February 2011

Blackman Kallick’s Accounting and Auditing Update

 On January 24, 2011, Blackman Kallick’s Not-for-Profit professionals hosted a seminar to discuss new accounting and auditing standards that will affect not-for-profit organizations. The seminar discussed a variety of topics including the Affordable Care Act, new exposure drafts, fair value measurements, and accounting for endowments. 

Brian Whitlock, tax partner, started off the session with a summary of the Affordable Care Act. He reviewed the different mandates for providers, insurance companies, employers, and individuals. When covering the employer mandate, he discussed new expanded 1099 reporting requirements effective for 2012 and the reasoning behind them. He also discussed the changes that would occur in 2014 regarding the employer minimum coverage required and the penalties involved with not following the mandates. He also covered the Small Business Tax Credit available for certain employers meeting the small-business criteria. He finished off with a few take-away actions:

1. Evaluate the effect of the changes on your current group health coverage
2. Address cost and compliance issues
3. Consider keeping grandfathered plans 

Clifford Shapiro, audit partner, then discussed the new exposure drafts on leases and revenue recognition. The lease exposure draft is proposing only one type of lease and to do away with operating leases. This change would require an asset (present value of the lease payments over the lease term) and liability (lease obligation) to be recognized as of the date of the lease commencement. There would no longer be rent or occupancy expense. The organization would now depreciate the asset and decrease the lease obligation upon making lease payments. The revenue-recognition exposure draft is proposing changing the consideration of collectability and expanding the use of estimates. The entity would be required to recognize revenue in an amount that reflects the consideration that it expects to receive in exchange for those goods or services. 

Toni Diprizio, partner, spoke on the topic of fair value measurements. She described how this topic had been evolving for the past two years and continued to develop with the Accounting Standard Update (ASU) 2010-06. This ASU requires a greater level of disaggregated information, more robust disclosures about valuation techniques and inputs, and information transfers between the three levels. It applies for calendar year 2010. 

Jennifer Culotta, audit senior manager, reviewed the definitions, accounting and net-asset classifications, and disclosure requirements for donor-restricted endowment funds. She explained that there were no new guidance or requirements that came out in 2010.

Other topics discussed include

• mergers and acquisitions,
• collaborative arrangements,
• the American Recovery and Reinvestment Act,
• best practices, and
• tax update.

Save the date for our next event:
Fraud Prevention and Detection for NFPs
April 20, 2011
Presented by: Marty Terpstra, CPA, CFE, Partner in Charge of the Forensic and Litigation Services Practice

For more information, contact Jennifer Culotta at 312-980-3226, or your Blackman Kallick representative.