Jim Ulvog

FASB has released three in a series of FAQs about the exposure draft that will drastically change accounting for all nonprofit organizations.

• The first Q&A provides background and general discussion. One of the main goals of the exposure draft is to improve reporting and disclosures about liquidity. The FAQ links to the exposure draft and a May 2015 webcast discussion.
• The second Q&A goes into some detail on specific issues.
• The third Q&A explains some alternatives available within the exposure draft.

Watch for more FAQs in the future.

This discussion is cross-posted from my other blog, Nonprofit Update. Although the context of my discussion is how this issue applies to charities, the issues are of even more importance to for-profit businesses.

In response to the rapid growth of what is called the “gig economy” or freelancers, the Department of Labor has issued an interpretation which tightens the definition of who is an employee.

I think it would be wise for the finance team and leadership of charities to look at this issue.

While this is aimed at companies like Lyft, Uber, Airbnb, and any other tech company that pays freelancers on an ad hoc job-by-job basis, it clearly applies to traditional businesses. This applies to charities.

It might be wise to think about how your charity is handling the independent contractor issue.

The Wage and Hour Division of DOL issued Administrator’s Interpretation 2015-1 (access to this copy provided by the WSJ.)

The Wall Street Journal explains Employees vs. Independent Contractors: US Weighs In on Debate Over How to Classify Workers.

The WSJ article explains that DOL believes many independent contractors should be moved to employee status. The DOL believes the definition of employee is far broader not only than what many employers believe but is even broader than what many courts have ruled.

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Employee vs. Independent Contractor – Dep’t of Labor proposal would changed definition of employeeRead More »

Disclosing which fiscal years are open to audit by tax authorities has been required for nonpublic companies for several years. An explicit requirement came into play with Technical Practice Aid 5250.15.

Effective March 2015 that TPA was deleted. The requirement now is based on a comment buried in the Basis for Conclusions of ASU 2009-06, which says disclosure of open tax years is only needed when there are material unrecognized tax benefits.

Impact of TPA 5250.15

That requirement has produced a standard comment on all nonpublic entity financial statements that looks something like this:

The entity files income tax returns with the U. S. and (state) governments. With few exceptions, the entity is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 20×1.

The AICPA has deleted TPA 5250.15. That type of comment will not be required unless the entity has material unrecognized tax benefits.

What changed?

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Disclosure of open tax years is now only required for a nonpublic entity that has material unrecognized tax benefitsRead More »