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Meeting Evolving Nonprofit Regulations and Standards in 2015JACQUELINE TISOCEO, JMT Consulting Group

JOAN BENSONSr. Nonprofit Marketing Manager

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Introductions

JOAN BENSONNonprofit Industry Expert, Intacct

JACKI TISOCEO, JMT Consulting Group

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95% Customer Satisfaction

Nonprofit Organizations Rely On Intacct

Real Value

8,500+Growth Companies

55,000+Business Entities

Growing withIntacct

FOUNDATION

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Built for Success

Choice of accounting experts worldwide

Top workplace 4th year in a row

10+ year track record of delivering results

Industry awards 25 Best

Small Biz Apps

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Nonprofit Overview

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Accounting Rules CHANGING?

Replace current 3 net-asset classifications down to two– Without donor-imposed restrictions (or unrestricted)– With donor-imposed restrictions

• Retain requirement to track & disclose type • Describe how & when funds can be used

– Board designated – must disclose amount & purpose

Capital-like transactions– Gifts of long-lived assets with no donor restriction– Cash gift restricted for purchase of long-lived assets

Board designations, appropriations, and similar transfers

Continued tightening of NFP Note Disclosures – Salary & benefits expense– Allocations– Tax exempt status

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NY Nonprofit Revitalization Act

Signed into law December 2013 and became effective July 1, 2014.– All charities must have a conflict-of-interest policy.

– Charities with support and revenue over $1,000,000 and 20 employees or more need to adopt a whistleblower protection policy. Several good examples are available online.

– Charities with over $500,000 must have an audit committee that hires auditors and oversees the audit. In addition, charities with over $1,000,000 must have a committee that interacts with auditors including planning the audit and reviewing audit results.

– Employees are prohibited from serving as board chair or a similar position.

– No employee may participate in the deliberations or voting about their own compensation.

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Uniform Grant Guidance

Effective for new awards, and increases to current awards, starting December 26, 2014

The key areas you need to be aware of are: – Internal controls over federal awards – New rules for time and effort reporting – Procedures for indirect costs – Procurement requirements (AKA buying stuff),– Sub recipient monitoring if you pass any of your federal money on to other agencies

Key things that you need to do (if you haven’t already): – Adopt the policies to comply with the new rules – Identify who will be responsible for compliance with these rules– Train responsible staff in these new rules – Consider applying for an indirect cost rate or elect a 10% rate to increase what you get paid

or decrease your documentation requirements

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Polling Question #1

Have you started planning or implemented changes in your organization to meet the new requirements?

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“A good hockey player plays where the puck is. A great hockey player plays

where the puck is going.” --Wayne Gretzky

Where is The Sector MOVING?

Outcome measures (accountability and transparency) Higher expectations of donors and funders Data driven performance management Fidelity to evidence-based models More competition for funds Data driven fundraising

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Where is The Sector MOVING?

It will become more and more about data.

Government funding has increased compliance reporting and performance expectations

Pay for performance, performance-based contracting and privatization of public sector services

Entrepreneurial modeling for nonprofits (diversify, scale) Data visualization (Dashboards) Non-financial reporting System integration

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What?

So What?

Now what?

Perpetual Performance Improvement

What data do we have? What do we know?

So what does this mean to us?

Now what are we going to do with this

information?

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WHAT DO YOU NEED TO DO?

Dashboard visibility – Dollars and Statistical

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Design and Implementation

Preparation and fair representation

Free from material misstatement, whether due to fraud or error

Your Organization’s Management isUltimately Responsible!

Management is responsible for the preparation and fair representation of its financial statements, including:

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Financial Operational

Ad-HocManagementRegulatory

Summary Intermediate Transaction

Vendor Project Offerings and more…

Performance Measures

Stakeholder Needs

Granularity

Business Drivers

Basis / BooksCash Accrual

Your Financial Management Solution Needs to Address Multiple Needs

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“Telling the Story”

Donors are very interested in what an NFP does, and how effective it is. The best evidence of this is for nonprofits to expand the story of the organization in the financial statements.

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System Benefits

Organizational Impact

Fraud Risk

Manually intensive processes

Limited operational visibility

Lack of compliance

Strong internal controls

Automated processes

Improved audit & compliance

Nonprofit Accounting and Compliance Challenges

Lack of true fund accounting Weak internal controls Cash flow management Budgeting and planning Manual, offline reporting Volunteers/part-time staff Complex allocations Lengthy close process Heavy dependency on Excel Redundant, manual processes

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Polling Question #2

Are you confident that you have the system(s) you need to manage and meet compliance requirements?

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Lack of Visibility

Challenges of Financial Management Systems

Inefficient manual processes Dependence on spreadsheets High system costs Resource constraints

Changing workflows Growing company needs Multiple locations / currencies

Data silos–cumbersome reconciliation

Lack of access to real time data Limited reporting / analysis

Low Productivity

Limited Internal Controls

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Today’s Systems Need To Do More…

Full audit trail of any access & activity

Workflow automation with approvals

Document management attached to every transaction

Automated, “smart” events, such as notifications of changes to master records

Proper documentation reinforces internal

controls & drives audit trail quality

Visibility to metrics, measurements & evaluation is key

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Liquidity and Financial Health

There is general agreement that liquidity information is both important, and not as clear as it could be under current GAAP

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Improve Reporting on Financial Performance

The NAC focused on reporting, paying particular attention to the statement of activities and statement of cash flows. NAC agreed that there was room to improve the reporting of finance performance.

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Reporting Requirements Should Be Met Directly From Your Accounting Software

FAS 116

FAS 117

Segregation and auditing of uses and sources of funds

501(c)(3) charitable vs. non-exempt activities

IRS Forms 990, etc.

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The Dangers of Reporting by Spreadsheets

Spreadsheet Pro’s Spreadsheet Con’s

Robust Incredibly fragile: No way to trace where your data comes from No audit trail (so you can overtype numbers and not know it) No easy way to test validation

Easy to create Created by who and how: No documentation No methodology

Easy to change Lots of data manipulation: Manual data entry from various sources Manual copy and paste Manual formulas (often with errors)

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Functionality to Eliminate Spreadsheet Use

Nonprofit-specific financial and effort reporting directly from the system (no reformatting)

Have a chart of accounts that exactly matches your operational and financial reporting requirements

Automate nonprofit-specific functions typically done manually:

– Allocations

– Budgeting

– Purchasing

– Reconciliations

– Planning and projections

Look at your systems and determine what you need

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Polling Question #3

Are you using spreadsheets for reporting to senior management, board, funders, &/or program directors?

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Why JMT Recommends the Cloud

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Workflow, Triggers, and Logic

Design custom workflow processes, including state, actions, and sequence

Add Triggers to automate actions– Update fields– Create new records– Send emails– Create documents– Call external Web Services– Invoke an API– Plus five more trigger types

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New Technology Eliminates Out-dated Accounting Designs

The “13th Period”User defined books!

GL SegmentsDimensions!

Account TypesAccount groups, flexible reporting (think pivot tables)

The GL is only for GAAPBookings, encumbrances, grant management fields

The GL is only for $$Statistical accounts!

GL Reporting is only on GL Accounts

Report on any field, including AP, AR, etc. & custom fields

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YOUR SOFTWARE

NEEDS TO DO MORE!

Dashboard visibility – Dollars and Statistical

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Clear Visibility is Vital

Real-time, consistent information

Role-based dashboards Management by KPI’s 24x7 accessibility by all

stakeholders

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Employee and Volunteer Time and Expense

You should be able to clearly demonstrate management and oversight of your staff and volunteer time & expenses, capturing time and expenses by program, project, department, etc., flowing directly to your financials.

Benefits include: Ability to track cash

commitments in real-time

Speed reimbursement and manage approvals

Complete visibility into usage of funds rightthrough your financials

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Workflow Approvals and Controls

Benefits include: Safely engage all employees and volunteers Real-time visibility and control Ensures compliance Comprehensive audit trails reduce risk

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Best in Class Financials

AICPA preferred

CRM Budgetingand

Planning

PayrollSales TaxFixedAssets

Best in Class Financials

AICPA preferred

CRM Budgetingand

Planning

PayrollSales TaxFixedAssetsCRM Budgeting

andPlanning

PayrollSales TaxFixedAssets

Best-in-Class Financials

AICPA preferred

Your system should provide:

Streamlined operations Automated reporting Full audit trail Workflow approvals Document management Real-time visibility

In Summary

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Questions?

www.intacct.com | info@intacct.com | 877-437-7765FOR MORE INFORMATION:

Jacqueline Tisojtiso@jmtconsulting.com

CONTACT OUR GUEST SPEAKER:

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Interested in Learning More?

Try Intacct with a free 30-day trialhttp://www.intacct.com/trial

Download a white paperWhy Cloud Makes Sense for Nonprofits

Attend an upcoming webinarhttp://www.intacct.com/webinars

Follow us on Twitter@intacct_corp

Connect with us on Facebookhttp://www.facebook.com/Intacct

Contact us directly info@intacct.com | 877-437-7765

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Thank you!

www.intacct.com | info@intacct.com | 877-437-7765FOR MORE INFORMATION:

Jacqueline Tisojtiso@jmtconsulting.com

CONTACT OUR GUEST SPEAKER: