Federal Internal Control Standards – the Green Book Is Released

/in /by

Standards for Internal Control in the Federal Government has been issued by the Comptroller General. What color is it? Green! Why should you care? Because the new rules for Uniform Grant Guidance say that you must have internal controls over administration of federal awards and they should be compliant with COSO or this publication.

The Green Book is manageable in length, under 70 pages of content with some clear illustrations, a concise list of the components and principles of internal control, and an appendix that lists the principles that should be followed.

More importantly, it is not dramatically different from the COSO standards that you are probably already familiar with. The 5 components of internal control (control environment, risk assessment, control activities, information and communication, and monitoring) are the same as COSO.

Internal controls are critically important in nonprofits, and documentation of your controls is a must for organizations receiving federal and other funding, so familiarity with this new guidance is valuable.

Google “standards for internal control in the federal government” or Use the links in our website.

Volunteers’ out-of-pocket expenses for charity

/in /by

Volunteers who provide services to charities and have unreimbursed out-of-pocket expenses are generally able to include them as personal itemized deductions.

Individuals must have records to support the amount of their expenses and, if any of the expense categories exceeds $250, the individual must get an acknowledgment from the charity that describes the services provided, states whether and the extent to which expenses have been reimbursed, and a include statement that no benefits were received in return. This acknowledgment must be received before the due date of the volunteer’s tax return for that year.

As an example, if an individual purchases a plane ticket costing over $250, to provide services under the supervision of a charitable organization, they will need a receipt for the ticket to prove the expense and a statement from the charity about the services that were performed and information about any reimbursement or goods or services received in return.

IRS and the Tax Courts have been disallowing contributions when acknowledgments are not received or not timely so this is important.

Dashboard Reporting for Nonprofits

/in /by

As CPAs who are very focused on good controls, we advocate for complete reports directly from your accounting system to your board and finance committee, but we also understand the value of financial highlights that can be found in a dashboard report.

Some people have the personality for a dashboard report “give me the big picture and let’s move on”. Some people just don’t like the detail and avoid it at all costs, and still others find dashboard information to be a very useful supplement and interpreter of more detailed information.

What should be in your dashboard? There are books on the topic, for example boardsource.org has a publication available in print and PDF versions called “The Nonprofit Dashboard: Using Metrics to Drive Mission Success”. They also have four member resource PDFs on dashboards.

Dashboards can address financial information, program activities and program service accomplishments.

What financial information is important to your organization? If cash is tight, cash account balances will be key. It will be useful to compare them to the prior month and, if your activity is seasonal, compare them to the same month one year ago.

Total income, total expenses, and year to date surplus or shortfall can be an important alert.

What about client statistics? The total number of clients you are currently serving and the first-time clients served this month.

If volunteers are a key part of your service delivery, what about the number of volunteers or volunteer hours?

Other significant events that occurred since the last report can be listed. Examples might include renewal of a large grant or approval of a new grant or program, or funding source that was discontinued.

One of the objectives of dashboard reports is to provide information so you can make adjustments before a problem arises. Like your car’s dashboard tells you gas is low, or you better slow down, your business dashboard should warn you about deficits, cash flow challenges, funding changes, or additional demands for service and support.

It’s healthy and can be fun to brainstorm about what key information will keep the organization and its board informed about the organization’s direction and progress.

Acknowledging Contributions -What to Say When You Get a Donation

/in /by

Say thank you. Also, you should also know that earlier this year IRS released an updated version of their publication 1771 “Charitable Contributions-Substantiation and Disclosure Requirements”. This publication contains useful information about recordkeeping requirements and the flexibility you have with required contribution acknowledgments.

The publication does confirm that donors need to obtain a written acknowledgment from the charity for any single contribution of $250 or more.

Your acknowledgment should include your name, the amount of cash contributions, or a description of non-cash contributions (not the value), and a statement that no goods or services were provided in return for the contribution. If goods or services were given in return, include a good-faith estimate of the value of what was given in return.

There are some exceptions to the requirement to list items given in return. For example, low cost items that have your name or logo, or items given in return which don’t exceed the lower of 2% of the contribution or $106, are considered insubstantial. Certain membership benefits such as discounts and admissions are excluded as well.

One of the most beneficial parts of the publication is examples of written acknowledgments. There is sample language for gifts when nothing is given in return, when something is given in return, and when non-cash contributions are received.