Don’t forget to file for your PPP loan forgiveness. A borrower can apply for forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used. Borrowers can apply for forgiveness any time up to the maturity date of the loan. If borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred and borrowers will begin making loan payments to their PPP lender.

Employers can retroactively file for credits for the 2020 year by amending previously filed 941’s for periods in which they qualify for the credit. The credit was also recently extended through December 31st, 2021.

The grant application portal is now open. To submit an application you can visit https://www.svograntportal.sba.gov/s/.

In September of 2020, the FASB (Financial Accounting Standard Board) issued a new pronouncement regarding the presentation of contributed nonfinancial assets in the financial statements. This came about in response to users of not-for-profit financials requesting that more transparency was needed regarding the types of non-financial gifts that organizations receive, how these gifts were being valued and what was their intended use. Prior to the issuance of this standard, there was only guidance requiring footnote disclosure for contributed services.

Annually, many organizations receive a substantial portion of their total contributions in the form of donated goods and services. They rely on these gifts in order to accomplish their mission. Oftentimes, however, the reader of the financials is not aware that the organization is receiving them. Examples of in-kind donations are stocks, fixed assets, materials, supplies, clothing, and contributed services. These in-kind gifts are typically included in the contribution line of the statement of activities and are not called out for the reader.

The standard is effective for fiscal years beginning after June 15, 2021, and must be done retrospectively.

Upon implementation, not-for-profit organizations will be required to show in-kind contributions as a separate line, apart from cash contributions, on the statement of activities. There will also be additional footnote disclosure required for each category of in-kind gifts that includes the following:

This standard does not affect the amount or timing of the recognition of in-kind donations, only their presentation in the financial statements.

If you have any questions in regards to how the standard will impact your organization, please contact your Hawkins Ash CPAs representative.

With the implementation of FASB Accounting Standards Update 2016-14 several years ago many organizations were introduced to the concept of functional expense reporting. Now that we are a few years out from implementation, it is helpful to take a look back at the concepts and ensure your organization is properly reporting your functional expenses.

According to FASB 958-720-45, functional expenses are broken up into the following main categories:

Most organizations accounting systems will track expenses by their natural classification but many are not set up to report into the three categories described above, therefore, allocations are often utilized to report costs for functional expense reporting purposes.

Some common expenses that need to be allocated are salaries/wages, benefits, occupancy costs including rent, utilities, insurance, repairs and maintenance and deprecation. There are a few different methodologies you can use to allocate costs. One methodology is based on employee time which may require a time study. Time studies can be as elaborate as having each individual track their time daily through a time management system or hiring an outside contractor to conduct a time study for each functional category. Less elaborate time studies can be as simple as picking a “representative” one week to one month in the year and having each employee track their time daily to each functional category. A “representative” period of time is one that is similar to what is done year-round. A common method for allocating expenses pertaining to space/occupancy would be to allocate based on square footage.

The key is to ensure you document the methodologies that you use and that there is some basis behind your methodologies. You should also review your cost allocation plan annually at a minimum.

A recent article published by the AICPA Center for Plain English details some common areas of noncompliance in not-for-profit functional expense reporting. These common errors include the following:

The overall intention of functional expense reporting is to help donors, creditors, and other users of your financial statements see your NFP’s service efforts and how you are utilizing your resources. It is important that expenses are reported properly so the users of your financial statements are able to reach reasonable and useable conclusions.

If you have other questions regarding the functional expense reporting requirements, please contact your Hawkins Ash CPAs representative.

The pandemic has brought many changes to nonprofit organizations, including changes in operations, reduced funding from traditional revenue streams, and perhaps, new funding from various Federal programs.

While the assistance from various federal programs is helpful in maintaining services, there may be some additional reporting requirements, including the potential for a single audit under Uniform Guidance requirements. The general rule is if an organization expends at least $750,000 in federal funding (either directly or indirectly through state or local agencies), a single audit is required.

If you are in need of assistance in determining whether your organization requires a single audit, please contact your Hawkins Ash nonprofit representative.

A: When I started, I thought I needed to be the “expert” at everything programs, accounting, board governance, advocacy…the whole list. I’ve since learned especially as we’ve grown over the years, that my job isn’t to know everything, but it is to cascade leadership throughout the organization. Collectively we get a lot more done this way!

A: Our team is extraordinary. I am incredibly fortunate to be surrounded by so many dedicated and selfless people who show up every day wanting to do whatever it takes to make a difference in kids’ lives.

A: Our biggest accomplishment is figuring out how to measure and track the complicated and multi-faceted work we do so we know we’re having the outcomes we’ve set out to achieve.