Some recent tweets that came across the @cnybj Twitter feed, offering various small business, tech, HR, and career tips.

Katie Mazzocco @FSProductivity
Do quick “side trips” to social media, videos or games cause you to lose track of your day, #entrepreneur? Here’s my solution to get back the time lost in your #smallbiz. > http://bit.ly/2LBAo8A

PrestigeBizCoach — Coaching For Small Businesses @RobertViney|
Keep Improving Your Business By Learning How To Run It Better. The best in business do that. Copy their ways … To boost your success.

Fundbox @fundbox
While traditional @SBAgov #loans can take as long as two or three months to finalize, the SBA designed their SBA Express loan program to provide much faster funding to small business owners in a pinch: https://fbx.bz/2OhnTFj #SMB

NFIB @NFIB
The #SmallBiz economy has seen 45-year record highs in job openings, hiring plans, job creation, and compensation increases in 2018. See more from our latest Small Business Economic Trends report: https://www.nfib.com/surveys/small-business-economic-trends/

World Economic Forum @wef
This is how #AI can help you make sense of the world https://wef.ch/2IcGkDb

Kristen Poborsky @KristenPoborsky
How to Optimize Your Blog Post in 10 Minutes or Less #SEO #SEOTips http://bit.ly/2odumzT

Seotomation @seotomation
Top 12 Link Building Mistakes In-House SEOs Make & How to Avoid Them by @brentcsutoras via http://searchenginejournal.com — http://amp.gs/hXnZ

Paychex @Paychex
When the many #HR demands fall on the shoulders of one person, what can be done to alleviate the burden? These resources may help during challenging times. http://spr.ly/6011DfakH

Jayden Kim @JaydenKim_JK
“The old days of HR are over. Today onward we need to revolutionize and the best people who can do this are HR punks.” https://www.forbes.com/sites/sap/2018/10/10/how-punk-rock-can-revitalize-human-resources/#468a207e9267

Mark C. Crowley @MarkCCrowley
I want to challenge the notion that we need to make our workplaces more “human.” We don’t. What we need instead is to create workplaces where both the #leadership & culture is “humane.” It might sound like a quibble, but humane means respectful, considerate, caring, & kind.

VETS_DOL @VETS_DOL
Job creators: Get the latest updates on the #HireVets Medallion Program at https://www.HireVets.gov

6C Dialer @6cdialer
#HR #chatbots are changing the way routine HR processes and functions are done. They are making HR more efficient and agile; let’s understand how. https://buff.ly/2yhui9p

Hannah Morgan @careersherpa
6 Things Every New Job Seeker Needs To Know https://buff.ly/2w6QBxB #newjobsearch

What She Said! @WhatSheSaidTalk
Changing #careers is exciting but also frightening – there is no right answer but @MeridianCU’s @dilysdcruz has points for us to think about – https://www.facebook.com/WhatSheSaidTalk/videos/2181996862076146 …

In my world, the transition from summer to fall always seems to prompt a renewed focus on what will be different for our tax-exempt organization clients as the majority of them approach their financial reporting at year-end on Dec. 31. Calendar 2018 represents the initial implementation date for the most comprehensive reform of not-for-profit financial-reporting requirements in several decades. 

When it comes to tax-exempt financial-reporting requirements, my partner and colleague, Mario Urso, is the most knowledgeable subject-matter expert that I have worked with for close to 40 years. With respect to the complexity and changes of the new financial-reporting requirements, Mario’s expertise is something that I wanted to share in this column. Accordingly, the discussion that follows represents Mario’s concise summary of these financial-reporting changes. As you will read below, these requirements have been known for some time, but your nonprofit organization needs to confirm that it has made appropriate financial-reporting modifications to comply with the promulgated changes. Please pay close attention to what follows and the related impact on your 2018 audited financial statements.

Mario Urso

“It is hard to believe the time has gone by so quickly in my professional career. It seems like only yesterday I was reading FASB (Financial Accounting Standards Board) Statements No. 116 and 117. These statements, which were issued in the early 1990s, set forth the accounting and reporting requirements for contributions received and contributions made and the requirements for financial statements of not-for-profit organizations, respectively. As a result of these two standards, the accounting and reporting by all not-for-profit organizations was fundamentally altered from the era of fund accounting to an accounting and financial reporting model based on the existence or absence of donor-imposed restrictions. It is still hard to believe the accounting and reporting landscape for not-for-profit organizations was radically changed by two standards that contained only 30 and 31 paragraphs, respectively.

“Fast forward to 2016 and the issuance on Aug. 16, 2016, of Accounting Standards Update 2016-14 Not-for-Profit Financial Statements. This ‘update’ to the not-for-profit reporting standards consists of 233 pages of information, with the stated goal to ‘improve the current net asset classification requirements and the information presented in financial statements and notes about a not-for-profit (NFP) entity’s liquidity, financial performance, and cash flows.’ The FASB’s Not-for-Profit Advisory Committee (NAC) and other stakeholders indicated that existing standards for financial statements of NFPs are sound but could be improved to provide more useful information to donors, grantors, creditors, and other users of financial statements.

“Significant elements of the new accounting standard include the following items:

1. The requirement for NFP organizations to report on the face of the statement of financial position (balance sheet) using two net asset classifications; i.e., with and without donor restrictions, as opposed to the existing requirement to report using three net asset classifications; i.e., unrestricted, temporarily restricted and permanently restricted.

2. Reporting on the face of the statement of activities the change in net assets using the same two categories as the statement of financial position.

3. Removal of the requirement, if preparing the statement of cash flows using the direct method, to reconcile the overall change in net assets to the net cash flow from operating activities.

4. A substantial increase in the footnote disclosures in NFP financial statements to include information about:

a. Amounts and purposes of governing-board designations, appropriations, and similar actions that result in self-imposed limits on the use of resources without donor-imposed restrictions as of the end of the period. 

b. Composition of net assets with donor restrictions at the end of the period and how the restrictions affect the use of resources.

c. Qualitative information that communicates how an NFP manages its liquid resources available to meet cash needs for general expenditures within one year of the balance sheet date.

d. Quantitative information, either on the face of the balance sheet or in the notes, and additional qualitative information in the notes as necessary, that communicates the availability of an NFP’s financial assets at the balance-sheet date to meet cash needs for general expenditures within one year of the balance sheet date. Availability of a financial asset may be affected by (1) its nature, (2) external limits imposed by donors, grantors, laws, and contracts with others, and (3) internal limits imposed by governing board decisions.

e. Analysis of expenses by both their natural classification and their functional classification. That analysis of expenses is to be provided in one location, which could be on the face of the statement of activities, as a separate statement, or in notes to financial statements.

f. Method(s) used to allocate costs among program and support functions.

g. Underwater endowment funds, which include required disclosures of (1) an NFP’s policy, and any actions taken during the period, concerning appropriation from underwater endowment funds, (2) the aggregate fair value of such funds, (3) the aggregate of the original gift amounts (or level required by donor or law) to be maintained, and (4) the aggregate amount by which funds are underwater (deficiencies), which are to be classified as part of net assets with donor restrictions. 

5. The requirement to report investment return net of external and direct internal investment expenses and the elimination of the requirement to disclose the amount of the netted expenses.

6. Use, in the absence of explicit donor stipulations, the placed-in-service approach for reporting expirations of restrictions on gifts of cash or other assets to be used to acquire or construct a long-lived asset and reclassify any amounts from net assets with donor restrictions to net assets without donor restrictions for such long-lived assets that have been placed in service as of the beginning of the period of adoption (thus eliminating the current option to release the donor-imposed restriction over the estimated useful life of the acquired asset).

“While the Accounting Standards Update (ASU) also lists as one of its objectives ‘…to reduce the complexities …’ of reporting by NFP organizations, I am not sure that this will be achieved. A number of the new disclosure requirements will result in the need for significant critical and analytical thinking as an NFP develops the necessary disclosures. Also, a number of areas of new disclosure focus on matters that have historically been outside the main target of financial reporting and disclosure.”

Gerald Archibald

Each tax-exempt organization needs to consider the impact of this new standard on its financial-reporting practices. Most organizations will need to develop new financial-reporting disclosures in order to comply with the ASU requirements. With the effective date of the ASU commencing with years beginning after Dec. 15, 2017, calendar 2018 will represent your first year for adopting these requirements. Your internal planning for its implementation requirements should be in process now.

Our firm, under Mario’s leadership, has developed an “ASU No. 2016-14 Playbook,” which I believe is the best and most thorough summary of the 233 pages of the promulgated standard. If you would like a PDF copy of the Playbook for purposes of assisting your efficient adoption of the ASU requirements, feel free to email me. 

Gerald J. Archibald, CPA, is a partner in charge of the management advisory services at the Bonadio Group. Contact him via email at garchibald@bonadio.com