or defalcations can cause donations to dry up quickly.  This could cause a great deal of disruption to your mission, if not catastrophic. Your CPA can provide information and advice about internal control best practices.  
  • Your CPA can be a source of volunteers.  Professional accounting organizations encourage CPAs to “give back” to their community and volunteer to work at worthwhile causes. CPAs not only make excellent financial officers (treasurers, controllers and internal auditors) and board members, but often have a large network of clients that also want to volunteer.  In effect, your CPA can act like a volunteer clearinghouse for your organization

These are just a few of the reasons why it makes sense for you to get to know your CPA in 2022!

Mark Koscinski NFP

Dear Santa…

December 21, 2021

Dear Santa:

It truly has been a tough year, but we were all good.  We worked hard to keep our organization going, often on a shoestring budget.  So, when you are making your rounds tonight and come to town, could you please bring us:

  • A Web designer.  We need to update our website so we can get our message out more effectively and to more people.  Oh yes, we have to  add a donation button to the website as well.  Could you see to that as well? 
  • A Cyber security expert.  Obviously, if we get a new website we need to make sure it is hacker resistant. Data security is so important these days.  We can’t afford to get our website hacked and held for ransom. 
  • A CPA.  Who can understand the PPP rules, not to mention that new lease accounting we have to figure out?  Maybe those guys at the FASB will leave us alone this year?  If they have any bright ideas about new accounting standards in 2022 we hope they keep them to themselves. 
  • A whole bunch of volunteers.  That includes the first four people on this list and a lot of others to help us carry out our mission this year.  
  • People willing to serve on our board.  We know these are far and few between. We also know this is a big time commitment for someone.   You have a pretty wide network of friends.  Perhaps you can convince some of them to donate their time and talent to help us out?  

Of course, you don’t have to drop them down the chimney.  They can knock on the front door and we will let them in. If you want though, could you leave us five gallons of hand sanitizer and wipes?  You can definitely leave those under the tree in the office. If that isn’t possible because of supply chain issues,  perhaps you can just leave a check to help us balance our budget this year? 

 Please kindly remember all of our volunteers,donors, employees,  clients, vendors and other stakeholders  this year as well.   We couldn’t have done it without them. A few of them might deserve coal in their stocking like the members of the FASB, but please overlook this. They have had a tough year too.  On second thought, perhaps the FASB board members do deserve coal in their stocking for that lease accounting decision they made last month. We’ll leave that up to you.  

 Santa, if it is not too much to ask, can you please bring an end to this Pandemic?  We keep hearing about the “new normal”.  However, the “old normal” was difficult enough for all of our clients and us.  This new world is really putting a strain on the delivery of services to those who are most in need of them. Perhaps you can put a vaccine that works on all mutations of the COVID virus in our stockings?  We know this sounds magical, but we also know you use magic to carry all of those presents in your sleigh.

Finally Santa, we are sad to tell you that there will be no milk and cookies for you tonight.  The Governor won’t let anyone eat or drink in the office.  Unfortunately, that includes you.  When you drop in tonight, you have to wear a mask in the office as well.  By the way, are you vaccinated? 

Have a wonderful and restful Christmas Santa.  We hope Mrs. Klaus, the elves, and you all have a great New Year as well.  

Very truly yours,

The Board and Management

Any NFP Organization

PS.  Don’t forget to get the elves vaccinated if there are more than 100 of them! We don’t want OSHA coming after you. 

Mark Koscinski NFP, Uncategorized

Who is the New Grinch This Christmas?

The Financial Accounting Standards Board (FASB) recently delivered an unwelcome holiday season body blow to the NFP world (and privately owned companies as well). 
Working hard to earn the title of Grinch, the FASB  decided on November 10 not to defer the new lease accounting standard for a third time.  The previous justifiable deferrals of the original implementation date were caused by the Pandemic, as many organizations were shut down or forced to adapt to their new reality. 

The new lease accounting will take effect for fiscal years beginning after December 15, 2021, and for interim fiscal periods beginning one year later. This standard requires all lease obligations to be recognized on the balance sheet of the organization, with only minor exceptions. Management could be in for some surprises  as bank loan covenants might be impacted because of the new debt on the balance sheet.  Additionally, an NFP organization will need to not only implement the lease accounting for future years but also to retroactively recalculate the impact of the new accounting for prior  years. This is required even if the NFP decides to adopt a “cumulative change” approach to implementation.  In short, NFPs shouldn’t underestimate the amount of work involved in this effort. Many organizations have already found the implementation more difficult than they originally anticipated. 

To say I disagree with the Grinch’s action is to put it mildly.  Many NFP organizations have been operating on a shoestring budget for extended periods of time, not to mention the fact the job market for accountants is extremely tight.  This means just finding the bodies to do the work is a difficult proposition. Mercifully, many NFP organizations have fiscal years such as June 30, giving them some more time to complete the required work. Nevertheless, it is imperative to begin working on this project as soon as possible so the delivery of financial statements to donors and other stakeholders is not delayed.  

Perhaps the FASB should adopt green as its new official color?