Staying on top of key industry trends and resources is critical to ensuring that we can continue to help deliver valuable services to our not-for-profit clients. Last week, Holtzman’s Not-for-Profit team attended “Moving Forward in 2021,” the Association of International Certified Professional Accountants (AICPA) Not-for-Profit Industry Virtual Conference.
During the week of interactive sessions, our team had an opportunity to hear firsthand from the best and the brightest thought leaders and subject matter experts in the nonprofit industry and get a big-picture view of all things not-for-profit accounting.
Here are a few key takeaways:
- COVID-related federal government funding has significantly increased the number of organizations and commercial entities subject to federal compliance audits (“single audits”). For example, 5,000 organizations and commercial entities are newly subject to single audits requirements due to receiving funds under the Provider Relief Fund program that provided financial support to hospitals and health care providers.
- New single auditees need skills, knowledge, and experience to maintain independence from their auditors. If an organization received Provider Relief Funds or other COVID-funding and has never been subject to a single audit, the organization may need to hire personnel with experience and knowledge related to single audits and federal grant funding.
- COVID has created funding challenges for not-for-profit organizations, especially museums and performing arts organizations. Organizations may be able to access or borrow from endowments to support current operations. The organization most likely will need to get permission from the donor to access the endowed funds. Organizations should engage legal counsel when making endowment decisions to ensure that the Uniform Prudent Management of Institutional Funds Act (UPMIFA) is followed.
- All organizations need to consider what changes to internal controls will be needed as their workforce potentially transitions to a hybrid (remote and in-office) work model.
- Many lessees received free rent due to the pandemic. Not-for-profit organizations need to evaluate to what extent the free or discounted rent received was a contribution because the organization is a charity. Discounts that are contributions would be recorded as contribution revenue.
- Single Audit Considerations for Not for Profits
- How to Prepare for Your First Not for Profit Financial Audit
- Don’t Forget About Money, People, & Reputation During the Pandemic: Risk Management for Nonprofits
- The Benefits of Outsourced Accounting for Nonprofits
- How to Prepare for an Audit: Your Ultimate Guide
- Audit vs. Review vs. Compilation: What’s the Difference?
- A First-Time Audit Timeline