Dan O'Shea, Member, Not-For-Profit

1. NFP Industry Update
2013 PrimeGlobal Business
2013 PrimeGlobal Business
Assurance Conference
Dan O’Shea, CPA
D O’Sh CPA
Daniel.Oshea@WatkinsMeegan.com

2. NFP Industry Update
NFP Industry Update
• Over the last 4 years NFP’s have changed the way
Over the last 4 years, NFP s have changed the way
they manage and report as a result of:
• The Recession
• Governance Practices (heavier focus on reporting)
• Competition in the Marketplace (For‐Profit and NFP)
• Continued Focus on Transparency and Accountability.
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• Fiscal Cliff Discussions on Charitable Deductions have
brought NFP s to the forefront.
brought NFP’s to the forefront
• Charity Watchdog Groups and Charity Efficiency
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Ratings Continue to Gain in Popularity .
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3. NFP Industry Update
NFP Industry Update
• External Influences on the NFP Industry
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• Government
– Cutbacks in Gov’t Funding (Federal, State and Local grants are cut)
– For‐profits have entered the arena and compete for same dollars.
– IRS 2012 2013 workplan indicates guidance coming on type III S.O. s, group returns,
IRS 2012‐2013 workplan indicates guidance coming on type III S O ’s group returns
charitable hospitals, and numerous items under IRC sections 170 & 509.
• Watchdog Groups and Charity Ratings
– Charity rating groups are more visible than in the past.
Charity rating groups are more visible than in the past.
– Ratings are influencing charities’ strategic and operational decisions.
– Charities in a Catch‐22 situation.
• Donors (Giving remains down; competition for $$ increases)
Donors (Giving remains down; competition for $$ increases)
• Membership (declines in m‐ship & member spending)
• Social Media
• FASB and AICPA
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4. NFP Industry Update
NFP Industry Update
• New Accounting Pronouncements
New Accounting Pronouncements
– ASU 2012‐05 Cash Flows ‐ Reporting Proceeds for
Donated Securities (effective date: Periods Beginning
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after June 15, 2013).
– ASU 2011‐04 Fair Value Measurement (effective date:
Periods Beginning after Dec 15, 2011). See AICPA White
Periods Beginning after Dec 15 2011) See AICPA White
Paper issued in late 2011.
– ASU 2011‐07 Presentation of Patient Care Revenue, ,
Provision for Bad Debts and the Allowance for Doubtful
Accounts for Certain Health Care Entities (effective date
for NFP s: Periods Ending after Dec. 15, 2012).
for NFP’s: Periods Ending after Dec 15 2012)
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5. NFP Industry Update
NFP Industry Update
• New Accounting Pronouncements continued
New Accounting Pronouncements continued…
– EITF Issue No. 12‐B NFP Contributed Personnel
Services Received From an Affiliate (Exposure Draft
Services Received From an Affiliate (Exposure Draft
Period Closed Nov 2012, expect final pronouncement
to be issued mid‐2013).
– FASB has 2 Projects on NFP Financial Reporting
• One addresses financial statements such as Statement of
Activities, net asset classification, and liquidity.
Activities net asset classification and liquidity
• One addresses other financial communications such as
MD&A, measures of operations, etc.
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6. NFP Industry Update
NFP Industry Update
• NFP Financial Reporting is Evolving and Improving
NFP Financial Reporting is Evolving and Improving
– Financial and Non‐Financial Data Analysis using dashboards,
metrics and benchmarks
– Setting up the right metrics
• What is important to NFP mgt?
• Identify the users and ask them
Id if h d k h
• NFP’s should rethink “What they need” vs. “What they get”
• Customize the metrics.
‐ Capturing the right data (Mapping)
‐ Using appropriate benchmarks and Peer Groups
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7. NFP Industry Update
NFP Industry Update
• Other NFP Evolving Issues
Other NFP Evolving Issues
• Concerns re: Insurability of Cash (no unlimited FDIC coverage)
• Search for Increased Investment Returns
– Attraction to Alternative Investments (Hedge Funds)
Attraction to Alternative Investments (Hedge Funds)
• Technology Issues Arising
– Systems and infrastructure have not been maintained
– PCI Compliance
PCI Compliance
– System Security
– Data security
– I/C’s keeping pace with technology (i e mobile payment
I/C’s keeping pace with technology (i.e., mobile payment
solutions)
– Business Continuity Plans
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8. NFP Industry Update
NFP Industry Update
• P di ti
Prediction: Change in Financial Reporting is Coming.
Ch i Fi i lR ti i C i
There will be more significant changes affecting NFP reporting
in the next 3 years than in the previous 15 20 years.
in the next 3 years than in the previous 15‐20 years.
• Leading NFP’s will be those that manage and adjust in
“Real‐time” with the ability to identify and react timely
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to trends in the marketplace and in their operations.
• Provides a great opportunity for advisory services.
• Q & A/Open Discussion
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