By: Anders Erickson, CISA, CISSP, CRISC
In the most recent Threat Intelligence Report publish by Nokia, researchers found that software viruses or malware infecting mobile devices (e.g., cell phones and tablets) had increased 83 percent in the second half of 2016. The report suggests that this increase represents a shift from hackers targeting traditional computers to going after mobile devices. One of the most common methods of infecting mobile devices is through “Trojan” apps. Like the Trojan Horse of Greek mythology, these apps look like a game or something harmless but when they are installed on a mobile device, they execute malware that allows a hacker to access or steal data from that device. One thing users can do to protect themselves from these types of viruses is to avoid downloading apps from locations other than the Apple or Android app store.
Many nonprofits allow their employees to access organizational data through their mobile devices. Whether that’s emails, files, or the corporate directory, the access they provide to their employees represents a significant business risk. If not properly protected, malware infecting an employee’s mobile device can place our client’s data in jeopardy. Eide Bailly’s Cyber Security team can assist your clients in protecting their data on mobile devices by:
- Helping establish a secure mobile device policy;
- Implementing mobile device management (MDM) software, which allows our clients to safeguard corporate data on their employees’ mobile devices; and
- Educating employees on the dangers of mobile devices and how they can help protect themselves and their organization.
If you have any questions about these services or would like to better understand how we can help our clients feel more confident about their cyber security, please contact Anders Erickson, Director of Cyber Security Services, at firstname.lastname@example.org or (208)383-4731.
By: Mike Herold
Many nonprofit organizations utilize single member limited liability companies (SMLLCs) in their operations. SMLLCs are popular vehicles for holding real estate and are an easy way to conduct separate activities in different locations. For example, a skilled nursing or senior care corporation might consist of various locations or centers each held within its own SMLLC. This provides a vessel for managing the operations and profitability of each location more effectively and accurately.
Because a SMLLC is considered a disregarded entity for federal tax purposes, the IRS allows the SMLLC to operate as a tax exempt entity without seeking its own application for tax exempt status. This makes the SMLLC a relatively low cost entity to create while affording the parent an additional level of liability protection through an isolating entity.
For more information on SMLLCs and tax exemption, read the full article here.
By: Laurie Hansen, CPA, Tax Manager
With all the changes that occur within an organization during the course of a year, it’s important to take a step back and review policies and procedures at the beginning of the year. For example, it’s critical that an organization classify its workers properly. Are your workers employees, or independent contractors? Let’s take a look at the rules to make sure workers are classified in accordance with IRS guidelines for the coming year.
In general, a person will qualify as an independent contractor if the employer has the right to control or direct the result of the work, but not how or what will be done to achieve the end result. Conversely, in an employer-employee relationship, the employer has the right to direct and control the work done by the employee. Visit our website here for factors that are important in determining worker classification.
By: Peggy E. Jennings, CPA, Partner
If you are like me, you have already forgotten the promises made in the wee hours of 2017 meant to improve health, personal outlook and work habits. We might be forgetful when it comes to self-improvement, but it isn’t too late to consider some improvements to your accounting process that can find efficiencies to be enjoyed all year round.
Some things to consider for 2017:
- Walkthroughs –determine how processes for transactions, information flow and approvals are actually working on a daily basis. The goal isn’t to create a fancy spreadsheet but to consider improvements to processes that can save valuable time. Challenge the adage “we’ve always done it this way” to determine the most efficient means to achieve the tasks.
- Ask questions – is this process necessary? Does it add value? Can it be automated? Is there a duplication of effort between teams? Is anyone using the output? Are roles and responsibilities appropriate?
- Document – after evaluating existing processes and procedures, documenting any updates to existing policies, or creating policies in areas where little documentation existed previously, will provide a tool for staff to utilize in successfully implementing the procedures. Such documentation can also be incorporated into training materials.
- Training – after you have determined the most efficient means to achieve tasks and have created new and improved processes, take the time now to fully training your personnel in the new processes so that all can be successful in their positions and responsibilities.
- Develop process metrics – a good way to measure success is by measuring activity. Consider what metrics can be tracked, such as number of invoices processed, number of days in cycle time (invoice date to approval date), number of manually processed payments, number of invoices processed electronically
Reward success! Change is not easy and it takes a lot of effort to change established processes even when the personnel involved are fully on-board. Listen for needed tweaks to the new processes (internal controls are never final) and take the time to recognize achievement.
Here’s to an efficient and successful 2017!
By Kyle Fritch
As the end of the year approaches, many individuals and businesses will be planning their holiday and year-end giving. Charitable donations are an excellent way for donors to reduce their tax burdens while also supporting their communities and nonprofit organizations. Donors commonly have questions about the timing of contributions to ensure they receive a deduction for their charitable donation in the appropriate year. In addition, charities must provide the date that a contribution was received when providing acknowledgements to their donors. These rules are complicated, so care needs to be taken in evaluating these year-end donations.
Charitable contributions are deductible in the year the donation is made. A contribution is considered to be made on the date of delivery to the charity if the donor has irrevocably parted with ownership (possession and control) of the property. The date of delivery rules vary depending on the type of property contributed and how it is transmitted to the charity. Click here for some of the most common donation scenarios, along with the rules pertaining to each type of donation.
By: Kim Hunwardsen
Last week the U.S. Labor Department announced overtime final regulations that will go into effect on December 1, 2016. These rules mean that most employees earning less than $47,500 per year will be entitled to overtime compensation, regardless of whether they are currently classified as executive, administrative, or professional (white-collar) workers. The final rule applies to employers in all sectors, including nonprofit organizations. A summary of the proposed rules is available here.
In an effort to address longstanding confusion about how the Fair Labor Standards Act (FLSA) and the overtime regulations apply to nonprofit employers and employees, a special overview and guidance for nonprofit organizations document was also released and can be viewed here. Among the key considerations for the nonprofit industry is how annual sales is defined along with specific entities that are subject to the rules regardless of sales volume. A key feature in defining sales is that contribution revenue is not included in the definition. Hospitals, businesses providing medical and nursing care for residents, schools and preschools and government agencies are subject to the rules regardless of sales volume. The special guidance provides a number of examples to help clarify the application of the rules.
One of the biggest impacts for nonprofit organizations will be to those organizations that have existing government grants or contracts as they now incur additional costs that were not known at the time of entering into the original contracts.
All organizations have options to consider in order to become compliant with the final rules. This may include providing pay raises that increase workers’ salaries above the new threshold, reorganizing workloads, adjusting schedules or hiring new employees to manage hours, or paying overtime.
Now is the time to consider the impact of these changes on the organization’s budget and determine what changes will need to be implemented to address the new rules. The Council of Nonprofits has a great number of resources available here. In addition, please contact your Eide Bailly service provider for additional assistance.
By: Tim McCutcheon
Many not-for-profit organizations (NFPs) have audit firm rotation polices requiring a change in audit firms—not just audit partners—every few years, most typically every five years. Some call for rotation in as little as every three years. Policies such as these have become the norm only in the past dozen years or so. Why is this, and does it make sense?
The rise of audit partner or audit firm rotation policies, in large part, is attributable to the Sarbanes-Oxley Act of 2002 (SOX, or the Act). Curiously, with the exception of two very narrow provisions of the Act dealing with document destruction and whistleblower policies, the Act does not apply to NFPs unless an NFP is also an issuer of publicly traded securities or has filed as a registrant to issue such securities under the Securities Exchange Act of 1934 or the Securities Act of 1933, respectively. So, if SOX doesn’t apply to NFPs, why have so many adopted its audit partner rotation policy, or going even further, turned the policy into one of audit firm rotation?
The article looks back at the Act, the effects it has had—intended or otherwise—on the relationships between NFPs and their auditors since its passage, and offers considerations for NFPs when evaluating their own policies. Clink here to read the full article.