Tag Archives: HR

More Questions and Answers

Questions and AnswersHere are some more nonprofit accounting and financial questions that have come to from this site and from my workshops and my answers.

Question – Should the donor know?

I am curious to know if FASB 116 or FASB 117 prohibit the use of endowment as collateral against a line of credit without donor’s acknowledgment or knowledge of this action.

Answer – I do not believe that either of those prohibit the use of endowment funds as collateral. But unless the donor has told you it is OK to use the funds in that fashion I would be very wary of doing so without the donor’s consent. It has happened before that nonprofits have used the funds as collateral and then lost those funds. You could be in for some hard times if that happens.

Question – SAS 112 issues

For the past two years, our auditor firm has noted material weakness in the management letter due to the fact that there are adjustments made to deferred membership revenue, interest revenue, depreciation, etc. We were told that this could impact us getting grant monies and these “weaknesses” need to be corrected.

It was my understanding that an audit was to make necessary adjustments so that the books balance and reflect the current financial state. We were told by our auditing team this year that there are not allowed to make adjustments to our books and that is why there are material weaknesses. This has never been an issue before last year nor was it an issue with other auditing firms. Any guidance?

Answer – Those SAS rules for risk assessment kicked in at the end of 2006. As these weaknesses are listed in the Management Letter and become a part of the audit, a funder who asks for a copy of the audit might question what those weaknesses are. The SAS rules change what auditors are allowed to do. Making changes to your books may infringe on their independence, which under the new rules is a pretty big issue.

The purpose of an audit is to verify the quality and soundness of your organization’s financial reporting. The errors they find are now up to you to fix. If they can give you some direction on how to fix them and then how to do the entries correctly going forward you should not have anymore problems.  Otherwise, if the auditors keep finding the same mistakes the language gets more severe.

Question – Remote Employees

Do you know of any best Practices with regards to remote employees or employees who work from home?

Answer – Here are two articles that may be of help:

More questions answered in the next post!

Nonprofit News Update

roundupThis weeks update features a great piece on using Social Capital, more human resource topics that didn’t make it in to the last post and the latest from the Internal Revenue Service that might affect your organization.

The Power of Social Capital

The Fieldstone Alliance has a great e-newsletter and this topic caught me eye: Mapping Your Networks to Mine Valuable Resources. From the article:

After Exploring all possible options for reducing expenses and increasing revenues, many nonprofits are stymied—how can they survive this downturn? Every nonprofit has another valuable resource that they can tap—social capital. Positive, productive relationships represent social capital, which is just as important (well, almost as important) as money in the bank.

Social capital has been described as the resources available to people based on the networks their relationships give them access to. Just as a skilled plumber knows how the water is piped throughout the house, a skilled nonprofit or community leader knows how social capital flows through their networks or community.

Check out the article for more.

More on Nonprofits Human Resource Issues

Are you, or have you ever had to draft a severance agreement? This article talks about a new publication from the Equal Employment Opportunity Commission that may be of help, even though some are renaming the document, “How to Sue Your Employer.”

Exempt employees can present a challenge to employers, nonprofit or for-profit, especially when it comes to the issue of docking an employee’s pay.  Make a mistake and you can violate their exempt status and open your self up to a world of financial and legal hurt. This article and this article offer some guidance that may be of help. You should also make sure there are not any separate, or even more stringent state rules that may apply to your organization as well.

IRS Updates and News

For those who have been waiting, efile.form990.org is ready to help you through filling out your 2008 form 990. They can also help you with several state filings as well, please do pay them a visit.

The final regulations for the 990-N, the electronic post card filing for small nonprofits have been released. No changes from the draft version, but it should be noted that organizations that are required to file the form and fail to do so for three consecutive years will automatically lose their tax-exempt status. Revocations will begin in May 2010.

The latest Form 990 filing tip is all about related organizations and schedule R. What is a related organization you ask? From the IRS:

Related organizations are organizations that stand in a parent/subsidiary relationship, brother/sister relationship, or supporting/supported organization relationship. Supporting and supported organizations are defined in section 509(a)(3) and 509(f)(3). Determination of the first two relationships depends on a definition of control set forth in the Form 990 instructions glossary and Schedule R instructions. The definition of control depends on whether the organization has owners or persons with beneficial interests.

Finally, the IRS wants us to make sure we handle donated property and non-cash contribution transactions the right way. Here is a page with several more links that might be of interest to any organization that receives non-cash contributions.

Human Resources for Nonprofits Update

News StandThis post is focused on some of the latest developments and issues in human resources, issues that can affect all nonprofit organizations that have employees.

Let’s start with the I-9 form. All employers are required to have these filled out by their employees.  Federal agencies are stepping up their compliance audits of companies in an effort to crack down on illegal immigrants by going after employers. It is best to make sure you have these from all of your employees.

Does your nonprofit use interns? Do you use those interns as a pool of potential employees?  Then this article might be of interest to you.

In any issue involving human resources your documentation is key. From setting performance expectations to defending yourself in court, a solid paper trail can only help. This article list seven major mistakes to avoid.

Hiring employees can be an expensive and time consuming process. As much as we strive to make the best matches not every new-hire works out. This piece has some great advice for those doing the hiring and includes questions to ask potential employees that may help us make better hiring decisions.

Your nonprofit has a policy to only pay overtime pay if approved in advance but an employee is claiming overtime hours worked that were not approved in advance. What do you do?

A disaster waiting to happen or a boon to employers? This article talks about this service from CareerBuilder.com where employers can search for information regarding potential, and current, employee’s online life. Searches of people  can be done without this service but I think this straddles the issue of work-life vs. private-life a little too much.

“That type of behavior goes on here all the time.” is not a sufficient defense against a harassment claim. All managers need to take harassment claims seriously to protect both employees and employers.

Finally, sometimes it is the little things, things that you might think will have no repercussions that get us into trouble. Here is an example of an employee who didn’t like being refereed to by his nickname on the job.