Novak Francella – Resources – Articles

On August 20, 2018 the FASB issued and Auditing Standard Update on "Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans". Please follow this link for our briefing. Briefing Please contact us for additional information

It's the start of a new year. Are your filing cabinets so full that you cannot file any new documents? If you answered yes, continue reading ... Full article Please contact us for additional information

What's the first thing you should think about when looking at an audited financial statement for an employee benefit plan? If you answered audit quality, you are correct... Full article Please contact us for additional information

How organized are you? Do you have a compliance calendar? Do you know where to look to see your due dates for tax filings? How organized is your Microsoft Outlook calendar? These are all questions you should ask yourself if you are a plan administrator ... Full article Please contact us for additional information

Online shopping enables consumers to buy almost anything from the convenience of their own homes. But comfortable surroundings can lull online shoppers into a false sense of security. You wouldn’t leave your wallet unattended in a busy shopping mall or enter a sketchy-looking shop, yet you may be taking similar risks on the Internet. One of the biggest risks is shopping on fraudulent sites or making purchases from crooked marketplace sellers who have no intention of shipping the goods you’ve paid for. Here are three suggestions for protecting yourself: 1. Use feedback features. When shopping in online marketplaces such as eBay or Amazon, pay close attention to ratings and comments provided by previous customers about individual sellers. Bear in mind, however, that some online review platforms allow sellers to request the removal of negative reviews. And while reputable marketplaces and review sites do their best to block fake reviews, it’s possible for sellers to boost their pro

Do you prepare internal financial statements for your board of directors on a monthly, quarterly or other periodic basis? Later, at year end, do your auditors always propose adjustments? What’s going on? Most likely, the differences are due to cash basis vs. accrual basis financial statements, as well as reasonable estimates proposed by your auditors during the year end audit. Simplicity of cash Under cash basis accounting, you recognize income when you receive payments and you recognize expenses when you pay them. The cash “ins” and “outs” are totaled by your accounting software to produce the internal financial statements and trial balance you use to prepare periodic statements. Cash basis financial statements are useful because they’re quick and easy to prepare and they can alert you to any immediate cash flow problems. The simplicity of this accounting method comes at a price, however: Accounts receivable (income you’re owed but haven’t yet received, such as pledges) and a

Auctions have long been lucrative fundraising events for not-for-profits. But these events come with some tax compliance responsibilities. Acknowledging item donations If you auction off merchandise or services donated to your charity, you should provide written acknowledgments to the donors of the auctioned items valued at $250 or more. You won’t incur a penalty for failing to acknowledge the donation, but the donor can’t claim a deduction without substantiation, which could hurt your ability to obtain donations in the future. Written statements should include your organization’s name and a description — but not the value — of the donated item. (It’s the donor’s responsibility to substantiate the donated auction item’s value.) Also indicate the value of any goods or services provided to the donor in return. Other rules Donors of services or the use of property may be surprised to learn that their donations aren’t tax-deductible. Alert these donors before they make their p

Many employers sponsor 401(k) plans to help employees save for retirement. But sometimes those employees need access to plan funds well before they retire. In such cases, if the plan allows it, participants can make a hardship withdrawal. If your organization sponsors a 401(k) with this option, you should know that there are important changes on the way next year. What will be different Right now, 401(k) hardship withdrawals are limited to only funds an employee has contributed, and the employee must first take out a plan loan from the account. The employee also cannot participate in the plan for six months after a hardship withdrawal. However, important changes take effect in 2019 under the Bipartisan Budget Act of 2018 (BBA). First, employees’ withdrawal limits will include not only their own contributed amounts, but also accumulated employer matching contributions plus earnings on contributions. If an employee has been participating in your 401(k) for several years, this

Your not-for-profit’s board of directors meetings don’t always need to be performed up-close and personal in the same room. Many organizations hold virtual board meetings via phone and with Web-based applications. Participation may improve It can be difficult to secure full board meeting attendance, but going virtual might allow members to attend meetings they otherwise couldn’t. And virtual attendance can make board participation more attractive to potential members. Knowing they won’t be expected to show up in person at every meeting may make busy candidates more likely to commit their time. Of course, virtual meetings aren’t without obstacles. In teleconferences, participants won’t be able to read each other’s facial expressions and body language. Even in videoconferences, participants may be unable to observe these cues as easily as they could in person. This can potentially lead to misunderstandings or conflicts. The chair might find it difficult to shepherd discussion,

How efficient is your not-for-profit? Even tightly run organizations can use some improvement — particularly in the accounting area. Adopting the following six tips can help improve timeliness and accuracy. 1. Set cutoff policies. Create policies for the monthly cutoff of invoicing and recording expenses — and adhere to them. For example, require all invoices to be submitted to the accounting department by the end of each month. Too many adjustments — or waiting for different employees or departments to turn in invoices and expense reports — waste time and can delay the production of financial statements. 2. Reconcile accounts monthly. You may be able to save considerable time at the end of the year by reconciling your bank accounts shortly after the end of each month. It’s easier to correct errors when you catch them early. Also reconcile accounts payable and accounts receivable data to your statements of financial position. 3. Batch items to process. Don’t enter only one inv

Auditors examining a not-for-profit’s financial statements spend considerable time on the revenue figures. They look at the accounting methods used to record revenues and perform a detailed income analysis. You can use the same techniques to increase your understanding of your organization’s revenue profile. In particular, consider: Individual contributions. Compare the donation dollars raised to past years to pinpoint trends. For example, have individual contributions been increasing over the past five years? What campaigns have you implemented during that period? You might go beyond the totals and determine if the number of major donors has grown. Also estimate what portion of contributions is restricted. If a large percentage of donations are tied up in restricted funds, you might want to re-evaluate your gift acceptance policy or fundraising materials. Grants. Grants can vary dramatically in size and purpose ― from covering operational costs, to launching a program, to f

Not-for-profits use special events to raise large amounts in a short period of time. Most often, the donor receives a direct benefit from the event — such as dinner or participation in a gaming activity. But special events don’t always meet their fundraising goals. In fact, organizations can lose money on them. Following these steps can help boost your event’s potential and enable you to decide whether to hold it again in the future. Step 1: Make a budget Planning and holding a successful event is a process that should start with a budget. Estimate what you anticipate revenue to be. If costs are likely to be greater than revenue, consider forgoing the event. Of course, you can also come up with a less costly event or look for sponsors to help defray expenses. Step 2: Develop a marketing plan Determine the target audience for your event and the best way to reach that audience. For example, bingo nights are often popular with seniors. And they may be more likely to read about

If you suspect an employee of fraud, you’ll want to enlist the help of financial and legal advisors to handle the bulk of the investigation. Ahead of their arrival, however, you may need to perform interviews to help resolve any doubts and obtain information before memories fade. Prepare for the pros In advance of requesting any meetings, decide what information you’re looking for. Knowing what you want helps you get to the truth of the matter quickly and avoid getting sidetracked by extraneous information. Then identify who’s best able to supply that information. Say, for example, you suspect an accounts receivable employee of siphoning money. You may want to talk to that person’s supervisor and a member of your IT department to get information on work habits, unusual behavior or signs of file tampering. Remember, though, that people may be reluctant to share information if they feel it reflects poorly on them or if it might land someone else in hot water. Just the facts, p