Nonprofit Accounting Blog – Page 10

Preparing for Nonprofit Accounting Audit Services

The annual audit is an important part of nonprofit financial management. Nonprofit accounting audit services include a visit from the auditors, review of key financial information, preparing reports, and reviewing them with directors, board members, and other members of your organization. If it’s time for you to make the call to Beck & Company to schedule your audit, keep these considerations in mind.

Helping the Auditors Help You: Manage the Process

A good audit can really help your nonprofit thrive. Having organized finances along with the confidence that everything is in good order can strengthen relationships with your board and major donors. The information gained from the audit can also be used to shape goals, strategies, and methods by which you’ll continue to fulfill your organization’s mission.

In order to obtain a satisfactory audit, it’s important that you take control of the process within your company and do the prep work required. It’s simple to do, but a methodical approach ensures that nothing is left for the last minute.

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To manage the audit process, tackle the following logistical and operational tasks early in the timeframe intended for the audit:

Call Beck & Company to schedule your audit. Scheduling it early in the season means we can accommodate your timeline easier. Providing a few dates gives us all some room to work around previously scheduled meetings.
Make arrangements within the organization to have a room set aside for the auditors. Confirm that you have a working telephone line, computers or outlets available, and a quiet space for them. Have the WiFi passwords and instructions for calling outside the company printed and waiting for the auditors.
Secure parking spaces, if necessary, in your building’s lot, or provide travel directions to the auditors.
Gather together the necessary paperwork. Label things neatly so that the auditors know what they are reviewing.
Tell the staff to make helping the audit a priority. Brief the staff on your expectations for the audit. Make it clear that they should be helpful to the auditors while also avoiding interruptions.
Allow people time to help the auditors with tasks, if necessary.
After the audit, review the report with the audits. Ask questions and be sure you understand both their findings and recommendations.
Prepare to share the information with your Board of Directors.
After sharing with the Board, share it with your staff. Staff also needs to know what’s going on within the organization. Sharing the audit findings gives everyone a sense of clarity about the organization’s financial state and operations.
Ask the auditors if there is anything you should improve for next year’s audit. Make notes and get ready for next year!

Nonprofit accounting auditing services are an important part of running an active organization. If it’s time for your group to have its annual audit, these steps can help make it go smoothly and efficiently for all.

Financial Advice and Assistance for Nonprofit Organizations

Beck & Company Certified Public Accounts and Business Advisors specializes in nonprofit financial management, nonprofit accounting audit services, and issues pertaining to the world of nonprofits. We have extensive experience helping nonprofits of all sizes achieve their mission without sacrificing margin. Contact us for more information.

A 10-K for Taxpayers: The Government’s Annual Report and What Your Nonprofit Can Learn

Accounting for Nonprofits Includes Analyzing Trends

Did you know that the United States government produces an annual 10-K? It’s called The Financial Report of the United States Government (a creative title if ever there was one) and it contains the annual reports from 150 federal entities. Accounting for nonprofits includes analyzing such documents and exploring trends that may directly impact your work and constituents.

The report is prepared annually by the Treasury Department. It contains nearly every brand of the federal government with the exception of the Federal Reserve, among others. The focus is on the government’s fiscal performance for the previous year, but it contains some useful gems of information about trends and future direction. It’s this information that may be valuable to your nonprofit organization.

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Which Way the Wind Is Blowing…

Reading through the information in the document, or the summaries provided by each agency, you can begin to glean some of the trends found within the jargon. Some of the government bodies use reporting methods similar to what you have seen from corporations, but others use specific government-formula reporting to account for their finances.

Among the notes that accompany the finances are useful bits of information that may be quite helpful to your nonprofit organization. For example, if you work for a nonprofit that provides health or health-related services, reviewing the Department of Health and Human Services’ information in the complete report may help you understand the government’s priorities. This in turn may lead to pursuing federal grants and other funds based on such priorities, or aligning your nonprofit with general trends to better serve people.

Super CPA to the Rescue

CPAs have an important role to play in the analysis of the federal budget information. With your experience and knowledge, you can translate the important points for your organization and help them understand the information that may affect their work in the new year.

The AICPA has published a special report to go along with the main document. What’s At Stake provides information for CPAs curious or concerned about the contents of the federal document.

Accounting for nonprofits is so much more than keeping the books and managing the money. It’s also being part of the leadership team that helps set policy direction, goals, and more. For those concerns about how various federal agencies may change their policies or adapt to the new year, reviewing The Financial Report of the United States Government may be helpful.

Financial Advice and Assistance for Nonprofit Organizations

Big Data, Big Worries: Ethics and Nonprofit Financial Management

Does the amount of data your nonprofit collects from donors, members, and other supporters worry you? It should. If you have big data, you have big worries, as well as responsibilities. An important part of nonprofit financial management is securing and managing the data that your nonprofit collects so that you safeguard the interests of all.

You Collect More Data Than You Think

At first glance, you may think you don’t collect all that much data. Sure, you’ve got a mailing list on file of people interested in your nonprofit’s work, and email addresses for that monthly newsletter to send out, but doesn’t everyone?

Consider how people donate to your nonprofit. If you accept credit card donations over the internet, website security becomes critical to prevent criminals from stealing data from your donors. Passwords may also be important if you have a member-only area on your site where you host forums. When you really sit down to analyze your organization’s data collection methods, you’ll quickly realize that you’ve got more data than you initially thought.

Keeping Data Safe: Creating a Data Ethics Policy

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Many organizations are creating their own data use and security ethics policies to help safeguard customer privacy and maintain the high level of trust they’ve worked so hard to build with their constituents.

To create your own organizational data ethics policy, follow these five tips.

Establish data-use goals: Knowing exactly why your organization collects data, and the use to which you will put it in the future, is the starting point for a data ethics policy. You’ve got to know the reason why you’re collecting the data in the first place to establish guidelines about its use. Some common reasons for collecting customer data include future marketing, such as requesting that interested people sign up for your email list so that you can send them donation solicitations later.
Create a privacy policy: Privacy policies are ubiquitous on websites but an important part of your data security and ethics work. You can create a privacy policy in several ways. There are privacy policy generators online that help you build a simple boilerplate privacy policy for your website. You can also ask your legal counsel for a recommendation. Once you create your privacy policy, post it online.
Assess the risks: Take a data inventory to understand exactly what data you have stored and what the risks are of maintaining it. Know what you have to work with, how and where it is stored, and who has access to it. Lastly, determine who controls access to the data and the steps your organization has taken to safeguard it.
Add safeguards: Every day it seems that hackers have found new ways to break into websites and steal personal information from customers. It may be worthwhile to consult with an internet security expert to make sure that your website and network have the latest security safeguards in place. Updating software and plugins for websites, adding Akismet to WordPress-based sites to screen for virus-filled spam, and using other simple measures may go a long way in preventing theft and security breaches.
Conduct due diligence: If third parties have access to your data, such as mailing house or email service providers, do you conduct due diligence to ensure that their safety procedures match or exceed your own? Few organizations give much thought to who in other companies may use or access their data. Make sure that you have steps in place to screen companies and understand their data security policies. Common third-party vendors who may access your data include marketing agencies, mailing list companies, list brokers, email service providers, and fundraising organizations.

Nonprofit Financial Management: Data Security Policy

Once you have the basic information about your current data collection and use, formulate a general ethics policy and procedure document that can be shared throughout your organization. A little work now will come in handy later if the unthinkable happens and you have a data breach on your hands. Your constituents will thank you for taking extra steps to safeguard your data.

Financial Advice and Assistance for Nonprofit Organizations

Nonprofit Financial Management and the Responsibilities of CPAs: What You MUST Know

CPAs play an important role in shaping federal financial policy. But to shape any type of policy, you need to understand the basics underlying the current structure. One way to do this is to review the 10-K of an organization. Surprisingly, the federal government files a 10-K. Citizens can review it, and CPAs should also review it for a peek behind the curtain of the often-misunderstood government agencies and bureaus.

The Government’s 10-K Report: What You Need to Know

The government’s 10-K report includes financial reporting for 150 government entities. Some of these entities may impact your nonprofit organization, which is yet another reason why nonprofit financial managers and accountants should note the reports and make it a point to look at them.

The reports include:

Financial position and condition
Revenue and costs
Assets and liabilities
Financial obligations and commitments
Analysis of important financial issues
Significant conditions that impact future events

This should be enough information to provide a comprehensive and detailed picture of the government entity’s financial picture. The Federal Reserve and a few other entities are excluded from reporting.

These reports are either traditional, accrual-based accounting, such as you will see in the corporate sector, or nontraditional sustainability reports. Each report includes eight basic financial statements, with details on many aspects of the current and future budget.

What’s at Stake – and What You Need to Know

The complete analysis of these reports is available in the Journal of Accountancy. What CPAs and nonprofit financial management experts need to know is this: many of the budgets show disturbing fiscal gaps that, if left unchecked, can be dangerous for the economy.

The AICPA discusses the use of the U.S. government’s financial statements as they pertain to the nation’s fiscal health in a paper entitled “What’s at Stake? The CPA Profession on Federal Fiscal Responsibility”. Greg Anton, CPA, CGMA, a past chairman of the AICPA board of directors explains the far-reaching consequences if current policy is kept in place.

Although CPAs can probably understand the technical aspects of the document, reviewing eight statements from 150 federal agencies would take a considerable amount of time. There’s a layperson’s guide which might come in handy: the Guide to Understanding the Financial Report of the United States. This may prove easy reading, from which to grasp key insights useful for CPAs.

One of the most troubling aspects of this report is that, despite 19 years of releasing the report, the GAO has been unable to release an audit opinion. Many of the agencies included within the report have been audited, but certain groups like the Department of Defense remain an exception.

The AICPA urges CPAs to become better informed and to raise questions and concerns with local elected officials. CPAs are in a unique position to understand and explain these policies to local business leaders and others. As a nonprofit financial management leader, you are also in a special position of responsibility to your constituents, and some of this information may have deeper meaning for your nonprofit.

Understanding the information and taking the appropriate actions through your local elected officials is one way that CPAs can demonstrate important leadership skills in the nonprofit sector. Citizens and policymakers look to CPAs for guidance on important matters. Elected officials too need guidance on the technical aspects of federal budgeting, and concerns from local taxpayers. CPAs play an important role in this process.

At Beck & Company, we offer CPA services, nonprofit accounting, and business advisory functions for nonprofit organizations. Contact us today if you would like more information about our services or help with your nonprofit business needs.

The Top Three Reasons Why Internal Controls Are Vital for Accounting for Nonprofits

No one likes to talk about internal controls. It makes people feel uncomfortable to think about a colleague or coworker stealing from the company or otherwise doing something wrong. Yet internal controls are necessary for accounting for nonprofits, the same as they are necessary at for-profit companies. Some might even say they are even more important at nonprofits, which may run with fewer staff or more personal responsibility.

Anyone can be tempted by lax security, financial need, or simply a bad moment. Without internal controls in place, you aren’t doing your best to prevent people from succumbing to temptation. Internal controls may feel like we don’t trust our colleagues or volunteers, but they help keep people honest.

It’s good to remember the old adage, “If anything can go wrong, it will,” especially when it comes to handling money.

Internal Controls for Typical Scenarios

Accounting for nonprofits includes handling payroll, donations, accounts payables, membership fees and dues, and other financial tasks. There should be routine controls in place for all common tasks including:

Storing checks for bank deposits: If you store checks in the office until someone can take them to the bank, have safeguards in place to secure the uncashed checks. Keep them locked in a safe or in a desk drawer. Make sure that only one or two people have access to the safe or drawer. Have two people present whenever each is opened so that one can verify the items removed or placed inside.
Handling petty cash: Cash may be the most tempting item since it is difficult to trace if stolen. To prevent thefts or even mistakes, have at least two people present when petty cash is counted in or out. Verify the amounts by having the second person count out the cash, too. Make sure that employees sign receipts for petty cash and provide receipts for items purchased for petty cash, including receipts for services such as taxi or car service.
Fundraising events: Raffles, sales and other events may generate a lot of cash in small bills. Volunteers working raffle and sales tables may handle cash and store it at the event in a cash box or other unsecured box until it’s time to finish the event. Train volunteers and workers to never leave cash unattended at the booth or table. Instruct them to place all cash into the secure box or official cash register, never in their pockets or purses. Reconcile ticket sales with cash that night before everyone goes home to make sure no one has made mistakes.
Payroll: Padding timesheets with unworked hours is another form of theft that needs internal controls to prevent. Ask all managers to authorize employee overtime, and have a supervisor sign off on manager’s overtime reports if they are not salaried workers.

These steps are simple to put into place and can prevent small actions that can add up to significant losses over time. Although internal controls may feel like ‘spying’ on your employees or that you don’t trust them, they are a must for all nonprofit organizations.

The idea behind internal control policies is to trust yet verify. You must have a witness when handling money, and spit up cash responsibilities and duties among several employees to prevent anyone from being tempted. The more controls you can put into place and make a regular part of your company’s policies, the easier it will be to prevent problems.

Surprising Skills Nonprofit Financial Management Needs – and New Ways to Acquire Them

Nonprofit financial management just took a step in the right direction with the introduction of two new ways in which CPAs will be able to obtain Continuing Professional Education (CPE) credits. The AICPA and the National Association of State Board of Accountancy recently changed the standards for CPE providers as well as NASBA’s Field of Study document. The result? Two new ways in which CPAs can earn valuable professional education credits.

Blended Learning and Nano Learning for CPAs

The two new opportunities for CPEs include blended learning and nano learning.

Blended learning includes a combination of learning methods such as seat-based (classroom) sessions, self-study, and video lessons on demand.
Nano learning consists of short 10-minute modules, usually focused on a specific task. This type of learning is often used to help CPAs acquire specific skills rather than master overarching concepts.

Although not all states accept the new learning methods, many do. CPAs should check with their state chapters of their accrediting body to learn which methods are acceptable for CPEs.

Additional changes are also being made to the Fields of Study document. These changes update categories and descriptions so that they are both current and relevant. The biggest change occurs in the Specialized Knowledge field of study, which now separates computer science application and information technology into its own categories. Specialized knowledge topics can now be specific to industries or categories.

The Importance of Continuing Education for Nonprofit Financial Management

Like any profession, financial management takes knowledge, skill, and practice to do well. The world of nonprofit financial management continues to grow, change, and evolve over time. Consider the new FASB rules of which we’ve written so much. The updated guidelines are the first since 1993, but if you’re not keeping up to date on all the changes in the world of nonprofit accounting, you could miss some of these important elements.

What skills should CPAs in nonprofit organizations master? Here are some you might not have considered:

Presentation and public speaking skills: Nonprofit CPAs may be called upon to address board meetings, present at conferences and in other public spaces. Good speaking skills are critical to represent your organization well.
Interpersonal communications: Interpersonal communications ensure that you can share and listen to knowledge within your organization in an effective manner.
Social media skills: Sure, you might know how to tweet or comment on social media. But nonprofits need social media guidelines for their workplaces just as much as for-profits do, and you may be called upon to assist with and guide social media campaigns for donors and other financial managers.
Management: Learning how to manage a team is both an art and a science. Managers are made, not born, and these are important skills to acquire so you can lead your team successfully.

There are many opportunities for you to learn these skills. Online learning, self-guided learning, professional courses and more provide opportunities for these and more ‘hard’ accounting skills. CPE credits may not necessarily be offered for these skills, but they are equally as important for success as a nonprofit manager today.

New Year, New You: Education and Assistance for Nonprofits

With a new year on the horizon, it’s time to make some much-needed changes. This includes updating your education credentials and staying up to date on the skills you need to make your nonprofit successful.

It may also include working with a nonprofit financial consultant to prepare for audits and more. At Beck & Company, we offer CPA services, nonprofit accounting, and business advisory functions for nonprofit organizations. Contact us today if you would like more information about our services or help with your nonprofit business needs.

Accounting for Nonprofits: Why You MUST Tell a Compelling Story

As a consulting firm that provides accounting for nonprofits, Beck & Company wants to be sure that our clients have accurate and timely information to assist them with their needs. This includes updates on the latest FASB regulations that impact accounting for nonprofits.

By now, you have probably heard of Accounting Standards Update No. 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities. This new update seeks to help nonprofits provide better clarity and transparency in their financial reports. It requires several changes on how information is classified and reported.

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Numbers Tell a Story

People naturally gravitate towards stories. Since earliest childhood, we listen for stories, and we respond to them from an emotional, as well as logical, perspective. So, it’s not surprising that FASB’s new guidelines for nonprofit accounting attempts to help nonprofits tell a story through their numbers. Nonprofits struggling with the new accounting rules should keep in mind the impetus behind the changes. If you keep the reason in mind, it’s easier to understand why FASB has requested the changes it has and how your nonprofit organization can comply with them.

Helping Donors Understand Your Organization

Nonprofit organizations have a responsibility to their donors, patrons, sponsors, and members to tell a complete, comprehensive, and transparent story with their financial reports. People who give money to a nonprofit want to be sure that their money is used responsibly in support of the organization’s mission and activities.

Much has been made in recent years of nonprofits who have spent excessively on activities that donors view as superfluous. Although nonprofits are still free to spend as they wish within the limits of their charter, the new, enhanced transparency in financial reporting will help donors and the public understand how finances were spent.

Telling a compelling, honest and articulate story through your numbers can help donors understand more about your organization. The new FASB requirements, for example, include qualitative information added on how organizations manage liquid available resources and liquidity risks. The updated regulations also require reporting of expenses by both function and nature, two additional areas you can use as an opportunity to share information with your constituents.

Consider the information that goes into these sections. If you are reporting expenses by both function and nature, you can provide additional details that will help donors understand the importance of expense categories. The functional areas can help them understand the areas of your organization. Additional details can be provided to help donors understand the various activities supported by these funds.

Additional Changes in the New Guidelines

There are other changes in the guidelines that will be in effect for fiscal years beginning after December 15, 2017. These include:

Reducing the number of net asset classes from three to two
Continue allowing preparers to choose between the direct and indirect method for presenting operating cash flows
Eliminating the requirement for those who prefer the direct method to perform reconciliation with the indirect method
The reporting by nature and function, as well as reporting on liquidity risks and liquid available resources, as discussed in the ideas shared here.

If you struggle with your accounting for nonprofits, Beck & Company can help. We are a CPA and business advisory firm dedicated to the nonprofit sector. Our many years of experience can help you update your financial compliance, change to follow FASB 958, or handle all types of accounting for nonprofits. Please contact Beck & Company today for further details.

Making Mindful Choices in the World of Nonprofit Accounting

Each day, your nonprofit organization faces many choices. One area where choices are of supreme importance is in the area of nonprofit accounting. Choosing how you classify donations, whether to give a trusted employee a raise, or how to comply with the new FASB 958 regulations are all choices that must be weighed and prioritized based on urgency.

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When faced with myriad choices, it is easy to feel overwhelmed. As Washington DC nonprofit advisers, we have worked with many nonprofit clients to help them identify and prioritize key elements of their accounting activities for maximum business impact. Here are several tips to help you make mindful choices about your financial and accounting needs.

Three Tips for Nonprofit Accounting to Help You Set Priorities

Focus on strategic clarity: Clarity of purpose, mission and vision is essential for all good business management, but especially for nonprofit accounting. When you clearly identify your organization’s mission and vision, you will find it easier to prioritize the essentials. Activities in direct support of your mission are funded first, with secondary activities funded next, and so on. Developing strategic clarity can be difficult if you are not used to this type of work; a nonprofit business adviser can help.
Diversify income sources: In other words, don’t put all your eggs in one basket. Relying upon one source of funding for the majority of your organization’s support can be catastrophic if something happens to the funding source. Grants may end; donations can dry up if the economy sours. Diversification of your income stream is equally as important as diversifying your investments. Diversification spreads out the potential risk if one stream dries up.
Measure outcomes: Measuring outcomes isn’t just for the for-profit world. Nonprofits should also measure the outcomes of their efforts. Measuring donor campaign results, educational activities, and other projects just makes sense. It is only measuring how well you achieved your objectives that you can prioritize funding in future years. Knowing that one activity achieved its objective while another fell short can help you decide whether additional funding, staffing, or publicity can change the dynamic or not.

Asking the Tough Questions

Asking the tough questions about initiatives can also help you set your goals. It may be difficult to learn that a favorite activity doesn’t meet your revised mission statement, but it is better to learn this now than to continue spending resources unwisely.

Ask yourself:

Are we continuing any activities just because we’ve always done them? Some companies continue with charitable events, marketing campaigns or other activities in the same manner year after year simply because “it’s what we always do.” Always ask if the activity serves the organization’s best interests now.
Are we holding onto “pet” projects? Larger organizations with a strict hierarchy sometimes fall prey to the ‘pet project’ syndrome. It may be the director’s favorite activity, or a cherished idea. It’s done simply because so-and-so asked that it be done. You must have the courage to question even pet projects to prioritize the vital ones from the rest.
Does this serve our constituents? No matter what activity you are considering, asking if it serves your constituents’ best interests helps keep your focus on what you do best. This helps you prioritize your budget and accounting activities around what matters most.

As Washington DC nonprofit advisers, we know how hard it is to ask these questions and to change the status quo. It may be helpful to bring in business advisers to help you sort through these issues dispassionately.

Accounting for Nonprofits Update: FASB Financial Reporting Standards Changes

If you are in charge of accounting for nonprofits, it is important to keep abreast of the FASB financial reporting standards changes. These changes are the most significant in twenty-three years, and will affect organizations to a large degree.

The New FASB Nonprofit Guidelines

On August 18 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities.

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Like other accounting for nonprofit tasks, these FASB changes require significant planning and preparation. Failure to begin planning now may mean that your organization is unable to meet the requirements later.

The areas most affected by the changes include:

Net asset classification requirements
Information provided financial statements
Notes about liquidity, financial performance, and cash flows

The Journal of Accountancy states that nonprofits must now report expenses by their nature and function. This is a change; formerly, only nonprofit health and welfare organizations were required to follow this reporting protocol. Now all nonprofits will be required to report expenses in this manner.

In addition, a net presentation of investment expense against return is now required on the face of statement activities. Internal salaries and benefits expenses must also be disclosed as they are netted against investment returns.

Operating cash flows may be presented by either the direct or indirect method, eliminating the need for those who use the direct method to reconcile with the indirect method.

Other highlights of the changes include restructuring the net asset classifications from three to two. Nonprofits are also required to provide qualitative and quantitative information that refers to their liquidity.

The goals of these sweeping changes is to make financial disclosure more transparent for donors, investors and the general public. Many changes also reflect the changing nature of the nonprofit world.

The standard will take effect for annual financial statements issued for fiscal years beginning after Dec. 15, 2017, and for interim periods within fiscal years beginning after Dec. 15, 2018.

Help for Accounting for Nonprofits

Nonprofit Financial Management and the New DOL Overtime Rules

If you are responsible for nonprofit financial management, it is important to understand the new DOL overtime rules. These rules will be in effect starting December 1, 2016, and will impact both for-profit and nonprofit businesses alike.

What Is the New DOL Overtime Rule?

The new DOL overtime rule resets the threshold for who should be paid overtime and when overtime pay takes effect. The revised Fair Labor Standards Act (FLSA) increases the salary threshold for white-collar workers. The threshold for exempt employees has increased from $455 to $913 per week. That is about $23,660 to $47,476 per year, on average.

The only exemptions from paying overtime are for executive, administrative and professional positions making $47,476 or more per year. The annual salary must meet or exceed $47,476 in order to qualify as exempt from overtime pay.

The threshold for so-called highly compensated employees has also been raised. These employees earn between $100,000 and $134,004 per year and perform non-manual labor. They must supervise two or more employees. These employees are now covered under overtime rules as long as their salary does not exceed the upper threshold limit.

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Both the standard salary and HCE annual compensation limits will be updated again in three years.

Why Does this Matter for Nonprofit Financial Management?

The new DOL rules matter a great deal for nonprofit financial management. You may be required to adhere to it if you conduct business transactions exceeding $500,000 per year (excluding membership fees, grants or gifts).

Individuals may be covered under the revised law if they produce goods or services for interstate commerce and make amounts within the threshold limits. An example may be a nonprofit employee who regularly travels to other states for business purposes. You may need to review each situation on a case-by-case basis and make decisions based on the preponderance of activities that adhere to the rules. Err on the side of caution and compliance with the rules if you are unsure in a given situation.

Consider the implications of overtime on your payroll budget. Depending on how many employees are now covered under the revised DOL guidelines, you may now be required to pay overtime for a considerable number of people.

You may wish to revise schedules and limit overtime, depending on your needs. Weigh the pros and cons of hiring new employees or temps against the need for overtime.

There are several options to navigate these new salary rules. The options include:

Raise salaries: If you have employees who meet the ‘duty qualifications’ and have salaries near the $47,476 threshold, raising their salary would exempt them from the overtime requirement.
Pay overtime: Organizations should pay overtime salary to workers exceeding the 40-hour work week and who meet the requirements.
Redistribute workloads: Examine employee duties and hours, and redistribute tasks if necessary to avoid overtime.
Require overtime approvals: Occasional overtime payment may not be a problem, but you may wish to approve overtime requests to control your budget and employee workloads. Employees may not be aware that you are able to redistribute their workload.

The DOL leaves it up to the discretion of the organization or employer how they wish to address the changes. They neither endorse nor recommend a specific approach, which does give you some flexibility in how you address it within your organization.

Payroll and salaries account for a large portion of any organization’s budget. Nonprofit financial management includes the ability to balance budgets and avoid excess costs. By carefully adhering to the new regulation and understanding its impacts upon your organization, you can maintain a balanced budget that allows you to continue funding your mission.

Financial Advice and Assistance for Nonprofit Organizations

Beck & Company Certified Public Accounts and Business Advisors specializes in nonprofit financial management and issues pertaining to the world of nonprofits. We have extensive experience helping nonprofits of all sizes achieve their mission without sacrificing margin. Contact us for more information.