Key Takeaways from the 2023 AICPA National Nonprofit Conference

In June 2023, three members of HBK Nonprofit Solutions—Anthony Savasta, CPA; Teal Strammer, CPA; and Ashlynn Reeder, CPA, MST— attended the 2023 AICPA National Nonprofit Conference in Washington, D.C. The Conference consisted of three days of seminars on a wide variety of topics, from Uniform Guidance Auditing best practices to cybersecurity and fraud risk management. Following are reports on key Conference sessions:

Mission-Critical: The SEFA:

Elevating the Role of the Nonprofit Finance Leader by Natalie Anderson and Chuck Miranda of Sage Intacct.

The presenters discussed the changing role of financial leadership in nonprofit organizations. Historically over half those leaders’ time has been spent in accounting through manual processes and calculations. But through automation and software products like Sage Intacct, they proposed, the financial leader can become a datadriven strategist. They showed samples of dashboards from these systems that present key financial results and other metrics in real-time. There is a growing shift to automation and artificial intelligence, and they discussed one of the possible steps nonprofits can take in this direction.

How to Get it Right by Sadie Mayle, CPA and Rachel Stushek, CPA.

The speakers discussed the requirements of Schedule of Financial Assistance (SEFA) reporting, including a discussion of common errors. It is important to make sure that SEFA provided at the beginning of an audit agrees with the information that needs to be reported in the financial statements at the conclusion. Audit adjustments and other changes could lead to the need for the auditee to revisit the SEFA. Another common error in SEFA reporting is the lack of cluster presentation. It is important to include the cluster name, individual programs within the cluster, and the applicable federal agency name in the SEFA to ensure requirements are met.

Top Challenges Facing NFPs Today

by Divya Gadre, Ted Phillips, and Amy West, CPA.

Topics included increasing interest rates, outsourcing, the structure of the board of directors, and the role of the CFO. The discussion of outsourcing addressed the different needs of different organizations, such as outsourced accounting, information technology, human resources, and marketing. There are many nonprofits with small teams that are so mission-focused that they lack the infrastructure in these areas that require significant technical expertise. Outsourcing can be a great opportunity to get specific skills into the organization at reasonable rates without having to hire and train employees.

Deploying a 501(c)(4) for Maximum Impact

by Dick Locastro, Diara Holmes, and Lauren Haverlock.

The presenters not only discussed the structure of these types of organizations, and the mechanics of applying for exemption under this code section with the IRS, but they also brought forth ways in which these organizations can be included in income tax and estate planning. While these types of organizations aren’t a “one size fits all,” when they do fit, they can have a substantial impact on the estate plan as well as the family legacy.

View of the IRS moderated

by Meghan Bliss.

This annual session is hosted by representatives of the IRS who specialize or work in the IRS’s Tax Exempt & Government Entities Division. They provide insights into different regulations, how the IRS sees those regulations impacting tax-exempt entities, and the status of certain initiatives within the IRS as they relate to nonprofit organizations. They also highlight requests for comment that are ongoing, and specifically acknowledge the AICPA’s responses to those requests. For those professionals who work on the tax compliance side of the nonprofit industry, this session is especially insightful, as it will cover the difficulties the IRS is seeing and existing remedies for those situations.

Show me the Money

by Isreal Tannenbaum and Brian Yacker.

Reporting compensation on 990’s has always been an area of confusion, especially with definitions that are specific to those parts of the Form 990 and 990-PF. For officer compensation specifically, the definitions of who qualifies, what is considered compensation, and how to report that compensation can be tricky. There is also the determination of what is considered “reasonable” compensation that can be a pitfall for a nonprofit. I highly recommend this session to anyone who is preparing a 990-series return or who is involved in setting or monitoring compensation within a nonprofit organization.

Making the Most of Your Audit

presented by Cohn Reznick

Ryan Jenkins talked about how important it is to connect to others. He provided statistics showing that employees are feeling disconnected, and that they don’t feel their workplaces are addressing the issue or providing opportunities for belongingness. Younger generations appear to feel lonelier than their elder peers. Additionally, employers may not be even aware of the importance of fostering ways for their employees to fell like more than simply workers who clock in and out every day. His research also touched on the different generations that are currently in the workforce and how the importance of connections among these diverse generations could lead to increased performance, engagement, and worker retention.

Cybersecurity is an issue that everyone, not just nonprofit organizations, should be concerned with. Organizations need to spend the time it takes to ensure they have properly assessed potential risks and to implement strategies to mitigate attacks. Nonprofits are targets for cyber assailants: They store a significant amount of data on donors and members, and they send marketing messages that cyber assailants can copy to get cyber victims to click on thinking they are responding to a nonprofit. The presenters covered local, state, federal, and international regulations and laws currently in place to address cybercrime. Noncompliance with rules is being enforced: Examples were given of companies that have violated privacy laws and the associated settlements to deter others from doing the same.

The presentation was a valuable refresher on the roles of auditors. We strive to have seamless and efficient audits and hope to provide valuable information regarding the application of accounting policies, and recommendations for internal controls. Although the audit period can be an arduous process, the end result provides a tangible result that is needed to satisfy the requirement that made an organization seek an audit in the first place. Auditors can also be used as advisors outside of the audit period to assist organizations with financial questions. We are able to provide recommendations to help management make decisions while maintaining independence.