OMB Proposed Uniform Guidance

Hello everyone, welcome back!

Today we’ll be discussing the Proposed OMB Uniform Guidance: Cost Principles, Audit, and Administrative Requirements for Federal Awards, more specifically changes to OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Wow, that’s quite a mouthful; see if you can say it 5 times fast!

The most important and impactful proposed change is to the limit for requiring a single audit, currently, if you expend $500,000 or more of federal funds than you are required to undergo an A-133 audit, however, there is good news for some of you. That threshold is proposed to be increased to $750,000! What this means for some of you is that the current scope of your audit will be lessoned. This change is only for the A-133 portion of your audit and does not affect other requirements imposed by other municipalities or organizations. Therefore, if you fall under $750,000 in federal expenditures you may not need to read further, however, you may want to in case this part of the proposed changes is not fulfilled.

Another proposed change in the above referenced guidance would be to increase the threshold between Type A/B programs from $300,000 to $500,000. As those of you whom have Type A know, these programs must be audited every three years as they are considered normal risk the third year after their last audit regardless of prior findings. This means that for some of you your Type A programs may be decreased or even eliminated, which may decrease the scope of you’re A-133 audits!

In addition they are considering other changes to a Type A program being labeled normal risk. Some of these are: questionable costs above 5% of the total expenses for the program, a material weakness found in the internal controls, or a failure to achieve an unqualified auditor’s opinion in its last audit.

Furthermore, they are proposing changes to the Percentage of Coverage decreasing the 50% for normal organizations to 40% and the 25% for low-risk to 20%. This means we, as auditors, may not have to test as many programs.

The proposal also includes changes to who may be deemed low-risk versus normal. The criteria for low-risk would now include the auditor’s findings regarding going concern of the organization and the timely submission of data collection forms. This proposal may help some of you to drop from normal to low-risk, again reducing the scope of your A-133 audit.

Finally, remember that all of the above are simply proposals and will not affect anyone until they are made official! Check back with us in the future for further information.

Until next time!

All labor that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence,” Rev. Dr. Martin Luther King, Jr.


BBB Wise Giving Alliance

Hello everybody! Welcome to Heveron & Heveron, CPA’s first blog! We have created this section to keep you, our clients, as up to date on the issues that affect you as possible. In this entry we will be discussing new BBB Wise Giving Alliance’s issued Standards for Charity Accountability.

The BBB Wise Giving Alliance, with the help of experts in the non-for-profit world, has focused on four main issues with respect to accountability; Governance and Oversight; Measuring Effectiveness; Finances; and Fundraising. As far as Governance and Oversight is concerned, the BBB Wise Giving Alliance would like to see all non-for-profit Boards to meet at least 3 times per year and be comprised of 5 members or more. Only 1 member of the Board should be receiving compensation from the organization, (no more than 10% for larger boards) and no other members of the board should receive compensation even as independent contractors. What this means for you is that all but 1 (or 10%) of the voting members of the board should be volunteers. However, non-voting members can be compensated from the organization, for instance, if you are a school and have teacher representatives on the board, whom are compensated, but do not have voting powers, this is alright as long as they are not involved in any discussion related to compensation of employees.

In the second area, Measuring Effectiveness, they note that all charitable organizations should be examining their performance and effectiveness at least every other year to determine what is working, what isn’t working and what needs to be worked on.

Thirdly, Finances, the BBB Wise Giving Alliance states that an organization’s net assets should not be more than 3 times their currently budgeted expenses or, for those without a budget, 3 times of the prior year’s expenses. For those of you lucky enough to have that much funding think about purchasing new equipment, upgrading facilities, or maybe even expanding your services!

Lastly, Fund Raising, the BBB Wise Giving Alliance wants you to assure your donors that they are donating to a worthy organization, that their funds are being spent wisely and that their privacy is being upheld. What this means is that your fund raising solicitations should include an accurate description of what your organization does, who you are and where their money is going. Think about including a reference on your solicitations or invitations that would direct the potential donor to a place where they can get an accurate accounting of your mission statement, program accomplishments, finances, and board list. Does this sound familiar to anyone? All of this information is on your organizations 990EZ or 990! For all of you located in New York State you could simply list or on your solicitations. This will direct your potential donors to a website that can provide them with a copy of your past 990s and financial statements! For those not in New York you could list or have copies available at your main office upon request. As far as donor privacy, please keep your donor information confidential and remember to remove those Schedule B’s before you hand out your 990s!

Until next time!